FFC will do balancing act in allotting resources: FM
Jaitley backs 15th Finance Commission’s terms of reference
NEW DELHI: Finance minister Arun Jaitley on Friday defended the terms of reference (TOR) of the Fifteenth Finance Commission (FFC) and said the body headed by NK Singh will do a “balancing act” while allocating resources to states, keeping in mind both their size by population and progress made in population control.
Jaitley’s comments follow protests by many states, especially in the south, over the FFC’S mandate to use 2011 census data rather than the 1971 one for resource allocation.
The southern states, as well as Odisha and Punjab, have reduced population growth rates in recent decades while those of most northern states such as Bihar and Uttar Pradesh have remained high. Southern states allege that if the FFC uses the 2011 census data, more resources will be transferred to northern states, penalizing states that have succeeded in controlling population.
“If the economically less affluent are provided less, then the poor in India will remain poor because they will be provided less resources and the economically more progressive will be provided more resources. Obviously, that can’t be the intention of any government in power. So these Finance Commission terms have been framed with great sense of responsibility keeping the balance in mind,” Jaitley told the Lok Sabha, answering questions put by Congress member from Kerala, Shashi Tharoor.
Jaitley said the 14th Finance Commission had the mandate to use only 1971 population data, but took into account data of both 1971 and 2011, assigning 17.5% and 10% weights respectively.
“The 14th Finance Commission did a balancing act. I am sure the constitutional authority will continue to do a balancing act,” Jaitley said.
Rejecting Tharoor’s point that Lok Sabha representation has also been frozen till 2026 based on 1971 population levels, Jaitley said the two can not be compared as one refers to preserving the representation of people while the other allocates resources to states.
Replying to a question on the merger of Dena Bank and Vijaya Bank with Bank of Baroda, the finance minister said there would be no loss of jobs due to the merger.
Jaitley said the move would in fact create a bigger entity like State Bank of India (SBI) and the cost of lending could also become cheaper.
Replying to another supplementary question, Jaitley said the curve of NPAS would go down and that the Insolvency and Bankruptcy Code has helped in bringing back around ₹3 lakh crore into the system.
He said SBI and other staterun banks have been making operational profits. They incurred losses due to provisioning for NPAS.
With regard to recapitalization of state-run banks, Jaitley said ₹51,533 crore had been infused into them in the current financial year till December 31.
“In the budget estimates of FY 2018-19, ₹65,000 crore have been allocated for recapitalization of state-run banks and an amount of ₹51,533 crore has been infused in state-run banks till December 31, 2018,” he said.
The finance minister said in recent past, ₹90,000 crore were allocated in the Union Budget and infused in various state-run banks by the government during financial year 2017-18.
Jaitley told the Lok Sabha that Punjab National Bank (PNB) did not engage in any misappropriation of pension and gratuity funds in the past and no amount was taken from the trusts’ account.
“PNB has informed that there is no misappropriation of funds, and that the pension fund and gratuity fund trusts are separate entities and the bank is not authorised to operate the trusts’ accounts or transfer any amount from the trust,” Jaitley said.
The bank has further said adequate funds for pension and gratuity are maintained as per the actuarial valuation report without any exception, that the same are in strict compliance of accounting standards, he added. MUMBAI: Primary bond offerings from Indian issuers fell to a nearly 10-year-low in 2018 with several Indian corporates shelving fundraising plans amid rising US interest rates and an uncertain investment environment at home.
According to data compiled by Thomson Reuters, proceeds from bond sales declined by 30% in 2018 to $47.2 billion after surging to a record $67.4 billion a year before.
The Tata group topped Indian conglomerates with Tata Capital Financial Services raising $3.1 billion in non-convertible debentures—the biggest bond offering from an Indian issuer in 2018.
Another top seller was ABJA Investment, a wholly-owned subsidiary of Tata Steel Ltd, which raised $1.3 billion from its dollar dual-tranche bond offering.
Indian companies tapping the offshore dollar-denominated bond markets raised $6.3 billion, down 51.7% from a year ago as the number of issuances more than halved.
Rupee-denominated bond proceeds clocked ₹3 lakh crore in 2018, down 19.9%, making it the lowest since 2015. In 2017, rupeedenominated bond issuances witnessed total fundraising of ₹3.7 lakh crore, a record.
Among sectors, the financial services industry accounted for 84.7% of the market share at $40 billion, registering an 11.9% decline in proceeds compared to a year before at $45.4 billion. In the rupee bond segment, the financial sector accounted for 81.4% of the market with ₹2.4 lakh crore, down 6.5%.
Issuance from the government and government agencies reached $2.3 billion, down 18.5% in proceeds from 2017, and accounted for 4.8% of the market share. The energy and power sector/s/ followed close behind and rounded out the top three sectors with a 4% market share.
Underwriting fees from primary bond offerings by Indian issuers totaled $130.5 million, down 40% from 2017, according to the report.
Axis Bank led the fee rankings for India primary bond issuance with $25.4 million in estimated fee revenue, down 33.7% from a year ago, accounting for 19.4% of the wallet share in 2018. The bank advised bond sales worth $10.7 billion in 2018.