Principal Economic Adviser in the Ministry of Finance Sanjeev Sanyal has said that the Indian banks have gone through a cleaning process and are now in a better condition to lend due to better liquidity.
"We have cleaned the banking system from past 5-6 years which has been completed now. Banks are better regulated now and posses better potential to lend loans for businesses, consumers and large investments. There is better liquidity in the system", said Sanyal, hours before the Finance Minister presents the union budget 2020.
Speaking of the growth rate of the economy which had substantially dipped in 2019, Sanyal, like the IMF expressed confidence on the projected upward trajectory stating, "Imports and exports will play a crucial role, also the US-China trade war has an effect on the economy however all of these factors have been taken into consideration and 6 to 6.5 percent is easily achievable".
Sanyal also noted that State Bank of India is the only Indian bank to make it to the top global 100 banks whereas countries smaller than India have more banks in the top 100 mark. "Our banking system is far smaller with respect to our economy, many smaller nations such as Singapore has three banks in top 100, ours is just one, State Bank of India, so our banks private or public are very small. If these banks don't become big then who will fund the investments? So it is important that we encourage the banking system", said Sanyal while explaining the importance of the growth of Indian banks.
Sanyal reiterated the completion of the cleaning process of banks which brought various banking scams to the surface. "We have cleaned the banking system from past 5-6 years, had we suddenly started expanding the banks in 2012-13 there would have been even bigger turmoils and scams. We saw many scams come to the light. We have cleared the majority of the issues after which the regulation and capitalization is better in banks now", said Sanyal.
The principal advisor also spoke on the 'Ease of doing business' saying that 'contract enforcement' is slow in India and the number of approvals required is huge as compared to other nations due to which the time taken to start a new business is more in India as compared to other nations. "If you want to open a restaurant in Delhi you require 26 permissions, whereas Singapore and China require only 4. And these 26 permissions is also a tedious process. So the complex web of rules and regulations was imposed for decades which needs to be phased out", said Sanyal while speaking of further improving the Ease of Doing business ranking.
India has ascended to 63rd rank in 2019 in World bank's ease of doing business index. India was also among the top 10 performers on the 2019 list for the third year in a row. A seven-year trend shows that India has been on the path of improvement with regard to ease of doing business. In 2013 and 2014, India was ranked 134 which improved to 131 in 2015 and followed by a one-point jump to 130 in 2016. India jumped drastically by 30 places to 100th rank in 2017. In 2018, the country jumped another 23 places to reach the 77th rank which has been further improved by another 14 points to 63rd rank in 2019.