Ignoring credence to what appears in the media about the Finance Ministry and Reserve Bank of India, Finance Minister Arun Jaitley on Monday said there is an institutional and very mature relationship between the two institutions. “As far as the Finance Ministry and RBI are concerned, there is an institutional relationship between the two. It is a very mature relationship. We, at the highest level at the two institutions, have discussion and each other’s views are considered between us,” Jaitley said, while speaking at an event organised by Indian Women’s Press Corps here.
While there is an widespread speculation about a possible second term for RBI Governor Raghuram Rajan, senior BJP leader Subramanian Swamy last week had ‘boldly’ suggested that Rajan should be removed and accused him of being responsible for ‘unemployment and collapse’ of industrial activity.
Rajan’s current three-year term as RBI head is ending this September. Indicating his interest in a second term, Rajan on May 13 had said he enjoyed every moment of the job, saying that there is still ‘more to do’, despite calls from some sections of the ruling BJP against any extension for him.
To a question whether Rajan is getting an extension, the Finance Minister quipped these are not issues which we discuss through the media. Besides the RBI Governor’s second term, Jaitley also spoke his mind on a wide range of other issues such as banks’ bad loan, divestment, goods and service tax (GST), bringing back Mallya to India, tax treaty with Singapore etc.
As far as bad loan or non performing assets (NPAs) is concerned, the Finance Minister had some reassuring words on NPAs when he said bad loans have reached the peak and expressed confidence that situation will get better with improvement in six sectors under stress. “I am sure that the growth will accelerate in the coming month against the backdrop of a projected good monsoon and consequent push to rural demand and a revival in private investment.
Jaitley is also optimistic that the Government’s consistent reforms agenda will also add to the growth momentum. “With the provisioning in the last few quarters taking place, at least transparency has come about. You cannot conceal the balancesheets of the banks. So, whatever was the actual position, it has peaked and all the steps (are) taken as far as different sectors are concerned,” he said.
On growth, Jaitley said factors like high public spending, FDI and improved urban demand have led to a GDP growth of 7.5 per cent in a world which is moving at 3 per cent. Going forward, he said, “If you look down the tunnel, a moderate level of oil price range-bound, monsoon and the consequential impact of reduced sectoral stress in steel, highways, sugar, and power and a plausible impact over the next few quarters over balancesheet of banks, these could be a positive and therefore can add to your present growth.”
As for disinvestment, Jaitley said its scope has been expanded from routine divestment to buyback and strategic sale. “The DIPAM has started this process. When the markets are low, you can always have a buyback. Because a lot of these units are very cash-rich and they can afford a buyback. Thereafter, you can have a strategic sale,” he said.
On GST, Jaitley is also confident of support from regional parties and hoped that the GST Bill will be approved in the monsoon session of Parliament.
On bringing back Mallya to India, the Finance Minister, however, said that investigative agencies would make every endeavour to bring him back to face law. last week, Britain told India that it cannot deport Mallya, who is facing money laundering charges as well as recovery of the Rs9,400 crore of loans to his defunct Kingfisher Airlines in the country, but could consider an extradition request for him.
“There are two separate procedures, one is deportation another is extradition. UK in deportation has conventionally never been helpful. They always take a plea that once somebody has entered with legitimate travel documents, they don’t deport that person. Then they expect you to go through the extradition process which is as per the law. The requirement is once you file a chargesheet in court, you start the extradition process and that the due process of law which taken forward. I think the agencies will make every endeavour under the options available,” he said.