Is Budget 2017's Rs 10,000-cr allocation to recapitalise PSU banks enough?

If steps to improve loan recovery succeed, then the allocation could suffice in the medium-term

The CNX Nifty PSU Bank index was among the top gainers last Wednesday (Union Budget announced) and has since risen further.
 
This is despite most market observers questioning the finance minister’s decision to stick with a Rs 10,000 crore allocation towards recapitalisation of public sector banks (PSBs). The general view is that these need much more government support to compete with private banks in lending.
 
Yet, some do believe PSBs could do well with the current allocation in FY18 and that there is no element of surprise in the move.
 
Krishnan Sitaraman, senior director at ratings agency