.jpg?downsize=773:435 "Budget 2017 Disappoints With No Mention Of Bad Bank: HDFC Bank’s Abheek Barua")
Budget 2017 was a ‘typical Arun Jaitley budget' – very high on details but lacking in the big picture view, said Abheek Barua, chief economist of HDFC Bank.
Barua said the absence of any reference to the banking sector's bad loan problem, or the “twin balance sheet” problem, mentioned in the Economic Survey, was disappointing.
The Economic Survey identified the “twin balance sheet” problem of stressed corporate balance sheets as the number one problem in the economy which could have perhaps been resolved through the government taking an active financial interest in creating a large bad bank.Abheek Barua, Chief Economist, HDFC Bank
It is to the finance minister's credit, however, that the government has moved to increase rural spending and provide tax benefits to micro small and medium enterprises (MSMEs) . Both these sectors were probably the worst affected by the government's decision to demonetise high-value currency notes.
The budget saw a reduction in the tax rate for small and medium enterprises to 25 percent from a previous 30 percent. Unveiling the budget proposals for the financial year 2017-18, Jaitley said the government is reducing the income tax rate to make MSMEs more viable.
The government's fiscal deficit target of 3.2 percent, however may not leave enough room for to maneuver the additional spending, Baruah said.
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