Government announces INR 9 trillion infusion towards Road and Bank sector
Government announces INR 9 trillion infusion towards Road and Bank sector

The Government announced over INR 9 trillion to recapitalize state-owned banks and build new roads and highways, which includes spending INR 2.11 trillion towards infusing capital into banks over the next two years and another INR 7 trillion over the next five years on the roads project, including roads in economic corridors, remote border and coastal areas.

This is the biggest move to shore up an economy. The INR 2.11 trillion is far higher than the INR 20,000 crore the government had previously planned to invest. Recapitalizing banks would help channel more investments to sectors such as infrastructure. The thrust to infrastructure will generate direct and indirect positive cascading effects for a lot of related sectors and will create feel-good factor for all stakeholders, which would help improve credit flow to companies from banks weighed down by bad debt, and boost public investment.

The move is part of PM Modi’s goal to help banks meet tighter capital-reserve requirements and boost credit. The plan to build more than 83,000 km of roads and highways over the next five years will boost connectivity and create jobs.

Unveiling the plan at an unusually high-octane press conference complete with a power point presentation, FM Mr Arun Jaitley said that the economy was on a strong path and that temporary hiccups were not unusual when structural reforms were undertaken. “When results of the GDP of the first quarter came out then I had said that we will be ready for the response,” said Jaitley.

Separately, the government also announced an increase in the price at which it procures wheat, pulses and oilseeds from farmers and waived the penalty on the delayed filing of initial returns on the new GST for August and September.