Fiscal situation should be comfortable next financial year, bank recapitalisation to boost lending: Arun jaitley
Jaitley also said that the last decision of the Monetary Policy Committee, chaired by RBI Governor Urjit Patel that decided to keep rates unchanged, was a “balanced decision”.
Finance Minister Arun Jaitley today said the fiscal situation should be comfortable next financial year and there are no worries at the moment regarding slippages in meeting the deficit targets.
Brushing aside any immediate need to worry about rising global oil prices, Jaitley said an assessment should not be made based on hypothetical situation concerning crude prices as the trend in the last three days has been opposite (with prices falling again), adding that at this stage he was not worried about any slippages on the fiscal front.
Addressing a press conference after meeting RBI’s board in a customary post-Budget exercise, Jaitley also said that the last decision of the Monetary Policy Committee, chaired by RBI Governor Urjit Patel that decided to keep rates unchanged, was a “balanced decision”.
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“... as far as fiscal situation is concerned, I see next year to be more comfortable as far as revenues are concerned. I cannot see at this stage that there would be any slippages,” he said.
Jaitley, who also met Sebi’s board and top officials earlier today, said one of the factors that stood out from the capital market regulator’s presentation is that there is an increased reliance on corporate bonds as far as credit is concerned.
The Finance Minister also said the government's move to recapitalise public sector banks (PSB) would improve their lending capacity.
"I think the indications are that it's (credit offtake) already happening and that seems to be good sign and now with the recapitalisation of the banks, the capacity itself to lend will improve," Jaitley told reporters.
The government's plans to spend Rs 2.11 lakh crore to recapitalise PSBs in a major step to restore the banking system's health.
"I had a meeting with the SEBI's (Securities and Exchange Board of India) board, and one of the factors that stood out in their presentation was that there is now also increased reliance on the bonds market as far as credit is concerned," the finance minister said.
Jaitley had a meeting with RBI and SEBI boards in the national capital on Saturday on the Union Budget.
Talking about the fiscal situation in the country, Jaitley said next year would be reasonably more comfortable as far as revenues are concerned.
"Therefore, I can't at this stage say that there would be any slippage. I am sure we will able to maintain the target quite well... You can't base it on a hypothetical situation like oil prices... What has happened in the last three days is again something which nobody had predicted. So, that's... entering into an area on which there is no certainty at the moment.," he added.
Brent crude oil price is hovering around $63 per barrel at present.
Adding to the oil price concern, Patel said: "If I can just add that, in fact, in the MPC (Monetary Policy Committee) resolution, we had put forth the downside risks or the mitigating factors. We had observed, that in recent days, oil prices had two-way movement... What the Finance Minister said is exactly the correct point that, we need to be prepared for movements either way."
"It is just very difficult to predict oil prices. A few months ago... June or so, people were talking about oil prices never going above $40-45... and some of the advice that came to the MPC and RBI was based on that which turned out to be wrong in a major way," Patel said.
Jaitley was addressing a press meet along with Reserve Bank of India Governor Urjit Patel.
Patel said the equity-debt ratio for corporates is expected to get better going forward as the capital markets have shown a good trend in terms of raising funds through bonds.