Allaying fears over the tight fiscal front with the deficit having already touched 56 per cent of the full’s target by the first quarter itself, Finance Minister Arun Jaitley on Sunday said that the level would normalise by the coming month - September.
Replying to questions by The Pioneer over the tight fiscal situation as well as the lack of any roadmap on disinvestment in the recent Budget, Jaitley said: “last year’s rollovers, poor economic growth, poor revenue collections and expenditure has caused the level to rise …..but I feel that by September it will normalize.”
He also said that though the there were no announcements in the Budget on the disinvestment roadmap but the DoD was preparing one. “The Department of Disinvestment (DoD) has already appointed advisors in some cases and the follow-up actions on those PSUs on some part of equity is to be divested is already progressing as scheduled…,” he added.
Jaitley further said: “We have certainly given the figure involved in that and the DoD is working on it.” Disinvestment process has been hanging now even as Rs 60,000 crore of target has been set and the proceeds from the disinvestment are seen as essentials in the Government efforts to meet the fiscal deficit level targeted at an ambitious 4.1 per cent for 2014-15 particulary in the backdrop of the sub-5 per cent growth. Jailtey was speaking after RBI boards meeting.
In the Budget, the Government has estimated to collect Rs 43,425 crore from selling stake in PSUs and another Rs 15,000 crore from sale of residual stake in the erstwhile Government companies. Of the disinvestment target of Rs 40,000 crore in 2013-14, the Government had mobilised Rs 15,820 crore. In 2012-13, of the Rs 30,000 crore target, Rs 23,957 crore was raised. In 2011-12, only Rs 13,894 crore was raised of the Rs 40,000 crore target.
The process for disinvestment in ONGC and NHPC, among others, has already been earmarked. Also, the Government is looking to sell 5 per cent stake in SAIl and 10 per cent each in RINl and HAl in the current fiscal besides an outright sale of Tyre Corporation of India.
The disinvestment of 10 per cent through an initial public offer (IPO) in Rashtriya Ispat Nigam ltd (RINl) is tentatively scheduled for completion in the current financial year. The DoD is at present engaged in outright sale of only one CPSE, Tyre Corporation of India (TCIl). The Cabinet has also approved sale of residual government equity in Hindustan Zinc and Balco.
Regarding RBI need to cut interest rates to boost growth, the Finance Minister said that he had already made his mind clear and hoped the central bank will take decision after taking into account various factors.
The Reserve Bank of India (RBI) had maintained status-quo on interest rate in its two credit policies announced after the formation of the new Government in May. “I, on the same evening (June 3 and August 5) already issued a clear statement and I think that’s very clear. This an issue that the RBI decides and I am sure they factor in various circumstances,” said Jaitley.
After the August 5 RBI’s monetary policy, Jaitley had said inflation was moderating and going forward “the RBI should examine the liquidity situation, inflation and growth in setting policy rates”.
On June credit policy, he had said the Government was “concerned with restarting” the investment cycle and moving towards higher growth and job creation.
Meanwhile, RBI Governor Raghuram Rajan said “as of now, we think the policy (to contain retail inflation) is on target. We (RBI’s policy measures) are contingent on the data coming in.”
The policy regime, Jaitley said in his address to RBI board, was being geared to attain higher growth, lower inflation and sustainable external balance in the backdrop of sub-five per cent growth in last two fiscals.
RBI Governor Rajan stated that there was no differeneces between the RBI and Financne Ministry regarding the financial inclusion policy of the former.
Regarding the Syndicate Bank bribery scandal, Jaitley said Government is open to putting in place stringent steps to check repeat of criminal cases like the alleged Syndicate Bank bribery scandal.
“I think banks already know what they are to do. If some stringent steps required, certainly it will be done,” Jaitley said when asked if some fresh guidelines or strengthening of corporate governance are required to check repeat of alleged criminal cases Syndicate Bank scandal.
“But what was allegedly happening (in Syndicate Bank) was certainly in contravention of the legal framework, it was a crime. We don’t need a fresh policy to decide that,” he said here after addressing the Central Board of the Reserve Bank.
Terming this as a matter of criminal law investigation, Jaitley said it is for the criminal law agencies like CBI to find out the entire evidence. He further said the Finance Ministry on its part suspended the Chairman following his arrest by the CBI.
“As far as the Department of Financial Services is concerned, it has put the process of law in motion. The actions which are required in terms of suspending those suspected of delinquency, it has already been done,” he said.