India has emerged the “bright spot” of the global economy, playing a key role in global supply chains, Prime Minister Narendra Modi said on Tuesday, urging stakeholders to take full advantage of this opportunity. He asked financial institutions to reduce the cost of credit, increase pace of credit disbursal and reach small entrepreneurs.
Indian banks are now profitable after being on the verge of collapse about eight to ten years ago, he said adding that the robust Indian financial system now has increased responsibilities . “Today, the need of the hour is that the benefits of the strength in India’s banking system should reach the maximum number of people,” he said.
The Prime Minister was speaking at the post-Budget webinar on the financial sector, the tenth of a 12-part series that started on February 23 and ends on March 11. The PM explained that the post-budget webinars, an annual practice since 2021, help the government in inculcating “collective ownership” and involve all stakeholders in the spirit of “equal partnership”. So far, he has addressed seminars on green growth, agriculture and cooperatives, harnessing youth power, reaching the last mile, ease of living, urban development, tourism in mission mode, infrastructure, and health.
Participating in the Budget discussion in the Rajya Sabha on February 10, Union finance minister Nirmala Sitharaman assured the house that banks and financial systems are now robust after the Modi government put an end to the ”dial-a-loan” scheme prevalent before May 2014, a reference to government interference in the loan sanctioning process of state-owned banks. The Modi government launched an Asset Quality Review (AQR) on April 2015 to unearth hidden non-performing assets (NPAs) to strengthen the Indian banking sector dominated by public sector banks. As a result, the 12 PSBs declared net profit of ₹25,685 crore in Q2 FY23 and total ₹40,991 crore in H1FY23, up y-o-y by 50% and 31.6%, respectively. The 2015 AQR led to a surge in non-performing assets (NPAs) of PSBs from ₹2.17 lakh crore on March 31, 2014 to ₹8.96 lakh crore on March 31, 2018 mainly due to indiscriminate lending.
{{/usCountry}}Participating in the Budget discussion in the Rajya Sabha on February 10, Union finance minister Nirmala Sitharaman assured the house that banks and financial systems are now robust after the Modi government put an end to the ”dial-a-loan” scheme prevalent before May 2014, a reference to government interference in the loan sanctioning process of state-owned banks. The Modi government launched an Asset Quality Review (AQR) on April 2015 to unearth hidden non-performing assets (NPAs) to strengthen the Indian banking sector dominated by public sector banks. As a result, the 12 PSBs declared net profit of ₹25,685 crore in Q2 FY23 and total ₹40,991 crore in H1FY23, up y-o-y by 50% and 31.6%, respectively. The 2015 AQR led to a surge in non-performing assets (NPAs) of PSBs from ₹2.17 lakh crore on March 31, 2014 to ₹8.96 lakh crore on March 31, 2018 mainly due to indiscriminate lending.
{{/usCountry}}Giving an example of the government’s support to the micro, small and medium enterprises (MSMEs), Modi asked the banking system to reach out to as many businesses as possible in the sector. The government provided help to over 12 million MSMEs during the pandemic period, he said. “In this year’s budget, the MSME sector has also got additional collateral-free guaranteed credit of ₹2 lakh crore. Now, it is very important that our banks reach out to them and provide them adequate finance,” he added.
Referring to the government’s focus on financial inclusion through the “JAM Trinity” (Jan-Dhan accounts, Aadhaar identification and Mobile coverage) the Prime Minister said that tens of millions of people are now part of the formal financial system. Modi urged policy makers, banks and the financial sector to “re-engineer” processes “to reduce the cost and increase the speed of credit” so that it reaches small entrepreneurs quickly. The government has helped millions of young people by giving Mudra loans worth over ₹20 lakh crore without a bank guarantee, he said. For the first time, more than 4 million street vendors and small shopkeepers received help from banks through PM Swanidhi Yojana, he added.
The Prime Minister invited the private sector to invest in a matching pace with the government, highlighting that Budget 2023-24 raised the capital expenditure outlay to ₹10 lakh crore.
In her Budget speech, Sitharaman recognised capital investment “as driver of growth and jobs” and raised the outlay by 33% to ₹10 lakh crore. “The direct capital investment by the Centre is complemented by the provision made for creation of capital assets through Grants-in-Aid to States. The ‘Effective Capital Expenditure’ of the Centre is budgeted at ₹13.7 lakh crore, which will be 4.5 per cent of GDP,” the minister on February 1.
Also read: 'India still fastest-growing economy': Sitharaman on Budget 2023 in Lok Sabha
Speaking on the government’s policy of reducing tax rates to enhance revenue collection at the webinar on Tuesday, PM said that the tax burden has come down significantly in India due to introduction of the Goods and Services Tax (GST) in July 2017, and reduction of personal and corporate income-tax rates. “In 2013-14 gross tax revenue was about ₹11 lakh crore which can rise to ₹33 lakh crore in 2023-24 [Budget Estimates], an increase of 200%,” he said.
He said tax base has also increased as the number of individual tax returns jumped to 65 million in 2020-21 as compared to 35 million in 2013-14. “Paying tax is such a duty, which is directly related to nation building. The increase in the tax base is proof that people have faith in the government, and they believe that the tax paid is being spent for public good,” he said.