‘Air India divestment expected to be closed in first qtr of FY22’
“CREATING A SINGLE LEGISLATION DOESN’T MEAN WE ARE FIDDLING WITH THE REGULATORY REGIME” “THE SINGLE CODE FOR BOND MARKETS IS EXPECTED TO ADDRESS DUPLICATION. FINAL REGULATION ON THIS WILL TAKE SOME TIME"
The Centre is taking up some of the major disinvestment proceeds on priority, particularly of Air India and Life Insurance Corporation (LIC) of India. In an interview with Shrimi Choudhary, Economic Affairs Secretary TARUN BAJAJ says the extra borrowing at the end of the current fiscal year is on account of low revenue and new fertiliser subsidy grant of ~65,000 crore. Edited excerpts:
Why did you keep the disinvestment target for 2021-22 (FY22) lower, even when you are confident about listing LIC, selling Air India, Bharat Petroleum Corporation, and IDBI Bank in the next fiscal year? Sometimes, transactions do not take place the way we want them to. That is why we kept the target lower than the current fiscal year. For instance, the public offering of State Bank of India took more than a year to get through. However, we are hopeful and may surpass the budgetary target if we get through the deals. We have taken up some big-bang disinvestments, particularly Air India and LIC on priority. Air India is expected to be closed in the first quarter of FY22. As for listing
LIC, we are proceeding with the legislative amendments in the Budget session itself. Besides, there are issues like valuation and accounting, which need to be addressed.
The Budget has proposed a securities markets code. How does it benefit the bond markets? Will it lead to a turf of war between the Reserve Bank of India and the Securities and Exchange Board of India (Sebi), assuming government securities and treasury bills will come under Sebi? Creating a single legislation doesn’t mean we are fiddling with the regulatory regime. The single code for bond markets
is expected to address duplication. The final regulation on this will take some time.
We will set up an expert committee to review it. This will also seek suggestions from other stakeholders. The move was welcomed by the market players: they say it will bring in greater efficiency. Moreover, the new requirements, if any, will be added to the code. From the current perspective, any legislation which is 30-40 years old needs to be revisited.
Why did you change your stance on borrowing for this fiscal year?
This year, the borrowing was much higher than last year (2018-19). There was expectation that the government would borrow another ~3-4 trillion this fiscal year, over and above the increased target of ~12 trillion. Our assessment showed a gap of ~80,000 crore. We thought we’d be able to meet this through raised targets. But we decided to have a new fertiliser subsidy grant of ~65,000 crore.
Once I realised some more money would be required, we decided to go for extra borrowing. Next year I am not anticipating any increase in rates. Since the deficit is pegged at 6.8 per cent for FY22, I don’t think we will go for extra borrowing over the budgeted target of ~12 trillion.
Why was the Food Corporation of India loan above the line in these trying times? We have come out with a very clean Budget, right from the speech and annexure to all the budgetary figures. Since the ultimate liability rests with the government, we decided to bring it above the line rather than keeping it below the line.
What is your take on growth?
Growth in the coming year is expected to be around 10 per cent. However, the Budget has taken a cautious approach on gross domestic product numbers and estimates 14.2 per cent. That’s why it is close, but lower than the Economic Survey estimations.
Why are you placing conditions on states going for higher borrowing?
The Budget has reflected that the business-as-usual approach is not the right one. We have been doing reforms, including a new One Ration, One Card for migrants and power reforms to tackle monopoly. I am not saying we should pay money to the central government, but I would expect states to spend judiciously.
How will you ensure investor rights through the investor charter?
This will be a one-of-its-kind charter, which will have all the information on each of the products — be it mutual funds or insurance — investors are putting their money into. Each regulator will have this investor charter, including Sebi, Insurance Regulatory and Development Authority of India, and Pension Fund Regulatory and Development Authority. The aim is to bring greater transparency and curb misselling of products. It will feature commissions, price, terms, and conditions. We are planning to make it a one-pager, helping investors make an informed choice before investing in any of the products.