Indian Prime Minister Narendra Modi (FIle Image: Reuters)
The Union Budget 2021 has laid out a clear roadmap on how to expand the participation of the private sector and strengthen the public sector institutions, Prime Minister Narendra Modi said on February 26.
He made the statement while addressing a webinar on effective implementation of Budget provisions regarding financial services.
“The government's vision of the country's financial sector is very clear – with place for ifs and buts. Our top priority is to ensure that depositors and investors experience trust and transparency. The old ways and old systems of banking and non-banking sectors are being changed,” he said.
The PM noted that aggressive lending 10-12 years back, severely harmed India’s banking and financial sectors and steps have thus been taken to free the country from “non-transparent credit culture.”
“Today, instead of brushing the non-performing assets (NPAs) under the carpet, it is mandatory to report even one day NPA,” he said.
PM Modi also sought to assure that the Centre acknowledges uncertainties in business and recognises that not every business decision is made with ill intentions. “It is the responsibility of the government to stand by business decisions taken with clear conscience, we are doing this and will continue to do so. Mechanisms like Insolvency and Bankruptcy Code, are assuring the lenders and borrowers,” he said.
The PM was also clear that the Centre’s priorities are income protection of common citizens, effective and leakage-free delivery of government benefits to the poor, and promotion of infrastructure related investment for the development of the country.
“All the financial reforms introduced during the past few years reflect these priorities and the Budget has carried forward this vision of strengthening India's financial sector,” he added.
On banks privatisation & insurance FDI
He further said that announcements such as privatisation of two public sector banks, permitting up to 74 percent foreign direct investment (FDI) in insurance, and the Initial Public Offering (LIC) for LIC are some such steps.
“Our constant effort is to wherever possible involve and encourage private sector participation. But along with this, effective public sector participation in the banking and insurance sectors is still important for the country,” he said.
On public sector banks, PM Modi said that equity capital infusion is being emphasised and a new ARC structure is being created to keep track of NPAs of banks and will address loans in a focussed way. He also spoke of encouraging sovereign wealth funds, pension funds and insurance companies to invest in infrastructure.
On Atmanirbhar Bharat
PM Modi also emphasised his vision for Atmanirbhar Bharat saying that is not only for big companies or big cities. “Atmanirbhar Bharat will be made possible in villages through the hard work of small entrepreneurs and common people. It will be made possible by our farmers, by our units that make agricultural producing better, by our MSMEs and our startups.”
He lauded Indian fintech startups for high participation in startup deals. “Indian fintech startups are doing an excellent job explore possibilities across sectors. So many startup deals have taken place in these COVID-19 times and in these our fintech firms had high participation,” he added.
On technology for financial inclusion
The PM also spoke of how better use of technology and creation of new systems has played a very big role in financial inclusion in the country.
“Today, 130 crore Indians have Aadhaar Card and more than 41 crore Indians have Jan Dhan accounts. Nearly 55 percent of these Jan Dhan accounts are of women and about Rs 1.50 lakh crore rupees are deposited in them,” he noted.
He further said with the Mudra scheme itself, loans worth about Rs 15 lakh crore have reached small entrepreneurs – of whom close to 70 percent are women and over 50 percent are Dalit, deprived, tribal and backward class entrepreneurs.
He also noted that about 11 crore farmer families have received more than Rs 1.15 lakh crore directly in their accounts under the PM Kisan Svanidhi Scheme, and around 15 lakh street vendors have been given credit worth Rs 10,000 crore.
“TREDS, PSB Digital Lending platforms are making easy loans available to MSME. Kisan Credit cards are freeing small farmers, animal husbandry and fishermen from the clutches of informal lending,” PM Modi said, while asking the financial sector to create innovative financial products for this section.
Adding that India is moving towards financial empowerment, the PM said a World Class Financial Hub is being built in IFSC GIFT City, as the fintech market is estimated to be over 6 trillion in India in the next five years.
“Construction of modern infrastructure in India is not only our aspiration but also the need of Atmanirbhar Bharat. So in this Budget, bold targets are kept for the infrastructure,” he added.
He stressed the need for Investment to meet these goals and said that every effort is made to bring this investment. “These goals will be achieved only with the active support of the entire financial sector. To strengthen our financial system, the government is committed to strengthening its banking sector. So far banking reforms have been carried out and they will still continue,” he added.