The government must focus on implementing the disinvestment and privatisation programme to generate revenues.
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Union Finance Minister Nirmala Sitharaman speaks during the post-budget press conference, at National Media Centre in New Delhi. (Photo | Parveen Negi, EPS)
The Union Budget presented in the wake of the pandemic led economic contraction lays out many proposals to strengthen the current V shaped recovery and sets India on the path to high growth.
We believe that the Budget has met the twin challenges of boosting growth while laying down a path to fiscal consolidation. It prioritises growth in the immediate term while taking a medium-term view of fiscal consolidation. It has also announced some path-breaking reforms.
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Increase in credit from banks may not always lead to a rise in investments as largely anticipated, said an RBI working paper.
The analysis shows that in the banking sector, partial monetary policy transmission happens with a lag. Further, banks respond to changes in money market spreads faster and better than changes in policy rate.
The working paper titled Monetary Policy Transmission in India: New Evidence from Firm-Bank Matched Data noted that quick and significant bank loan expansion resulted from a change in term spread.
Citing its analysis, the paper said: We show that in addition to slow or lagged monetary policy transmission, an increase in credit may not always find its way towards increasing investments.
India needs multiple bad banks to address adverse impact of non-performing assets: CII
Mumbai: Confederation of Indian Industry (CII) has urged the government to consider the creation of multiple bad banks to address the adverse impact of non-performing assets accumulated by public sector banks in the recent past, which got further accentuated during the pandemic. CII, in its recently submitted pre-budget memorandum to the government, has recommended that the government consider enabling Foreign Portfolio Investors (FPIs) and Alternative Investment Funds (AIFs) to purchase NPAs.
Explaining the rationale, Uday Kotak, President CII, said; âIn the aftermath of Covid it is important to find a resolution mechanism through market-determined price discovery. With huge liquidity, both globally and domestically multiple bad banks, can address this issue in a transparent manner and get the credit cycle back in action.â
PTI
The monetary policy transmission of state-owned banks in the short-run is stronger than their counterparts in the private sector, and can be improved further with capital infusion, said a RBI working paper.
The credit channel of monetary policy transmission is robust in India and its efficacy can be reinforced by better capital position of banks, said the working paper on Asset Quality and Credit Channel of Monetary Policy Transmission in India: Some Evidence from Bank-level Data . Controlling for asset quality, in the short-run, the credit channel of monetary transmission of public sector banks is stronger relative to that of private sector banks, it said.