CRISIL, S&P: What the Rating Agencies Say About Budget 2017

Global rating agency S&P on Thursday said the Budget announcement to infuse Rs 10,000 crore into public sector banks is highly insufficient and the lack of capital may delay the clean-up of

their balance sheets.

While presenting the Budget, finance minister Arun Jaitely allocated Rs 10,000 crore for recapitalisation of the NPA-laden public sector banks for the next financial year.

While the Budget focuses on the hinterland more, it is only "mildly" supportive of growth that may touch 7.4 percent in 2017-18, said a CRISIL analysis.

She, however, said the finance minister's assurance to provide additional allocation to state-run banks, in case they require it, gives some comfort. She also warned that some of these banks

have become so weak that they "could even become takeover targets."

Chugh said with less capital infusion from the government, public sector banks will have to raise money from insurance companies, other government related companies or they will be required

to tap capital markets.

Noting that the Budget is only "mildly growth supportive", CRISIL said the key focus is to revive the rural sector by bolstering agriculture and infrastructure.

Commenting on the drawbacks, it said the one big miss in the Budget is the lack of a roadmap to resolve the banking sector's asset quality and recapitalisation woes.

Elaborating on its growth impact analysis, the note said the push to consumption will only be "mild" because of the measures undertaken and the factors to look out for are the monsoons,

softer rates and inflation.

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