In view of the multiple pitfalls of the public-private partnership (PPP) model, the government in its budgetary proposals has made generous allocations for the infra space—roads alone will get Rs. 37,880cr in the current fiscal. In addition, in its budget proposals, it has also announced a new entity, 3P India—with a corpus of Rs 500cr to help resolve issues that have derailed PPP projects. That apart, the Budget has also given banks much cheer as they can now raise funds for investment in the core sector on better terms which will also help them deal with bad loans better. Promised, enhanced retail ownership will help in raising capital besides benefitting in deposit mobilization with the finance minister doing away with the unfair tax advantage enjoyed by debt mutual funds.
Allowing banks to issue long term bonds without subjecting them to cash reserve ratio and statutory liquidity ratio for financing infrastructure projects is also a positive step. Allowing infrastructure loans to be given for longer periods matching the life of the asset is also a big positive as it will prevent undue stress in repayment of infrastructure loans and will also reduce user charges, said chairman, State Bank of India, Arundhati Bhattacharya. While growth in loans to infrastructure and other sectors would help bring down the ratio of bad loans, banks have been provided support to recover from their existing stock of bad loans with the creation of six new debt recovery tribunals. Although there are laws in place to enable banks seize assets of defaulters getting orders has been a challenge because of the paucity of tribunals. In its entirety, the Finance Minister has delivered a well-defined and prudent Budget with specific focus on infrastructure, manufacturing and rural schemes.