The finance minister has announced wide-ranging measures to ensure that economic growth remains robust in the medium term, with a thrust to infrastructure, social sector, boosting investment in agriculture, and expanding productivity in industry as well as attracting foreign investment in the country.
The role of the banking sector has been enhanced with increase in credit for agriculture, along with expansion in subvention. Bank finance for infrastructure will receive a boost with expansion in definition of infrastructure sector to include cold storage and post-harvest facilities as well as capital investment in fertiliser plants. With tax concessions announced, ATMs will be cheaper, incentivising banks to expand their reach. With widening the scope of priority sector to cover houses up to Rs 25 lakh, along with increase in subvention, banks can see a healthy rise in their retail banking portfolio. The thrust on rural housing, mortgage risk guarantee fund for housing for weaker sections and a Central Registry for to check frauds will give a fillip to housing finance.
Tax-reforms including moderation in tax rates and simplification to ensure better compliance will boost the government revenue. The ground work for introduction of DTC and GST, including strong IT infrastructure, is a welcome step.
O P Bhatt,
Chairman, State Bank of India
