New Delhi: India may probably become the fifth largest economy next year, asserted Minister for Finance and Corporate Affairs Arun Jaitley on Monday.
Jaitley’s comments came while addressing the 71st Annual General Meeting of the Indian Banks Association, held in Mumbai today. He addressed the meeting through video conferencing.
Emphasizing the vital role of the banking industry, Jaitley said, “Given the kind of economic activity happening in India, industries role will be vital in strengthening the economy itself”.
He urged the industry to use the occasion of AGM to introspect and prepare a blueprint for the long-term.”The sector should do this by upholding professionalism, credibility and expansion,”Jaitley added.
Talking about the necessity of growth with fiscal prudence, the Finance Minister said,”The desire to have a high growth rate must be accompanied by strong macroeconomic fundamentals. He said that sacrificing the fundamentals for the temporary spurt in growth is not desirable.”
Jaitley further stated that the creation of the Insolvency and Bankruptcy Code has redefined the creditor-lender relationship in India and emphasized on the need to expedite the process. He also said, “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.”
Talking about the amendment to Section 29A of Prevention of Corruption Act and how it would prevent defaulting promoters from bidding, he said, “A pre-liberalization Prevention of Corruption Act could not attract the penal provisions for corruption; the new law empowers civil servants, bankers and other decision makers.”
Jaitley also highlighted the growth of the banking sector and its role in the growth of the economy and said, “The achievements of Jan Dhan Yojana, MUDRA Yojana and the low-cost insurance schemes are commendable. It is no small achievement for the banking sector to have reached every household.”
Terming banking institution as the heart and soul of the economy, he added, “The contribution of the banking sector towards nation-building, especially in terms of support to industry, is invaluable. India is continuing its run as a fast-growing economy, and that it will continue to be in this sweet spot.”
He also touched upon the subject of challenges to the economy and said, “Challenges are primarily external such as unpredictable oil prices, trade wars and sporadic political issues. Therefore it is 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.
He also asserted that banks play a vital role in job creation, infrastructure development, agricultural credit and others, making it the lifeline of the economy hence it becomes imperative to strengthen the credibility of the sector. Jaitley also said that the onus is on banks to avoid even stray incidents of frauds.