Not recap alone

Budget could be a good starting point for deeper banking reforms

The Indian economy continues to recover from the Covid-induced shutdown and the upcoming Union Budget is expected to make policy interventions to strengthen the recovery. One of the important enablers of broader economic recovery would be the state of the banking system, particularly public-sector banks (PSBs). Since non-performing assets in the banking system are expected to rise due to Covid-related disruptions, the government will be expected to make an adequate allocation for capital infusion into PSBs. However, it’s not difficult to argue that allocating capital would not be easy for the government because of other pressing needs of the economy.