Budget 2019 lacks big-bang surprise; bank recap is a lost opportunity

I don’t think the Budget proposals have an element of a big-bang surprise. That said, there is a bit of positive news for the non-bank finance companies (NBFCs), but nothing that is making me too excited. The divestment figure of Rs 1.05 trillion is quite huge and is a lot of stock to be sold via this route in financial year 2019 – 20 (FY20).

There are some proposals for the rural markets and thrust on the infrastructure sectors, besides rejig in the public shareholder norms. This will see a lot of stock come into the market over time, but there are benefits of foreign direct investment (FDI) and foreign portfolio investment (FPI). But overall, there is nothing in the proposals that excites me too much.
The budget proposes a recapitalisation of public sector banks to the tune of Rs 70,000 crore. I was hoping that the government privatises some banks ahead of such a move. I am a bit disappointed that this is small money and whether it will solve the problems that most of these PSU banks are facing. The best way to resolve the problems with PSU banks is to privatise them and then recapitalise the remaining, if required. PSU bank measures are a missed opportunity. There have to be more drastic measures to solve PSU bank issues rather than just recapitalise them. Even with their balance-sheets repaired, PSU banks are way behind their private counterparts. On the other hand, the NBFC sector has been given a leg up. Read More

Article Source -> Business Standard