India Inc today welcomed the government’s decisions to infuse Rs 2.11 lakh crore capital in PSU banks and approve Rs 7 lakh crore worth highway projects, including Bharatmala, saying these steps will boost economy and help revive private sector investment.
The announcement of recapitalisation of public sector banks (PSBs) along with a booster dose of expenditure will prove to be a mega turnaround point for Indian economy which was tackling issues out of the GST and demonetisation, Assocham Secretary General DS Rawat said.
As for the Bharatmala, he said the infrastructure- related industries like cement, steel, would get a boost, besides, it would also generate jobs at informal levels of the economy and generate demand at the bottom of the pyramid.
“The decision to invest in PSU bank recapitalisation should result in increased lending, especially to the MSMEs. We hope the RBI will pro-actively seek to boost investment and consumer demand through easing of the repo rate.
“Bank recapitalisation should also encourage banks to pass on the benefits of a lower rate of interest to investors and consumers,” Ficci President Pankaj Patel said.
“The government has imparted a huge boost to bank recapitalisation with a proposed amount of Rs 2.11 lakh crore which is likely to kickstart the credit cycle and facilitate private investments,” CII Director General Chandrajit Banerjee said.
According to Banerjee, a three-pronged strategy to encourage investments is evident in the announcement of expanding public expenditure on infrastructure, boosting private investments and addressing delayed payments to the MSME sector.
He said the government’s decision to enhance spending on roads and highways in a strategic manner, including port connectivity and border and cross-border roads, will have a big multiplier impact on economic growth.
Earlier in the day, the government announced Rs 2.11 lakh crore capital infusion for the NPA hit public sector banks over a period of two years.
Non-performing assets (NPAs) of banks have increased from Rs 2.75 lakh crore in March 2015 to Rs 7.33 lakh crore as on June 2017.
The Union Cabinet also approved Rs 7 lakh crore worth highway projects, including the ambitious Bharatmala. Bharatmala is a mega plan of the government and the second-largest highways project after NHDP that saw development of about 50,000 km, and aims at improving connectivity in border and other areas.