In a power packed press conference today the NaMo government at the centre lashed out all the opposition clamours over the structural reforms in the economy taken up by the Modi government
This conference comes at the heels of the latest announcement by Modi in Gujarat where he boldly declared that his government will not succumb to any pressures and continue with its reform agenda.
The Finance Minister also highlighted that the economy is boosted by strong macroeconomic credentials. The conference was briefed by top-level bureaucrats through a power point presentation where the key indicators were used to highlight the future trend of the economy leading to a strong growth path.
The Mr Subhash Garg, who made the presentation accepted that there has been a downward trend in the economy due to the reforms that have create a discomfort in the smooth functioning of the industry. This was also acknowledged by the Finance Minister.
Further the sectoral growth in the Indian markets was highlighted where automobile, pharmaceutical, banking and insurance sectors have been the top gainers. The withdrawal of FII/FPI from the markets was again shown to take an upward trend and the overall markets were also deemed to be stable.
The economy showed signs of growth which is being evidently asserted by the fact that industry is getting used to the new normal, which is the application of GST.
The government through this press conference has detailed that there will be more push to the reform agenda. Highlighting burden on the Centre’s spending o the states after the GST, the fiscal deficit which had arisen to 93% i the quarter ending June-2017, the current deficit will be less than 2%, as the government is sticking to its figure of 3.2%. The strong fiscal deficit target is based on the ever-growing forex reserves which are pegged at USD 400 billion.
Despite the front-loading of expenditure of the states the Finance Secretary Ashok Lavasa said that total government expenditure so far this fiscal has been Rs 11.47 lakh crore out of Rs 21.46 lakh crore budgeted for this financial year.
With an added thrust on the reformist agenda, the IMF’s recent downgrade of the Indian economy has been revised to reach 8% soon. The government has also announced a revision of the MSP at which Pulses, Oil-seeds and Grains are procured.
An important announcement made was regarding the waiving of penalties on delayed filing of GST returns for July August. This will have a trust building effect on the trading community and the industry by and large.
The biggest announcement has been a re-capitalization exercise aimed at healing the public sector banks in the country with a burden of non-performing assets and bad debt to the tune of INR 2 lakh crore.
The amount that will be pumped into the state-run banks will be pegged at INR 2.11 lakh crore which implies giving the psbs a new lease of life. The total amount will be funded from two primary sources wherein 11.47 lakh crore will be realised from recap bonds while the remaining 76,000 crore will be raised from budgetary support and market borrowings.
The Finance Minister also afforded a dart at RaGa’s Gabar Singh Tax remark by saying that the transparency will never be preferred by people who are used to 2G and Coal scams.
The overall picture presented by this press conference is optimistic and the government seems to be committed to reach out to the stakeholders of the economy to have faith and lend their support. The recap exercise will bring more confidence to the lenders and the credit cycle will again spin into motion as expected.