‘Govt giving sector-specific solutions to fight slowdown’
MUMBAI: Union finance minister Nirmala Sitharaman on Thursday said the government is giving sector-specific solutions to fight the slowdown in economic growth. She, however, parried a specific question on whether the government accepts if the country is in the midst of an economic slowdown.
India’s gross domestic product (GDP) expansion slowed to a sixyear low of 5% in the April-June quarter. This has led to a rash of downward revisions in expectations, including from the Reserve Bank of India (RBI) which now expects GDP growth to come down to 6.1% in fiscal 2019-20.
The government has taken a slew of measures, including a massive cut in corporate taxes to revive economic growth, even at the cost of sacrificing revenues.
Hinting at other measures like steps to improve exports, easing credit, making more money available by early repayments to vendors and front-loading of banks recapitalization, Sitharaman said the government has been working on sector-specific measures. “We are giving relief to all sectors who need help,” Sitharaman said.
Her comments came hours after global ratings agency Moody’s Investors Service sharply cut India’s FY20 GDP growth forecast for India to 5.8%.
The finance minister, who faced angry depositors of scamhit Punjab and Maharashtra co-operative Bank Ltd (PMC) on Thursday, also announced setting up of a panel to recommend legislative changes to ensure better governance at co-operative banks. If necessary, the government will amend the laws governing co-operative banks in the winter session of Parliament, she said at a press conference.
After a ₹4,500-crore scam came to light at PMC Bank, RBI, which put curbs on withdrawal of funds from the bank, had also said it would examine if the regulatory framework needed tweaks.
Sitharaman said a committee of secretaries of economic affairs and financial services, rural affairs and urban development ministries and a deputy governor of RBI would be formed.
Through this committee, the government intends to “understand and take necessary legislative steps to prevent such things from happening in the future, empower the regulator better,” she said.
Stating that she is not presuming that there are shortcomings in the present laws, the minister said the panel will study the issue and “if necessary, in the forthcoming winter session of Parliament itself, we will be bringing in any amendments which may be necessitated.” Concerns exist about co-operative banks often becoming fiefdoms of politicians or other influential persons, giving a go-by to banking regulations and leading to soaring of bad loans and putting in peril depositors’ money. Many co-operative banks have failed in the last two decades, and PMC Bank is among the largest such banks.
After the scam came to light last month, RBI capped withdrawals from the bank at ₹1,000 and later increased it to ₹25,000 following protests by depositors.
The bank had allegedly lent over 70% of its ₹9,000 crore in loans to near-bankrupt realty player Housing Development and Infrastructure Ltd.
Irate depositors gathered outside the Bharatiya Janata Party’s (BJP’s) office in south Mumbai ahead of Sitharaman’s press conference. When she arrived, they shouted slogans, demanding that their money should be returned to them. Sitharaman and a few of the depositors went inside and had a brief conversation.
“I heard them about their problems and explained to them that multi-state co-operative banks...are regulated by RBI,” she later said, adding that the government’s role is limited. But she assured that she will speak to RBI governor Shaktikanta Das and convey the “urgency and distress” of the depositors.
GOVT WILL SET UP A PANEL TO RECOMMEND LEGISLATIVE CHANGES TO ENSURE BETTER GOVERNANCE AT CO-OPERATIVE BANKS