Interim Budget 2024 – Very positive; further strengthens GDP growth
PM Awaz Yojna with an additional two crore houses will boost housing credit
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The enhanced focus on agriculture, allied sector like diary, fisheries and technology adoption will strengthen the agricultural sector and helps in more opportunities for agriculture credit for the banking sector
The Interim Budget presented by the Union Finance Minister has been very positive and the continuation of development focus with renewed vigour is encouraging. The focus on government-led Capex both from Central and State governments will ensure the GDP growth on the higher trajectory. Another encouraging aspect that fiscal deficit is likely at 5.8% of GDP for 2023-24 and 5.1% of GDP estimated for 2024-25, which reiterate the Centre’s commitment to reach fiscal deficit of 4.5% for 2025-26.
The gross borrowing and net borrowing by the Central Government both for this year and next year less than estimated, is also positive for the bond market and consequently for the banking sector. This also enables enough scope for banks to extend credit to support private sector investment projects.
The enhanced focus on agriculture, allied sector like diary, fisheries and technology adoption will strengthen the agricultural sector and helps in more opportunities for agriculture credit for the banking sector. The enhanced focus on SHGs for empowerment of women has been positive as banks are focused on lending in SHGs with no or nil NPA.
PM Awaz Yojna with an additional two crore houses for weaker sections provides scope for housing credit. The government’s intention to further strengthen the banking and financial sectors, in terms of size, scale and positive regulatory framework indicate further banking sector reforms and the earlier plan for further mergers or amalgamations may gain momentum. Overall, the budget is very positive and further strengthens our GDP growth, which is much higher than other peers.
If all three sectors like agriculture, manufacturing and services are assured of higher drivers of growth, then it will an opportunity for banking and financial sectors to maintain a healthy asset growth, and strengthen the financial strength.
(The writer is a former CMD of Indian Overseas Bank)
