Finance Minister Arun Jaitley on Friday tried to soothe investors in the domestic markets by stating that the severe volatility in the market was due to the chain reaction of major sell-offs in the global markets.
“It would be a… prudent investment reaction that the inherent strength of the Indian economy is kept in mind by investors rather than reacting disproportionately to global developments,” the Finance Minister said.
He reiterated India’s growth forecast of 7.6 per cent for 2015-16 and said the Centre would take measures to support growth.
Noting that some of the volatility in the domestic market was also because of concerns over the health of banks, Jaitley assured the investors that the Centre is keeping a close watch and will announce more measures to further empower banks to recover bad loans.
“The Reserve Bank of India has empowered banks. The Bankruptcy Law is under active consideration. The government is also looking at other steps to empower banks to recover the funds,” he said, stressing that there should not be any over reaction or panic.
Conceding that there is a problem of non-performing assets (NPAs), Jaitley said the loans were given earlier and that banks were taking steps to recover the funds from debtors.
Recapitalisation supportThe Centre will also support public sector banks on their capital requirement, he said, adding that banks have played a very important role in supporting the economy and their support is crucial to boost growth. The gross NPAs of public sector lenders had risen to ₹3.01-lakh crore as of September 2015 against ₹2.69 lakh crore in March 2015.
“India as an economy stood out even in the midst of the global slowdown to maintain a growth rate of over 7.5 per cent. Manufacturing and services are recovering.
“Hopefully with a better monsoon this year, agriculture will also recover,” he said.
The Centre is formulating policies and is conscious of the areas of the economy that require support and is fully committed to providing that support, he said.
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