Though there were no announcements benefiting the financial sector directly except those on home loans, bankers led by State Bank chairman Dinesh Khara and IBA chairman MV Rao have hailed the Union Budget saying the document is pro-growth and thus allows expansion of their balance sheets.
"The Budget while pursuing fiscal consolidation is largely focused on private demand revival with a slew of fiscal measures targeting the middle class, small businesses and employment generation. The thrust to agriculture productivity, infrastructure, climate transition and rationalisation of capital gains tax are the deeper facets of the transformation that the Budget seeks to achieve. From a banking perspective the Budget is pro-growth and offers scope for balance sheet expansion. In all, it is well-grounded given the domestic and international realities,” SBI chief Khara said.
IBA chief MV Rao, who is also managing director of Central Bank of India, said the overall focus of the Budget was to stimulate domestic growth impulses and so the theme was to concentrate on employment, skilling, small businesses and the middle class.
The proposal to conduct the digital crop survey for kharif using the digital public infrastructure in 400 districts and the inclusion of 6 crore farmers and their land under farmer and land registries and the issuance of kisan credit cards through Jan Samarth portal are helpful to farmers to have authentic records and for banks, the data is quite useful for quick decisions to fund the farmers, he said.
The proposals to improve the IBC outcomes by extending the services of the centre for processing accelerated corporate exit, voluntary closure of LLPs, strengthening of national company law tribunals and establishing more debt recovery tribunals are positive for the banking sector as they enhance the speed of the recovery processes in the system, Rao said.
In sum, it is a Budget focused on infrastructure development, improving domestic employment and skills and overall growth of the economy without deviating from the fiscal math, he added.
Stating that the Budget balances social imperatives with fiscal prudence, the chief economist at HDFC Bank Abheek Barua said the central focus of the Budget is job creation and addressing associated issues like skill formation with measures planned to address both the supply and demand side of the employment equation.
Changes in the income tax slabs and the direct benefit transfer to first time workers is likely to spur consumption, particularly for small ticket items which will boost real GDP growth to 7.1 percent.
PR Seshadri, CEO of South Indian Bank, said the proposal to rationalise both direct taxes and GST may potentially lead to a truly progressive tax structure. The measures for improving credit delivery to small businesses by enhancing Mudra loan limits and introduction of credit guarantee scheme will incentivise financial entities to lend to small entrepreneurs.
Radhika Rao, senior economist at DBS Bank, said that with the lower than expected fiscal deficit of 4.9 percent, the consolidated deficit (of the Centre and states) will fall to a five-year low.
But she feels that revenue assumptions are conservative, leaving sufficient cushion, despite some direct and indirect tax changes. So the Budget is positive for growth, neutral for bonds, and mildly negative for equities due to the rise in capital gains tax.
Umesh Revankar, executive vice-chairman of Shriram Finance, said the most significant announcement in the Budget is the development of a new credit assessment model for small businesses based on digital footprints easing their access to funds.
Rishi Anand, CEO of Aadhar Housing Finance, said the Budget clearly showcases the government’s vision in making housing for all a success with PMAY 2.0. The proposed allocation of 3 crore additional houses with 2 crore in rural, tier 3 & 4 and 1 crore in urban areas will help in fulfilling the dreams of home ownership for many.
Sadaf Sayeed of Muthoot Microfin feels that the Budget provides an impetus for rural development and growth as it continues to focus on supporting women and girls through schemes that aid inclusive growth and development.
Krishnan Sitaraman of Crisil Ratings said the Budget has created enabling provisions to support credit flow to key sectors of the economy.
Manushree Saggar of Icra Ratings said the 56 percent increase in the allocation under PMAY will improve affordability for end home loan borrowers.
