Budget: Credit Demand To Get Traction

Mayank Mehta, Executive Director, Bank of Baroda and Harideesh Kumar B., Executive Director, Canara Bank, expect credit growth boost from the Union Budget 2017.

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Mehul Dani: How will Budget 2017-18 facilitate credit growth for banks?

Mayank Mehta: The budget is progressive with its emphasis on inclusive development while being fiscally prudent. It has given special emphasis to development of infrastructure, agriculture, the rural economy and the MSME sector. As activities in these spaces get a boost, demand for credit is expected to get traction.

Harideesh Kumar B: This year’s budget was formulated against risks of global slowdown and turbulence, likely increase in policy rates in 2017 by the US Federal Reserve, uncertain crude oil prices, rising protectionism and additional fiscal burden due to 7th Central Pay Commission recommendations and OROP. The union budget has several welcome proposals, such as, ₹221,246 crore total outlay for infrastructure, amendments in Motor Vehicles Act to open up the road transport sector in the passenger segment and revival of unserved and underserved airports. The target amount to be sanctioned under Pradhan Mantri Mudra Yojana has been increased to ₹180,000 crore and there are various measures aimed at promoting affordable housing. All these steps would help credit growth in banks.

What increase in credit flow to agriculture, SMEs, industries and retail do you expect from the budget provisions?