Generation of Fresh NPA’s has Nearly Stopped

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Economic Advisory Council to the Prime Minister (EAC-PM) Chairman Bibek Debroy on said that growth of fresh non-performing assets (NPAs) of public sector banks (PSBs) has almost stopped.

Bibek Debroy was participating in a discussion on Budget 2018-19 where he emphasized that it was possible to scrap income tax and other direct taxes and replace them with indirect taxes but indirect tax can never be progressive.

He said non-imposition of tax on farm income in India is the main cause of low income tax collection. He regretted that not all farm income should be taxed but tax could be imposed above certain threshold.

But observing the bad financial condition of farmers and their suicidal tendency in different states due to burden of loans on farmers, it is suggested not to touch this sensitive issue.

Mr. Debroy said that the fresh cases of NPA have virtually stopped and NPA’s cases remain not more than 3 lakh crore in India.

However, according to the recent record of RBI, bad loans of Public Sector Banks stood at Rs. 7.34 Lakh Crore by the end of second quarter of this financial year and larger part of it arose from corporate defaulters.

It is also noteworthy to mention that the gross NPA of all Scheduled Commercial Banks has marginally come down from 10% as on June, 2017 to 9.8% at the end of September, 2017.

To provide cushion to the ailing Public Sector Banks, Government has recapitalized with Rs.2.11 Lakh Crores.

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