‘Happy to see economic recovery’
NEW DELHI : Days after announcing the mechanics of the bad bank that will remove ₹2 lakh crore of bad debt from the books of banks, and weeks after announcing a framework that will make more people eligible for loans and scrapping the retrograde retrospective tax, finance minister Nirmala Sitharaman discussed these, and the state of the economy, in an extensive interview. the fee becomes higher with time; so the sooner you sell an asset, the better it is.
Are you confident this will work?
Yes, because this entire mechanism was driven by the banks; many of these bigticket exposures are through consortia; unless all banks agree, no resolution is possible. Now because it’s through IBA, it’s for them to constantly keep moving towards better resolution, towards consensus. in the past year, and that is evident in the way UPI (United Payments Interface) has been growing – we are extending it to overseas Indians now. The AA framework also needs a nudge. This is a great leap forward.
Vodafone is also a shareholder in Vodafone Idea, which is a beneficiary of the telecom package your government announced recently. Do you think enough has been done for the sector?
Definitely. The way in which the package has come – it also brings in reforms. It removes a lot of anomalies, and constraints. Business has been given space to breathe.
At last week’s GST Council meeting, it was decided the timing for moving fuel under GST was not appropriate. When will it be?
To a large extent, that depends on states feeling comfortable. States feel that they have very few items on which they can have a consideration to increase or decrease tax. Tax on fuel, liquor are in their hands. They feel that at this time they need to have revenues, and reach a level where they can let it go. I wouldn’t want to push states at a time like this. A post-corona situation is not the kind of circumstance in which any state will have a comfort level (with doing this). At this stage, I am also not holding back any money that is due to them; and we are also ensuring they can borrow more.
In the 43rd council meeting in October 2020 it was decided that the borrowing undertaken to meet the compensation can only be paid from cess, so it needs to be extended. Those amounts borrowed last year, and the amount we have to borrow this year despite higher revenues and paying up the dues -- just to pay back the borrowed amount, we need to continue cess till March 2026. By law, compensation can be paid from cess at 14% for five years. This is being duly complied with. Beyond 2022, compensation need not be given, but cess has already been extended for paying the loan already taken till 2026. Where is the possibility of extending compensation?
So, there will be a shortfall in compensation this year also?
There will be a little shortfall in compensation, and this year also we will have to borrow.
Would the government consider cutting excise to bring down fuel prices?
The only very strong case for me to put forward – excise levied by the Centre is not value added; it is fixed. If it were value added, each time the price increases, it goes up. And prices are going up.
So, I have to balance this with what’s happening in the states (Editor’s Note: Tax on fuel levied by the state is value added).
It’s also a question of time. I won’t be able to comment on it beyond that.