homeeconomy NewsBudget 2020: Govt to offload stake in IDBI Bank but LIC will take its call, says Finance Secy Rajiv Kumar
Budget 2020: Govt to offload stake in IDBI Bank but LIC will take its call, says Finance Secy Rajiv Kumar
In an interview with CNBC-TV18's Krishnamurthy Subramaniam, Chief Economic Adviser and Rajiv Kumar, Finance Secretary gave their take on Nirmala Sitharaman's Union Budget and their outlook on the road ahead.
Krishnamurthy Subramaniam, Chief Economic Adviser and Finance Secretary Rajiv Kumar discussed in detail certain aspects of the Union Budget 2020 in an interview with CNBC-TV18.
When asked about intent of the government to offload its stake in IDBI Bank and that of LIC offloading its stake in the bank, Kumar said, “The announcement was about the government offloading its stake. Let us go through this process, which is the government’s decision of divesting its own shares and thereafter, LIC will take its call. That process will be worked out in consultation with law and what changes it requires and other things.
When asked about further consolidation of the banks he said, “You have already consolidated banks and they have come down from 27 to 12 and what has not been noticed - one has done consolidation in the space of the rural banks also. Regional Rural Banks (RRBs) were also 56 and that is also getting consolidated. So, as of now 12 is the right number and the process is well on its course and there are signs of efficiency gains in the Bank of Baroda. We are expecting around close to Rs 1,000 crore annually as efficiency gains. So everything is on course with regards to the 8 mergers which we announced last time and they are well on their way to become robust banks. Their asset quality has also improved, provision coverage ratios are at all-time high, and recoveries are at all-time high and their capital adequacies is much higher than what is required.”
When asked why there was no recapitalisation allocation in the budget Kumar said, “They are robust enough now and they also must stand on their own feet, which they are capable. State Bank of India results were robust, so at any time they are now ready to raise from the markets, monetise and they also have huge values in the associate companies which they have.”
When asked about LIC IPO, he said, "We will come to you very soon on that because we have to go through some processes that includes consultation with the law department and come back with a credible time line very soon."
Talking about scheme of network products Krishnamurthy Subramaniam said, “The economic survey has laid out a clear blue print for which are those six sectors in network products where the potential is maximum and we will have to wait for now, the details to be worked out because in terms of the timeline these ideas are actually came together a few weeks before. The articulation of the vision has been made and so going forward the rest of the details will be worked out.”
On the fillip for rural consumption Subramaniam said, “If you notice the first of the three themes that the finance minister emphasized on, the first was agriculture, rural development and where collectively she talked about how Rs 2.83 lakh crore has been allocated, so that argument about the bank for the buck been greatest actually in the rural sector as indeed being heeded too. Above and beyond that there is also some of the concessions on the direct taxes.”
Talking about allocations to the MGNREGS or PM-KISAN, he said, “Many of these are based on the actual demand and so when you compare with actuals which is indeed based on the demand the projection is based on the increase in this demand and what we want to actually push for greater consumption. So when you take into account the fact that there is actually money that has been allocated where possibly the consumption effect will be the greatest together with some of the on the direct tax as well. I do want to point out that for me what is far more important actually on the direct tax side is the bill of rights of a tax payer."
"I would read it as a very big move in that direction in streamlining taxes which also overtime should have an impact on compliance going forward as well," said Subramaniam.
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