Process to de-stress banks on: Arun Jaitley

Davos: As bad debts weigh down on banks, Finance Minister Arun Jaitley on Wednesday said the process to de-stress the banks has been initiated while the government may add to the re-capitalisation of public sector lenders.

"More things are being done. Steps are being taken for recapitalisation of banks. We have announced the programme and we probably will have to add to that programme," Jaitley said at the WEF Annual Meeting following suggestions from business leaders to take steps to boost the banking sector.

"Besides, RBI has asked banks to line up the bad debts they need to sell. The problem is not widespread and is limited to a few sectors.

"I am aware that both private and public sector banks are in touch with the concerned industry groups. We do not want to create a panic situation. Destressing of banks need to be tackled and the process for the same has been initiated," he added.

Industrialist Sunil Mittal said not all of these perfect storms would negatively impact India.

"Obviously, India cannot be an island in itself and there would indeed be some impact, but the government is also well aware of that and steps would be taken.

"I remain optimistic about India, principally because of entrepreneurial energy that I see in the country. FDI is on a high and it is rising. I have a lot of people who say they are very keen to invest and I am sure the FDI levels would rise significantly, going ahead."

He further said Prime Minister Narendra Modi has a tremendous liking among the business community and what he should do is to call top 100 industrialists to his room and tell them to invest in the country.

"Ease of doing business is already a major agenda for the government, but still there are some issues that remain pending and hopefully, they would be addressed in the upcoming Budget," he added.

Cisco's John Chambers said he also remains optimistic about robust growth in India.

"A million new jobs per month is very much doable in the country. There will be a new generation of start-ups. Cisco is doubling down again in India.

"India should not miss the chance to tap its growth opportunities and it should ideally lead the fourth industrial revolution," he added.

Foreseeing a huge potential for start-ups in India, Jaitley also said the freedom from the government is a must and the first condition for them is to prosper.

"As far as the conventional economy is concerned, the results (of government initiatives) will surely show up." On new IT start-up companies, he said they should be allowed to grow uninterrupted. "I personally feel why Indian IT in a natural course grew earlier was because there were no laws regulating it," he said, recalling the robust IT sector bloom that India saw in 1980s and 1990s.

Noting that today things have changed, Jaitley said for the recent start-up event, "we got requests far exceeding the number of participants we had planned. There is a huge potential for India. One of the first conditions that is required is freedom from the state".

"There should not be any intervention from the central or state governments. We need to create an environment for making capital available to them. States have a big role. The start-up campaign is one campaign.

"The other campaign that is going to be implemented in the next few months is extending support to the deprived sections of society to turn entrepreneurs," he added.

Mittal noted that India could not create any Google, Facebook or Cisco although China could do so by blocking a large number of foreign companies.

"But Indian entrepreneurs have found another way and now they are creating OyoRooms on the line of BnB while Ola is fighting Uber," he added.

"It is a year of opportunity and challenges... ," Jaitley said.

Chambers said 2016 would be a year when India will break its base. Mittal also said 2016 would a year of India and Roubini agreed provided it takes full advantage of the opportunities presented before it.

Andhra Pradesh Chief Minister N Chandrababu Naidu, who was in the audience, said his state was ready to contribute funds towards the national digitisation programme and promised full support on all fronts, including broadband.