Speed Post News Network
New Delhi : The Union Minister for Finance and Corporate Affairs Arun Jaitley on August 27, 2018, said that India may probably become the fifth largest economy next year. Given the kind of economic activity happening in India, he said that the role of the banking industry is going to be vital in strengthening the economy itself.
Jaitley said that the sector should do this by upholding professionalism, credibility and expansion. He said that the banking industry needs to use the occasion of AGM to introspect and prepare a blueprint for the long term. The Minister was speaking via video conference, addressing the 71st Annual General Meeting (AGM) of the Indian Banks Association held in Mumbai on August 27.
The Finance Minister said that the desire to have a high growth rate must be accompanied by strong macro-economic fundamentals. He said that sacrificing the fundamentals for temporary spurt in growth is not desirable. The Minister said that growth with fiscal prudence is necessary.
He said that indiscriminate lending done in the past created funding of projects which were not able to service those debts. He observed that this was followed by the subsequent error of dressing up the bad loans. He noted that excessive fear of consequences in the old regime led to a situation where this problem could not be resolved. The Minister stated that creation of the Insolvency & Bankruptcy Code has redefined the creditor-lender relationship in India. He said that the need now is to expedite the process, according to a PIB release.
He said that amendment to Section 29A of Prevention of Corruption Act will prevent defaulting promoters from bidding. Stating that a pre-liberalisation Prevention of Corruption Act could not attract the penal provisions for corruption, the Minister said that the new law empowers civil servants, bankers and other decision makers.
Speaking about the growth of the banking sector and its role in the growth of the economy, the Minister said that the achievements of Jan Dhan Yojana, MUDRA Yojana and the low-cost insurance schemes are commendable. He added that it is no small achievement for the banking sector to have reached every household. The banking institutions are the heart and soul of the economy, Jaitley said adding that the contribution of the banking sector towards nation-building, especially in terms of support to industry is invaluable.
The Minister said that the challenges to the economy are primarily external citing unpredictable oil prices, trade wars and sporadic political issues. He said that this is therefore all the more imperative that the domestic sector is equipped to deal with these external factors. Jaitley said that the ability of the Government to spend on infrastructure has improved due to increase in assessee base as well as tax collections.