“We are trying to consolidate some of the banks, which may otherwise find it difficult in a competitive environment... in one case we are thinking of reducing the government stake to 49 per cent in IDBI Bank,” the minister said here at the Economist
Jaitley added that in a consolidated manner they would probably continue to be in the present state. “But I think India still realises that there has been a very important role that some of these banks have performed,” he said. Asked why privatisation in financial space is not taking place, he said, “In order to reach a particular level of reform you have to evolve into that stage of public opinion... in funding large part of social sector in India, public sector banks, despite competition had a far larger contribution.”
According to Jaitley, the public or political opinion is still to converge to a point where one can start thinking in terms of any form of privatisation in the sector. “Some selective reforms do take place, for instance, we have announced a policy that government holdings (in banks) to be brought down to 52 per cent,” he added. On stressed assets, the finance minister said the Centre has initiated a large number of steps to reduce NPAs.
“There is not a single sector that we have left out in terms of resolving issues... if you were to ask me after the passage and may be possible implementation of GST, while that process is on what would be my priority at the moment, it is certainly the health of public sector banks,” he said. He also hinted that the government is ready to provide an additional capital over the Rs 25,000-crore amount announced in the Budget.
“This is over and above whatever assistance from the Budget we are giving towards the capitalisation of banks,” he said. Meanwhile, rejecting criticism of GDP numbers, Jaitley said the CSO is a professional organisation and its data is accepted by leading international oraganisations like the IMF. “We have a convention in India and a practice, which the CSO has followed throughout. I don’t think the professionalism of the CSO has even been called into question.
“They are a very responsible and professional organisation. They revise their methodologies and at the end of the day various international institutions most importantly the IMF accepts their data,” he said. Jaitley was responding to a question on a report in an international publication in which it was suggested that India’s growth was 4.3 per cent if calculated on old methodology.
Will India now allow multi-brand retail FDI? ‘Not yet,’ says Nirmala
The government on Wednesday said it will not be possible to allow FDI in multi-brand retail trading in India unless small traders and farmers are “empowered” and can face market competition. “At the moment, India can create several Walmarts of its own. We welcome anybody...but if some way this dialogue is moving towards, why not (FDI in) multi-brand retail in India? My answer is, ‘not yet’,” Commerce and Industry Minister Nirmala Sitharaman said at The Economist India Summit 2016 here.
She was replying to the question as why to India is not permitting FDI in retail trade. Explaining the “thinking behind” this, the minister said there is an issue of last mile connectivity, adequate infrastructure and financial inclusion of those segments such farmers and small traders. These things were absent all the while but now this government is making every effort to bridge these gaps, she said.
“If only that happens, and if they (farmers and small traders) are adequately empowered to tackle the market themselves... But today we are trying to bridge those gaps. We are still not ready to have them and face a competition where there would not be a level playing field,” Sitharaman added.
Although the current foreign direct investment (FDI) policy permits foreign players to hold 51 per cent stake in an Indian company, BJP had opposed foreign investment in this segment in its election manifesto. The last government had cleared UK-based Tesco’s proposal in multi-brand retail. On a question that there are no big supermarkets in India, Sitharaman said: “Our supermarkets are friendlier than the faceless supermarkets I have been in the West.”