Strengthening PSU banks most important agenda for govt: Jaitley

Strengthening PSU banks most important agenda for govt: Jaitley

After having seen structural reforms in 2017, the next year's agenda for the government is strengthening state-owned banks with more funding, Finance Minister Arun Jaitley on Thursday said, a day after Prime Minister Narendra Modi charged the UPA with leaving the lenders in a mess with historically high NPAs.

"When we look at the immediate next year, I think fixing the PSU banks and strengthening them is unquestionably the most important agenda on the table today," Jaitley said, addressing Ficci on the second day of its the 90th Annual Day event here.

He said the idea behind the recent recapitalisation plan was to ensure that the banks were able to support growth, their lending capacity particularly to MSMEs increased... "In the past few years, the lending capacity of banks to the MSME sector has been depleted because of NPAs," he said.

"The banks have a lot of money lying with them. They have a lot of low cost deposits lying with them but their lending is constrained because of capital inadequacy and once that capital inadequacy is made up for, I think their lending capacity itself increases," he said.

The government has recently promised to give PSU banks Rs 2.11 lakh crore as their increased recapitalisation share.

Jaitley said the year 2017 has seen more structural changes taking place than any time in the recent past. He also compared the economic reforms of 1991 with that of 2017 and said, "the structural changes in the economy 1991 were out of compulsion while the changes in 2017 were out of conviction".

The government revamped India's indirect taxation system by bringing Goods and Services Tax (GST) in 2017, which although slowed the economic growth for sometime, has been characterised by most of the domestic and global players as a positive long term structural reforms. Besides GST, the government has also brought out reforms in power, coal and other infrastructural sectors.

"Short term adverse consequences when you take structural changes... When the 1991 changes took place the immediate result was a rapid fall in the economic growth rate in 1992," Jaitley said, exuding confidence that the economy will be back on the track of a higher growth rate in the near future.

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