HYDERABAD: Former Reserve Bank of India (RBI) governor C Rangarajan on Monday said that real estate is one of the major sectors that will continue to reel under the heat of demonetisation in the near-term. “The adverse impact of demonetisation will wear off as currency availability approaches normalcy. But some effects will not go away. Sectors like real estate will have to rethink how to run their businesses,” the former RBI head said on the sidelines of a panel discussion on ‘Union Budget-2017’ here
Meanwhile, speaking about the Budget, he said there was much expectation in relation to corporate tax. “But the finance minister has limited the reduction to 25% from 30% only to MSME companies. Though in terms of numbers MSME companies may dominate, this is not true in relation to output,” he added.
According to him, the budget acted prudently to keep the fiscal deficit target at 3.2% of the GDP in 2017-18, which is lower than 3.5% during the current fiscal and slightly higher than 3% which was indicated earlier.
Speaking on the issue of non-performing assets (NPAs), the former RBI chief said that banks have to control NPAs in their balance sheets. “The banking system is undoubtedly under stress. How to resolve that particular problem is only through capitalisation…I think that the general scene is that the capital provided is not adequate…I think this cannot let the banks escape the responsibility for the non-performing assets that they have in their asset portfolio,” he said.
Credits ET Realty