Indian banks are now profitable after being on the verge of collapse about eight to ten years ago, he said, adding that the robust Indian financial system has increased responsibilities as the country is moving with new capabilities.

“Today, the need of the hour is that the benefits of the strength in India’s banking system should reach the maximum number of people,” he said addressing a post-budget webinar on the financial sector, the tenth of a 12-series programme between February 23 and March 11.

PM explained that the post-budget webinars, an annual practice since 2021, help the government in inculcating “collective ownership” and rope in all stakeholders in the spirit of “equal partnership”. So far, he has addressed seminars on green growth, agriculture and cooperatives, harnessing youth power, reaching the last mile, ease of living, urban development, tourism in mission mode, infrastructure and health.

Participating in the Budget discussion in the Rajya Sabha on February 10, Union finance minister Nirmala assured the house that banks and financial systems are now robust after the Modi government put an end to the ‘dial-a-loan’ scheme prevalent before May 2014. The government also launched an Asset Quality Review (AQR) on April 2015 to unearth hidden non-performing assets (NPAs) to strengthen the Indian banking sector dominated by public sector banks. As a result, 12 PSBs declared a net profit of ₹25,685 crore in the second quarter of FY23 and a total of ₹40,991 crore in the first half of FY23, a year-on-year increase of 50% and 31.6%, respectively. The 2015 AQR led to a surge in non-performing assets (NPAs) of PSBs from ₹2.17 lakh crore on March 31, 2014, to ₹8.96 lakh crore on March 31, 2018, mainly due to indiscriminate lending.

Giving an example of the government’s support to the micro, small and medium enterprises (MSMEs), Modi asked the banking system to reach out to the maximum number of the sector. The government provided help to over 1.20 crore MSMEs during the pandemic period, he said.

“In this year’s budget, the MSME sector has also got additional collateral-free guaranteed credit of ₹2 lakh crore. Now, it is very important that our banks reach out to them and provide them adequate finance,” he added.

Referring to the government’s focus on financial inclusion through ‘JAM Trinity’ (Jan-Dhan accounts, Aadhaar identification and Mobile coverage) the Prime Minister stressed that crores of people were now part of the formal financial system and urged policy-makers, banks and the financial sector to “re-engineer” processes “to reduce the cost and increase the speed of credit” so that it reaches the small entrepreneurs quickly.

He said the government has helped millions of youth by giving Mudra loans worth over ₹20 lakh crore without a bank guarantee. For the first time, more than 40 lakh street vendors and small shopkeepers received help from banks through PM Swanidhi Yojana,

PM Modi also invited the private sector to invest at a matching pace with the government, highlighting the Budget 2023-24 raises the capital expenditure outlay to ₹10 lakh crore. “Today, I would also call upon the private sector of the country to increase their investment just like the government so that the country gets maximum benefit from it,” he said.

In her Budget speech, Sitharaman described capital investment “as driver of growth and jobs” and raised the outlay by 33% to ₹10 lakh crore. “The direct capital investment by the Centre is complemented by the provision made for creation of capital assets through Grants-in-Aid to States. The ‘Effective Capital Expenditure’ of the Centre is budgeted at ₹13.7 lakh crore, which will be 4.5% of GDP,” she said on February 1.

Speaking on the government’s policy of reducing tax rates to enhance revenue collection, PM Modi said the tax burden has significantly declined due to the introduction of the Goods and Services Tax (GST) in July 2017, and the reduction of personal and corporate income tax rates.

“In 2013-14 gross tax revenue was about ₹11 lakh crore which can rise to ₹33 lakh crore in 2023-24 [Budget Estimates], an increase of 200%,” he said.

He said the tax base has also increased as the number of individual tax returns jumped to 6.5 crore in 2020-21 as compared to 3.5 crore in 2013-14. “Paying tax is such a duty, which is directly related to nation building. The increase in the tax base is proof that people have faith in the government, and they believe that the tax paid is being spent for public good,” he said.