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“Today, with global growth turning around, we are working to put up an actual plan in play to deal with the banking situation, which is top of our agenda. We need to rebuild the capacity (of the banking sector),” Jaitley told students of Harvard University in Boston.
“I inherited a banking system whose monies were lying in non-performing assets…are unable to service the debt. We are faced with a catch-22 situation as to how do we improve the capacity of the banks so that they can support growth,” he said.
So, all these factors together adversely impacted the private sector, the minister said. Jaitley, however, also noted that bigger enterprises did not suffer, because they approached the bond market and foreign funding which were available at much cheaper rates.
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Responding to a question, Jaitley refuted the notion that private sector is not expanding. “Expansion of private sector is taking place. The last quarter, which was otherwise not encouraging, indicated that the investment graph itself has turned positive. A lot of investment is taking place,” he said.
While India grew as India’s economy grew at a fast pace between 8 and 9 per cent, the expansion of the private sector was “limitless”. This was accompanied by an immediate slowdown in the global economy as a result of which major segments of Indian economy got impacted — steel, infrastructure which was due to poor management, power mainly because of corruption, he said.