Move lacks logic

Govt would float public sector recapitalisaion bonds valued at Rs 1.35 lakh crore

The finance minister announced during a meeting telecast across the country on Thursday that the Centre would take up recapitalisation of a few public sector banks by infusing Rs 2.11 lakh crore, of which Rs 76,000 crore would be through budgetary support. In addition, the government would float public sector recapitalisaion bonds valued at Rs 1.35 lakh crore.

On one hand, the government is unleashing a slew of disinvestments of its stake in public sector undertakings, on the other hand it is infusing a huge amount of money from the exchequer. I do not understand the logic of this move. Does infusion of capital in the guise of recapitalisation not encourage the non-performance of public sector banks? Are we not paying a premium for the inefficiency of PSBs?

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B Venkateswaran, Chennai

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