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Subhash Garg: Sitharaman had pre-conceived notions about me, wanted me transferred from FinMin

NEW DELHI, Oct 31: Former Finance Secretary Subhash Chandra Garg has said Finance Minister Nirmala Sitharaman asked for and insisted on his transfer from the Ministry of Finance in June 2019, within a month of her taking over as the head of the ministry.

Not only that, in his latest blog post published on October 31, Garg also said that the Narendra Modi administration had eschewed the drive for bold economic reforms in favour of a populist turn.

Garg said: "Through this blogpost, I had wanted to convey what had kept me occupied in the past one year, and what I plan to do in the near future. While writing it, I realised that it would be incomplete without speaking about the end of my time in the Finance Ministry and the government.”

In his blog, Garg has made it clear that he did not wish to work in the government apart from the Ministry of Finance.

According to senior serving and a retired government official who have been associated with the Finance Ministry. They are of the view that Garg’s position in the Finance Ministry had become untenable and had nothing to do with Sitharaman. He was seen as someone who had soured relations between North Block and institutions like the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI).

In his blog, Garg has said that in terms of an economic agenda, "the situation, after elections 2019, unfortunately took a turn for worse."

"Reform agenda was acquiring tinge of being more short term and tinkering type. I had expected the Government to take the requisite bold reforms in first six months. However, this did not seem to be the case. While the real economic reform agenda seemed like getting relegated to a side-show, the non-economic priorities started assuming primary space," Garg said.

The former finance secretary said that while the government, after re-election, did talk about making India a $5 trillion economy, the reform agenda and the investment plan for attaining the goal of $10 trillion economy articulated in the Interim Budget 2019-20 got side-tracked and was virtually forgotten.

Garg said that towards the end of this time in the government, when he had been shifted to the Power Ministry, he had presented his views on economic reforms to the Prime Minister’s Office, and was told that his recommendations were circulated amongst the relevant departments.

Government knew about economic slowdown

Garg also said that at the time of presenting the 2019-20 interim budget, a few months before the general elections, the government was aware of the fact that the Indian economy had started slowing down.

"India’s growth in second half of 2018-19 was only around 6 percent. Capital investment was falling. The financial system, most significantly the public sector banks, which still have the dominant share of credit, were in a lot of bother," he said.

Garg said that the government’s revenue growth had become muted and targets for 2018-19 and 2019-20 were in the danger of being missed by a wide margin. The Make in India programme was moving at a snail’s pace with the competitiveness of Indian manufacturing not improving much and the country was further losing its low share in global exports, he noted.

On the reasons for his exit, Garg said, "Serious difference also developed on some key issues like economic capital framework of RBI, a package for dealing with problems of non-banks, resolution of non-banks, partial credit guarantee scheme, capitalisation of non-banks like IIFCL and other financial entities and the like.”

He said that compared to late Finance Minister Arun Jaitley, Sitharaman has a very different personality, knowledge endowment, skill-set and approach for economic policy issues and that it became quite apparent very early, that working with her was going to be quite difficult and it might not be conducive to undertaking necessary reforms for the attainment of the objective of building a $10 trillion economy of India.

Garg said Sitharaman came with some pre-conceived notions about him and did not seem comfortable working with him.

He wrote that he did not want to work in the government outside the Ministry of Finance, as that was the place where an officer got the widest possible view of the Indian economy.

"The budget was due to be presented on 5th July, within 35 days of her taking over as Finance Minister. Despite quite a few episodes of acrimony which had made the working environment unpleasant, I decided that I would do everything possible to see that budget was not harmed and it was delivered on time," he wrote.

However, he had made up his mind in the month of June 2019, much before the Budget was presented, that he would take voluntary retirement from the service.

"Dr. P. K. Mishra, then Additional Principal Secretary, who oversaw appointments and transfers in the PMO, asked me to come over for a chat on 18th July... Both of us agreed that the best course would be for me to make way for the new FM to 'function smoothly'," he wrote.

RIL Q2 profit drops 15% as Covid-19 hit oil demand

BENGALURU, Oct 30: Billionaire Mukesh Ambani-led Reliance Industries Ltd’s profit fell 15% in the September quarter as the coronavirus crisis crushed demand at its dominant oil refining and petrochemicals businesses.

Reliance said on Friday consolidated profit slipped to 95.67 billion rupees ($1.29 billion) in the three months to Sept. 30 from 112.62 billion rupees a year earlier. Analysts on average had expected 85.48 billion rupees, Refinitiv data showed.

Refining revenue dipped 36%, said Reliance, which operates the world’s biggest oil refining complex. Petrochemicals revenue fell 23%.

Meanwhile, Reliance’s Jio telecom unit - India’s largest by subscribers - continued to be a bright spot as revenue surged 33%.

Overall, revenue from operations for Reliance slid 24% to 1.16 trillion rupees.

RBI holds interest rates, sees economy contracting 9.5% in FY21

MUMBAI, Oct 9: The Reserve Bank of India (RBI) left key interest rates unchanged on Friday but signalled more easing ahead to support an economy that it sees contracting 9.5 per cent in the current fiscal.

The six-member Monetary Policy Committee, with three newly inducted external members, voted unanimously to retain the benchmark repurchase or repo rate at 4 per cent while keeping its policy stance accommodative, implying it could ease again.

The central bank had slashed the repo rate by 115 basis points since late March before hitting a pause button in August.

To bring down borrowing cost, RBI announced a number of unconventional steps, including doubling of the size of open-market bond purchases to Rs 20,000 crore, offer to buy state debt, and easing a corporate cash crunch through a Rs 1 lakh crore of targeted long-term funds available on tap.

Besides supporting economic activity, the measures are aimed at ensuring the government's record borrowing programme goes through smoothly.

RBI Governor Shaktikanta Das said the economic growth, which slumped to a negative 23.9 per cent in the April-June quarter, will turn positive only in the final January-March quarter.

'By all indications, the deep contractions of Q1 2020-21 (April-June) are behind us; silver linings are visible in the flattening of the active caseload curve across the country,' he said.

Barring the risk of a second wave of infections, the economy appeared poised to begin a recovery, he said, noting food grain production was set for record highs and factories and cities were coming back to life.

With macro indicators pointing to a recovery, 'GDP growth may break out of contraction and turn positive by Q4 (January-March),' he said.

'For the year 2020-21 as a whole, therefore, real GDP is expected to decline by 9.5 per cent, with risks tilted to the downside,' he said, adding that if the current momentum of upturn gains ground, a faster and stronger rebound is eminently feasible.

After the sharp contraction in Q1 of FY21, the MPC expects growth to come in at (-)9.8 per cent in Q2, (-)5.6 per cent in Q3 and 0.5 per cent in Q4.

'Against all odds, we shall strive and revive,' he said.

In a video live stream, he said RBI will 'continue with the accommodative stance of monetary policy as long as necessary – at least during the current financial year and into the next year – to revive growth on a durable basis and mitigate the impact of COVID-19, while ensuring that inflation remains within the target going forward'.

RBI saw inflation easing close to the targeted range of 4 per cent, plus or minus 2 pr cent, in the fourth-quarter ending March.

The governor noted that the recent pick-up in inflation is due to supply disruption and higher markups during the lockdown. Going forward, as supply chains are restored, inflation could ease to 4.5-5.4 per cent in the second half of FY21.

RBI's optimism on the inflation front is based on easing of supply-side disruption, weak demand conditions and bumper Kharif harvest as it expects the retail inflation to decline to 4.3 per cent in the first quarter of FY22.

In a bid to provide easy liquidity conditions, RBI announced Open Market Operations (OMO) worth Rs 20,000 crore, which will be used for buying Government of India securities.

OMO will also be extended to state development loans. This will ease the state's borrowing programmes amid lower collection of GST.

RBI also announced on tap TLTRO (Targeted Long Term Repo Operations) with tenors of up to three years for a total amount of up to Rs 1 lakh crore at a floating rate linked to the policy repo rate. The scheme will be available up to March 31, 2021. Liquidity availed by banks under the scheme has to be deployed in corporate bonds, commercial papers, and non-convertible debentures issued by entities in specific sectors.

In order to facilitate higher credit flow to the retail and SME segments, RBI has decided to increase the definition of 'Regulatory Retail' threshold from Rs 5 crore to Rs 7.5 crore in respect of all fresh as well as incremental exposures. This may incentivise banks to lend to this sector more as the new definition has increased the target segment.

RBI also rationalised risk weightage on home loans. All new housing loan risk will be linked only to the loan to value ratio. The lower the ratio, the lower the risks and borrowers will get the interest rate benefits from institutions.

For exporters hit by the pandemic, RBI discontinued the system-based automatic caution-listing to allow them to realise export proceeds.

In order to facilitate swift and seamless payments in real-time for domestic businesses and institutions, RBI decided to make available the RTGS (Real Time Gross Settlement) system round-the-clock on all days from December.

In December last year, RBI had made available the National Electronic Fund Transfer (NEFT) system on a 24x7x365 basis.

Dinesh Khara appointed SBI chairman for 3 years

NEW DELHI, Oct 6: The government on Tuesday appointed SBI’s senior-most Managing Director Dinesh Kumar Khara as the chairman of the the country’s largest lender.

He replaces Rajnish Kumar, who completed his three-year term on Tuesday. The central government appoints Dinesh Kumar Khara as chairman of State Bank of India (SBI) for a period of three years with effect from the date of his taking over charge of the post on or after October 7, 2020 or until further orders, whichever is earlier, according to a notification issued by the Finance Ministry.

Last month, the Banks Board Bureau (BBB) had recommended Khara as the next chairman of SBI. As per convention, the SBI chairman is appointed from a pool of serving managing directors at the bank. Interestingly, Khara was among the contenders for the chairman’s post in 2017 as well.

Khara was appointed as managing director of SBI in August 2016 for a three-year term. He got a two-year extension in 2019 after review of his performance. An alumnus of the Faculty of Management Studies, Delhi University, Khara heads the Global Banking division of SBI.

He holds a board-level position and supervises the businesses of SBI’s non-banking subsidiaries. Prior to being appointed managing director, he was the MD and CEO of SBI Funds Management Pvt Limited (SBIMF). Khara, who joined SBI in 1984 as a Probationary Officer, was instrumental in merging five associate banks and Bharatiya Mahila Bank with SBI effective April 2017.

The new SBI chairman will have a tough task ahead as the banking sector is going through a major crisis due to the COVID-19 pandemic. As on June 30, SBI had made total provisions of Rs 3,000 crore to cover potential COVID-19 losses. Gross non-performing asset (NPA) ratio of 5.44 per cent was lower than 6.15 per cent in the March quarter.

SEBI revamps the ‘Risk-o-Meter’ of mutual funds

MUMBAI, Oct 6: Based on the recommendations of the Mutual Fund Advisory Committee (MFAC), the Securities Exchange Board of India (SEBI) has issued detailed guidelines for revamping the 'risk-o-meter' for mutual fund schemes.

A new category of ‘very high’ risk mutual fund has been added to warn investors, in addition to the existing categories of moderately high and high-risk funds. Now there are six categories of risk, starting from low and going to very high.

Taiwanese suppliers for Apple to invest US$900 million in India

TAIPEI, Oct 1: Three Apple suppliers in Taiwan are reportedly planning to invest a total of US$900 million in India in the next five years under the Indian government's new incentive plan for large-scale electronics manufacturing.

The three Taiwanese contract manufacturers — Foxconn, Wistron, and Pegatron — all plan to participate in India's US$6.65 billion production-linked incentive (PLI) scheme.

The scheme is expected to help add 0.5 percent to India's economic growth in five years by encouraging local electronics production and attracting large investments from major global manufacturers.

The report said that Foxconn has already applied to invest US$542 million, while Wistron and Pegatron have committed to invest US$176 million and US$163 million, respectively. Although it is unknown whether all the investment will go towards producing Apple products, sources familiar with the matter said that the majority of it will be used to expand iPhone manufacturing in India.

The investments highlight a potentially seismic shift as Apple diversifies its supply chain beyond China to evade the impact of the ongoing trade war.

Meanwhile, the Indian government has capitalized on the fallout and pledged to transform the South Asian country into the world's No. 1 in mobile manufacturing by 2025, reported Tech News.

 

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