Back From The Brink

THE Rs 2 LAKH CRORE-PLUS BANK RECAPITALISATION PACKAGE WAS A NECESSARY FIRST STEP TO LIFT THE ECONOMY OUT OF THE DOLDRUMS

- M.G. Arun

ON OCTOBER 24, THE CENTRAL GOVERNMENT administered a major shot in the arm of ailing public sector banks by announcing a Rs 2.11 lakh crore bank recapitalisation plan. The package included Rs 1.35 lakh crore via bank recapitalisation bonds to be issued to these banks and Rs 76,000 crore from budgetary support and market loans.

With the economy reeling under the twin effects of demonetisation and the Goods and Services Tax (GST), dragging down growth to 5.7 per cent in the first quarter, all eyes were on the government and how it would tackle this. Apart from banks, the Centre has also announced   a road-building programme to build 83,000 kilometres of highways with an investment of nearly Rs 7 lakh crore over the next five years. This is expected to create 142 million man days by 2022. “Macroeconomic fundamentals are strong; the government has decided on the steps needed to sustain the growth momentum,” Union finance minister Arun Jaitley said, while ann ouncing the plans in Delhi.