Recapitalisation of banks: Step 1 to pull economy out of doldrums

On October 24, the central government administered a major shot in the arm of ailing public sector banks by announcing a Rs 2.11 lakh crore bank recapitalisation plan. The package included Rs 1.35 lakh crore via bank recapitalisation bonds to be issued to these banks and Rs 76,000 crore from budgetary support and market loans.

With the economy reeling under the twin effects of demonetisation and the Goods and Services Tax (GST), dragging down growth to 5.7 per cent in the first quarter, all eyes were on the government and how it would tackle this. Apart from banks, the Centre has also announced a road building programme to build 83,000 kilometres of highways with an investment of nearly Rs 7 lakh crore over the next five years. This is expected to create 142 million man days by 2022.