Thursday, August 16, 2018 05:59 PM

Fiscal situation to improve next year: Arun Jaitley

Finance Minister Arun Jaitley said the government's move to recapitalise public sector banks (PSB) would improve their lending capacity, adding that fiscal situation would improve next year.

"I think the indications are that it's (credit offtake) already happening and that seems to be good sign and now with the recapitalisation of the banks, the capacity itself to lend will improve," Jaitley told reporters.

He was addressing a press meet along with Reserve Bank of India Governor Urjit Patel.

The government's plans to spend Rs 2.11 lakh crore to recapitalise PSBs in a major step to restore the banking system's health.

"I had a meeting with the SEBI's (Securities and Exchange Board of India) board, and one of the factors that stood out in their presentation was that there is now also increased reliance on the bonds market as far as credit is concerned," the finance minister said.

Jaitley had a meeting with RBI and SEBI boards in the national capital on Saturday on the Union Budget.

Talking about the fiscal situation in the country, Jaitley said next year would be reasonably more comfortable as far as revenues were concerned.

"Therefore, I can't at this stage say that there would be any slippage. I am sure we will able to maintain the target quite well... You can't base it on a hypothetical situation like oil prices... What has happened in the last three days is again something which nobody had predicted. So, that's... entering into an area on which there is no certainty at the moment.," he added.

Brent crude oil price is hovering around $63 per barrel at present.

Adding to the oil price concern, Patel said: "If I can just add that, in fact, in the MPC (Monetary Policy Committee) resolution, we had put forth the downside risks or the mitigating factors. We had observed, that in recent days, oil prices had two-way movement... What the Finance Minister said is exactly the correct point that, we need to be prepared for movements either way."

"It is just very difficult to predict oil prices. A few months ago... June or so, people were talking about oil prices never going above $40-45... and some of the advice that came to the MPC and RBI was based on that which turned out to be wrong in a major way," Patel said.

Patel also said the apex bank and the market regulator SEBI need to be cognisant of the equity market volatility for risk assessement.

"In the last few days, there has already been a correction, not only globally but in India. Therefore in a way it underscores how capital markets can change direction. So far neither globally nor in India, (it has) been felt that this bubble could lead to a very major problem," Patel told reporters here.

He added: "However, as financial market regulators, both the RBI and SEBI need to be cognisant of the risks going forward. The correction in the last few days underscores that these things can move pretty quickly."

Between February 1-9, the BSE Sensex had shed around 1,900 points. The other index, NSE Nifty shed over 500 points during the same period.

"I think the good thing in this cycle of high equity prices is that almost everyone who has been part of this, has talked about the possibility that this can't go on for long and I think that is good so that there is enough risk aversion that is endogenously built up by the investors themselves," Patel added.

Patel further said the banks have already started passing on benefits of lower rates to its customers.

"Actually few days ago one of the banks actually reduced its MCLR (marginal cost of funds based lending rate), secondly in terms of transmission if you measure, since the easing cycle started by the MPC, or preceeding the MPC, since the decline in interest rate cycle started and you compare the MCLR now, actually there has been very good transmission," he added.

Patel said the economy would see better equity-debt ratios going forward.


image

Challenging Article 35A

Article 35A was introduced by a presidential order in 1954 to safeguard the rights and guarantee the unique identity of the people of Jammu and Kashmir. This provision gives the Jammu and Kashmir legislature the right to decide who are..

image

In defence of Article 35A of the Constitution of India

The Supreme Court is hearing a petition  challenging Article 35 A of the Constitution of India - Special Provision for the State of Jammu and Kashmir - introduced as per Constitution (application to Jammu and Kashmir) Order 1954...

image

NRC: What is to be done

THE publication of the draft National Register of Citizens (NRC) in Assam has caused widespread consternation as over four million persons who had applied have not found a place in the Register...

image

Assam NRC: No Indian Should be Left Out

The National Register of Citizens (NRC) was part of the Assam Accord which decided on the cut-off date of 1971 to determine the question of illegal migrants settled in Assam.  The work for preparing such a register did not proceed until the..

image

Simultaneous Elections:For and Against

Addressing the fourth meeting of NITI Aayog, Prime Minister Narendra Modi again flagged the issue of simultaneous elections for parliament and state assemblies, calling for a widespread debate on the issue. ..

image

BJP: Political Failure in J&K

The decision of the BJP to withdraw from the coalition government with the PDP in Jammu & Kashmir at this particular moment has the potential of creating greater political instability in the state. It signifies the total political failure of..

image

Jammu & Kashmir: Steps Needed to Begin Dialogue

Once again, there is some talk about talks to be held on Jammu & Kashmir.  On May 26, the Union Home Minister Rajnath Singh, in a media interview said that the government is ready to hold talks with Hurriyat, if the Hurriyat leadership is..

image

Karnataka, Kairana undermine BJP's mission Sout India

The Karnataka and Kairana developments seriously undermine BJP's efforts to penetrate into south India either on its own or with the support of allies. The  swift move by congress  in Karnataka deprived BJP of prospective ally like JD(S) ...

image

BJP loses as opposition unites in the By-poll

The by-election results indicate that opposition can only challenge Narendra Modi if it can arrive at state level consolidation of anti-BJP vote. BJP in Palghar and NCP in Bhandara-Gondia in Maharastra and RLD in Kairana indicate this trend...

image

Cobra Post Sting exposes Media-Hindutva Nexus

Cobra Post and its intrepid journalists, particularly Pushp Sharma and Anirudh Behl, conducted daring sting operation on some of the biggest media houses in the country. They have exposed on camera the enormous greed of the media barons, who..

image

What happened at Thoothukudi?

At least 12 people were killed and scores of others including women and children injured in a brutal police attack and firing on people agitating against Sterlite Copper, a subsidiary of global mining conglomerate Vedanta, in the city of..

image

Who should form the Government in a hung Assembly?

If a majority of elected MLAs formed a coalition, the governor would be constitutionally right to invite the leader of the majority coalition to form the government and prove their majority within a short period...

image

Karnataka Outcome: Mining Mafia comes alive again

The Karnataka election has resulted in a hung Assembly.  The BJP has emerged as the single largest party winning 104 seats but falling short of a majority by eight;   the Congress was defeated getting only 78 seats and the Janata Dal..