New Delhi: Union Minister Nirmala Sitharaman all set for the pre-budget consultation with economists, banks, financial institutions, and industry chambers, between June 11-23,to formulate a road map for banking reforms, including consolidation of the state-owned lenders.
The Budget session of Parliament is likely to be held from June 17 to July 26 and the first Budget of Modi 2.0 government is scheduled to be presented on July 5 by Sitharaman on the backdrop of India’s economy hitting 5-year low growth of 6.8 per cent in 2018-19.
Before the interim budget, The Confederation of Indian Industry (CII) had suggested the government to reduce the corporate tax to 25 per cent and bring it down to 18 per cent in a phased manner. This suggestion might be taken up by the government which was earlier neglected.
Revenue Secretary Ajay Bhushan Pandey has already held one round of discussions with industry chambers on their budget expectations, in which they have demanded an across-the-board reduction in corporate tax rate and abolishing Minimum Alternate Tax (MAT).
In order to make the budget more inclusive and participative, the government has also sought suggestions from the citizens on the ‘mygov.in’ portal.
Reserve Bank of India’s (RBI) changed stance in the policy from “neutral” to “accommodative” can also have an effect on the upcoming budget.
The budget will provide direction to the consolidation of banks started that after the merger of State Bank of India with its associate banks and Bharatiya Mahila Bank in 2017.
In the continuation of this exercise, Vijaya Bank and Dena Bank were merged with Bank of Baroda (BoB) effective April 1 to create the third-largest lender of the country.
The maiden three-way amalgamation is the first step in the consolidation of the public sector banking industry, recommended in 1991 by the Narasimham Committee report.
The committee recommended a three-tier banking structure in India through the establishment of three large banks with international presence, eight to ten national banks and a large number of regional and local banks.
Through this merger, the government has created an institution of global scale and size, thereby providing significant benefit to all stakeholders.
The consolidated entity started the operation with a business mix of over Rs 15 lakh crore on the balance sheet, with deposits and advances of Rs 8.75 lakh crore and Rs 6.25 lakh crore, respectively.
(With PTI Inputs)