Though in terms of numbers MSME cos may dominate, this is not true in relation to output: C Rangarajan on Corp tax cut

Hyderabad, Feb 8 (KNN) Former Reserve Bank of India (RBI) governor C Rangarajan has said that though in terms of numbers MSME companies may dominate, this is not true in relation to output.

He was referring to the cut in corporate tax from 30 per cent to 25 per cent in the Union Budget on February 1, 2017.

While speaking on the sidelines of a panel discussion on 'Union Budget-2017' on Monday, he said there was much expectation in relation to corporate tax.

According to him, the budget acted prudently to keep the fiscal deficit target at 3.2% of the GDP in 2017-18, which is lower than 3.5% during the current fiscal and slightly higher than 3% which was indicated earlier.

Rangarajan also said that real estate is one of the major sectors that will continue to reel under the heat of demonetisation in the near-term.

"The adverse impact of demonetisation will wear off as currency availability approaches normalcy. But some effects will not go away. Sectors like real estate will have to rethink how to run their businesses," the former RBI head said.

On non-performing assets (NPAs), he said banks have to control NPAs in their balance sheets.

"The banking system is undoubtedly under stress. How to resolve that particular problem is only through capitalisation...I think that the general scene is that the capital provided is not adequate...I think this cannot let the banks escape the responsibility for the non-performing assets that they have in their asset portfolio," he said.