Centre Committed To Bank Reforms And Privatisation, Says Nirmala Sitharaman

Centre Committed To Bank Reforms And Privatisation, Says Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Monay said that the government is committed to its intent to divest state-owned enterprises and push banking sector reforms. She also said that windfall tax on petroleum products, crude oil is not ad hoc, but being charged in regular consultation with the industry.

Addressing an event organised online at at Ashwamedh – Elara India Dialogue 2022, Sitharaman said it is unfair to call windfall tax as ad hoc, because the tax rate and its resetting are done in complete consultations with the industry. “The very idea was implemented after taking the industry into full confidence,” she said at a function organised by Elara Capital.

“When we suggested the idea we had told the industry that the tax rate will be reviewed every 15 days and we have been doing that,” Sitharaman said.

On divestment, she said that the government will go ahead with the banking sector reforms. The initial public offering (IPO) of Life Insurance Corporation of India has shown that the government is committed to the process of disinvestment, she said.  

The Centre had proposed privatisation of two public sector banks along with one general insurance company in the 2021-22 Union Budget. It has also unveiled a public sector enterprise policy aimed at reducing the presence of government in running businesses.

The government is working on a path to boost economic growth over the next 25 years, along with the central bank, Sitharaman said. India’s economic recovery is firm and on a good foundation, she emphasised.

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On bond inclusion in global index, the minister said many things have changed since the pandemic, especially in terms of inflows.Mostly, fund inflows have not been as expected, which of course is mostly due to the pandemic, she said, adding, “However, I expect a logical conclusion to this sooner.”

On whether the government is planning to increase the tax-GDP ratio which is only about 10 now, she said, widening tax base is an issue that needs a lot of consultations and analysis, though the increasing number of income tax filings gives me some clue on the possibility of widening it. “But we want to ensure that as and when it is done it looks reasonable and tech-driven,” she said.

On the next 25 years of reforms and growth, she said by the time India celebrates the first centenary of independence, “We will have to reset lots of things so that we become a developed nation by then. And the biggest tools for such a reset are digitisation, education, and building more and more infrastructure so that our hinterland doesn’t remain unconnected to the cities.”

The finance minister has also underlined the need for more caution and concerted efforts at sustaining growth as the world is facing lots of newer challenges even as it comes out of the pandemic.