NEW DELHI: In a bid to stimulate the country’s economy, the government on Tuesday announced a bank recapitalisation package to the tune of Rs 2.11 lakh crore and a Rs 7 lakh crore budget to build 83,677 km of highways over five years. The latter includes the ambitious 34,800-km Bharatmala project worth Rs 5.35 lakh crore.
While the booster shot for banks is aimed at boosting credit flow to spur private investment, the fund infusion for highway projects is targeted at generating 14.2 crore man-days of jobs.
The thrust is on stepping up public investment in infrastructure. The government’s total expenditure this year has crossed Rs 11.47 lakh crore (till Sept 2017), out of the budgeted expenditure of Rs 21.46 lakh crore, which is an increase of Rs 1.2 lakh crore over last year.
“India has been the fastest growing major economy for the past three years; the attempt is to maintain a high growth rate,” said Finance Minister Arun Jaitley here on Tuesday. He, along with his team of secretaries and Chief Economic Advisor Arvind Subramanian, made a detailed presentation on the status of the Indian economy and the government’s plans to take it forward. India Inc welcomed the decisions. “The government has imparted a huge boost to banks, which is likely to kick-start the credit cycle and facilitate private investments and will have a big multiplier impact on economic growth,” said Chandrajit Banerjee, director-general, CII.
Ficci is hopeful that the announcements would influence the RBI to cut repo rate - the rate at which banks borrow from RBI. “Bank recapitalisation should also encourage banks to pass on the benefits of a lower rate of interest to investors and consumers”, said Pankaj R Patel, president, Ficci.
Jaitley pointed out that the decisions have been taken by the Cabinet keeping in view of the strong economic fundamentals of India. This should give the much needed push to public investment in infrastructure with stronger banks catalysing private investment, he said. The FM noted that the government would soon come out with conditions and norms that will ensure that the banks do not face the NPA issue again.