SME Times News Bureau | 06 May, 2016
The steel industry accounts for the largest proportion of
the non-performing assets (NPAs) of banks, Finance Minister Arun Jaitley told
the Lok Sabha on Thursday.
"The biggest contributor in the NPAs is the steel sector. Because if our
companies are not able to sell their steel, it is obvious they will not be able
to repay bank loans and the interest upon it," Jaitley said replying to
the debate on the Finance Bill, 2016-17.
The Finance Bill 2016-17 was on Thursday passed by the Lok Sabha. The Bill now
goes to the Rajya Sabha, which has to return it for the budgetary exercise for
2016-17 to get completed.
Jaitley said the Indian steel industry has been weakened by the dumping of
Chinese steel at below cost-level prices. The sector has in turn affected the
banks' balance sheets, he said.
"When the business cycles are weak in some sectors during global
headwinds, then not only the sector goes weak, but it affects the banks'
balance sheets. It is called twin balance sheet problem," Jaitley said.
Some loans which have turned bad might have been given on a wrong basis, and
such cases will be investigated, the minister said.
"(Out of) the current NPAs ... there are some which have been given on a
wrong basis. It will be investigated into ... I do not want to go into the
details of who was responsible for the same," he said.
Jaitley said the government was committed to bringing the banks out of the
financial crisis and the NPA issue can be resolved only if the bad assets are
reflected properly on the balance sheets, and not kept hidden.
The top 50 defaulters of public sector banks had exposure in excess of Rs 1.21
lakh crore as on December 2015, the Minister of State for Finance Jayant Sinha
had told Parliament on Tuesday.
Jaitley said: "We are working upon making laws for the banks to deal with the
current situation of rising NPAs. Bankruptcy Bill has already been tabled in
The finance minister also said that below average monsoon had an impact on the
economy in the last two years and an expected normal monsoon this year will revive
the rural economy.
Jaitley also outright rejected suggestions from some opposition members to
bring agricultural income under the tax net, saying this is not being
considered at all.
He said that, firstly, large farm-based income was rare and people using
agriculture as a front to hide income from other sources need to be dealt with
by the tax authorities.
The finance minister asserted that despite global recession, the Indian economy
is doing well.
He pointed out that despite the global recession and uncertainty prevailing on
how long the crisis will remain, India still continues to maintain a high
growth rate at 7.65 percent in 2015-16 compared to 7.2 percent in 2014-15.
On the issue of one percent excise duty on non-silver jewellery, the finance
minister ruled out its rollback, saying the levy was not applicable on small
traders and artisans. Only those jewellers with more than Rs.12 crore turnover
will attract the duty, he said.
Responding to criticism that government's steps have often been against
people-oriented schemes, Jaitley said: "In all the three budgets this
government presented, we tried to ensure that small tax payers have more money
in their hands."