Speaking to CNBC-TV18's Aakansha Sethi, Takru says that if one buys more goods, then manufacturing gets a boost along with all the collateral benefits. It will promote people involved in manufacturing, he adds.
Below is the verbatim transcript of Rajiv Takru's interview on CNBC-TV18
Q: The finance minister has announced the scheme for more capital infusion in banks above and beyond what was in the Budget. How much are you going to allocate to banks in this fiscal for capital infusion above Rs 14,000 crore?
A: The announcement is actually based on need. We have a fair idea of the items and the sectors where demand is a little sluggish. This is based on hard data and not on speculation, emotions, it is based on tax collections of the government excise collections and so on.
So, we exactly know the items and have picked up the ones that pertain to the festival season things like white goods, manufacturing sector related items.
It appeared that there was a need to stimulate demand there and consequently this was discussed between the finance minister and the RBI governor.
We felt that the sector requires a little push, a little encouragement and because there is demand in the market due to the festival season, so if we could make things a bit easier for the people, it would help.
It has a double effect, one, the consumer gets positively affected. Secondly, the sector itself, which must be suffering because of sluggish demand, gets a boost. If you buy more such goods then manufacturing gets a boost and then all the collateral benefits of that, all the people who are involved in manufacturing get a boost.
Q: While it is a great idea in theory nobody denies it. The question that is being raised is that in a year when you have fiscal constraints how much beyond Rs 14,000 crore can you allocate to banks or is it going to be just that Rs 14,000 crore?
A: This is over and above Rs 14000 crore. I don't think anybody needs to worry about where the government is getting its money from. The government has the money to put it into the scheme and this is useful because whatever money you give to the banks, they will leverage.
Q: How much more above Rs 14000 crore?
A: I think you will have to wait for that for a couple of days but the leveraging is normally in the ratio of 1:10.
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