Strategy to improve overall performance of state-run banks, reviving stalled projects and increasing private sector investment are major challenges before the government, finance minister Arun Jaitley told financial regulators on Tuesday.
He also said that due to better spread of monsoon, the government is expecting higher production of pulses this year compared to previous years, which in turn will substantially ease prices in the market.
The Financial Stability and Development Council (FSDC) also discussed the current macroeconomic situation, likely impact of Brexit, the external scenario, problem of stressed assets and the issue of redemption of foreign currency deposits. “As far as the redemption of these deposits is oncerned,there was an overwhelming view that the situation is under control and there is no problem at all,” said sources.The council discussed the issue of rising bank NPAs and the measures taken by the government and the RBI for handling stressed assets. It also strategized on the way forward to manage the situation.
Chief economic adviser Arvind Subramanian gave an overview of the state of macro-economy, highlighting key issues. The council noted that uncertainty in the global economy and high volatility in the financial markets are prominent risks confronting emerging economiesIndia, however, appears to be much better placed today on the back of improvement in its macro-economic fundamentals, recent financial sector reforms by the government and large foreign exchange reserves, which provides cushion against financial market volatility, a finance ministry statement said, quoting Subramanian. “With the revival of sentiment and certain signs of pick-up in industrial activity, a good monsoon is expected to further strengthen growth in the country,” it said.
“Members agreed on the need to continue to be in a state of preparedness for managing any external sector vulnerabilities, including those emerging from Brexit and its consequences,” the statement said.Minister of state for finance Jayant Sinha, RBI Governor Raghuram Rajan, finance secretary Ashok Lavasa, economic affairs secretary Shaktikanta Das, secretary department of financial services Anjuly Chib Duggal; U K Sinha, chairman, Sebi; T S Vijayan, chairman, IRDA; Hemant G Contractor, chairman, PFRDA attended the meeting.
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