What we have is the biggest ever lockdown in the history of mankind! There is an opportunity to do things we could not do before.
The government has demonstrated flexibility and humility to change its own decisions quickly and prevent damage. The corporate tax increase done in the Budget, has been more than reversed in less than three months.
In the current situation, only resolute bold measures taken quickly can save these nationalised banks from extinction. It is unorthodox to take up such sensitive reforms in an election year. But it could prove to be game changer, like unprecedented and unorthodox reforms in the form of demonetisation and GST.
Market value of all the PSU banks today is less than book value, at around $70billion. If PSU banks had performed in line with the private sector banks, they would have been worth $250 billion. While statutory obligations for priority sector lending, SLR, CRR are all similar for public and private sector banks, PSU banks had natural advantage for having inherited a huge branch network, credibility of government ownership and dominant share of PSU enterprises' banking business.
When two soldiers are martyred at the border, the whole nation rallies with them. When two hundred farmers commit suicide or die on the farms, you would hardly find a mention in social media. We should not forget that Kissan (farmer) is as important as Jawan (soldier) and we say in one breath Jai Jawan Jai Kissan. Today we need war cry not at the border but in the farm.
I have never been as bullish on India for next ten years, as I am today. My optimism is based not only on a stable government moving firmly in the right direction but also on India’s unique position in the global economy at this point in time.
“The government has a golden opportunity to act fast and mitigate the side effects on the ordinary citizen as much as possible. Smaller measures are increasing availability of physical cash quickly and removing or relaxing cash withdrawal limits from ATM's to at least Rs 20,000 and removing limits for withdrawal from banks” said Nirmal Jain.
A simple courageous call on keeping rates surprisingly low for instance 8% for essential, 16% standard and 32% for luxury items can be the real game-changer.
As government’s market borrowings have been capped at Rs 4.2 lakh crore, there is a strong case for interest rates to head southward.
"There are murmurs in the market that the Budget stance will be pro-poor and antirich. A few such provisions being talked about are dilution of long-term capital gains tax exemption, increase in dividend distribution tax, increase in corporate tax rate and further increase in the surcharge rate on the high income group,” said Nirmal Jain, Chairman, IIFL Group.