India has been the world’s fastest growing economy for the last three years and the government is working to sustain a high growth rate, Finance Minister Arun Jaitley said on Tuesday.
Jaitley made the comments at a press conference at the National Media Centre, where he was accompanied by Department of Economic Affairs Secretary SC Garg and Finance Secretary Ashok Lavasa, among others. The cabinet has approved a PSU bank recapitalisation plan of Rs 2.11 lakh crore, the finance ministry announced.
Stay tuned for live updates:
- Finance Ministry announces the Bharat Mala project, under which 34,800 km of roads will be constructed
- The real GDP growth average has been 7.5% in the last three years: Secretary, DEA
- Lashing out at the UPA government, Jaitley said that between 2008 & 2013, public sector banks engaged in indiscriminate lending, while NPAs were brushed under the carpet.
- Defending big reforms, Finance Ministry officials said GST led to reduction in corruption while note ban gave public sector banks adequate lending capacity
- Public investment needs to rise, Jaitley says, adding that steps will be taken to recapitalise banks
'Public Expenditure Needs to Be Stepped Up'
Following the presentations, Finance Minister Arun Jaitley said public sector banks have adequate lending capacity post demonetisation. He added that public expenditure needs to be stepped up:
It was decided that bold step needs to be taken by the government to recapitalise banks.
Govt Approves Capitalisation Plans for Public Sector Banks
The government has announced infusing Rs 2.11 lakh crore to strengthen public sector banks, through a mix of recapitalisation bonds, budgetary support and market raising, said banking secretary Rajiv Kumar.
Part of the money will be from banks raising their own capital, where the government can reduce their stake to 52 percent, said Arun Jaitley, who called it a “bold move”. The infusion will be front-loaded through recapitalisation bonds, whose nature will be decided in due course, Jaitley added.
Strengthening the country's banking system will result in more jobs, growth and investments, Kumar added. Banks are ready for a take-off due to strong economic fundamentals and push to public investment in infrastructure, he added.
In three and a half years, the government has already infused Rs 58,848 crore in PSBs under the Indradhanush plan. This is compared to Rs 62,734 crore infused in the six years to 2014, Garg said.
The government's recapitalisation plan is "why banks have mostly remained Basel-III compliant," he added.
