No policy paralysis, govt moving ahead with reforms: Finance ministry

Perceived paralysis in policy decisions and government inaction on important economic issues have been a matter of debate in the recent past, with many industry leaders including technology czar Azim Premji seeking urgent steps from policy makers to tackle the issue

New Delhi: The finance ministry today asserted that the government is moving ahead on the path of economic reforms though much more is needed to be done, reports PTI.

“If you talk of policy paralysis, I think it is extremely wrong. Look at all the legislations we have brought, including new laws on mines and minerals, DTC, GST,” Department of Economic Affairs secretary R Gopalan told reporters on the sidelines of a function here.

The government, he added, was moving ahead with economic reforms though much more could be done.

Perceived paralysis in policy decisions and government inaction on important economic issues have been a matter of debate in the recent past, with many industry leaders including technology czar Azim Premji seeking urgent steps from policy makers to tackle the issue.

Besides, a group of prominent personalities, through open letters, has also sought urgent steps in this regard.

Earlier this week, Reliance Industries chairman Mukesh Ambani at Indian Chapter of the World Economic Forum had asked the government to move faster in its decision making and put to rest any notion about policy paralysis due to political constraints.

Mr Gopalan said, “We are on the right path for reform, but we need to do much more, especially in capital markets to make it more participatory.” 

Moreover, he added, the foreign direct investment (FDI) and credit inflows have gone up and the agriculture and services sectors were expected to perform better.

On the possibility of doing away with the Securities Transaction Tax (STT), he said, “I agree that it is bad to have a tax on transactions. We are looking at the issue of reducing STT.”

The stock exchanges have been asking the finance ministry to abolish STT arguing that such a step would help in boosting investments and promote equity culture in the country.

Collection from the STT declined by 17.9% to Rs2,958 crore in the April-October in the current fiscal, mainly because of lower transactions on bourses. It was Rs3,602 crore in the corresponding year-ago period.

The Capital Markets division of the DEA has been pushing for lowering of STT and the issue was discussed at a meeting of the officials with representatives of the stock exchanges including BSE, NSE, MCX-SX and USE and the market regulator Securities and Exchange Board of India (SEBI).

The government had introduced STT in 2004 on transactions in different types of securities. The rate presently varies from 0.025% to 0.25% depending upon the type of security traded and transaction—whether sale or purchase.

Mr Gopalan further said the government was moving ahead with the rationalisation of the stamp duty across the country.

On recapitalisation of banks, he said, “Something will happen. We have a commitment of having 8% Tier-I  (equity) capital for public sector banks. It’s a commitment which we will have to fulfil.”

As regards the market stabilisation fund, he said, “This is at a very preliminary stage. There are always lots of suggestions. When there are suggestions, we have to examine them.”

The stock exchanges have been demanding setting up a fund to deal with problems of the capital market.

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Govt not to revise fiscal deficit target: Chief economic advisor

The government has announced to borrow an additional Rs52,900 crore from the market over and above Rs4.17 lakh crore estimated earlier. This has fuelled fears about missing the fiscal target for the current fiscal which is set at 4.6% of the GDP

Mumbai: The government is not planning to revise the fiscal deficit target notwithstanding the additional borrowing plans in the second half of the fiscal, chief economic advisor to the finance minister, Kaushik Basu, said on Tuesday.

“There is no thinking of revising the target of 4.6% (fiscal deficit target), but we are aware that it is a target that is not easy (to meet),” Mr Basu told reporters on the sidelines of a banking summit here.

He also said the country has to go a little slow on the fiscal consolidation process as there is a recessionary tendency in the world.

“There is a recessionary tendency in the world. If you too quickly pull back demand, you may aggravate the recessionary situation. We also have to be mindful of this as our industrial growth in the last couple of months has not been very good,” Mr Basu pointed out.

The government has announced to borrow an additional Rs52,900 crore from the market over and above Rs4.17 lakh crore estimated earlier. This has fuelled fears about missing the fiscal target for the current fiscal which is set at 4.6% of the gross domestic product (GDP).

Moreover, the government is far from achieving the disinvestment target of Rs40,000 crore this year.

“There is a disinvestment programme that we still have plans to go after. Hope, we will keep the fiscal situation (in terms of fiscal deficit, revenue deficit and government deficit) in control,” Mr Basu said.

Referring to inflation, he said that both the government and the Reserve Bank of India’s (RBI) efforts are moving in one direction to contain high prices.

“Questions can be raised on whether the RBI is moving faster than the ministry in curbing inflation. The fact is, both are moving in the same direction,” he said.

Supporting the non-intervention policy of the central bank with respect to the falling rupee, Mr Basu said the depreciation is mainly due to higher inflation along with the ongoing crisis in Eurozone area.

“The rupee fall does put pressure on us. There are two forces working behind it. One is that we have inflation that is above that of the US for two years. So there is some loss of value in the exchange rate. The second side is that every time there is turbulence in Europe, money seems to flow into the US treasury,” Mr Basu said, adding the ongoing debt crisis in Eurozone area remains a matter of great concern for the domestic economy.

Supporting the rollback of subsidy on petroleum products, he said this will help in containing inflation.

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HDFC Bank pips SBI to become most valued lender

With a 0.23% gain in its share price, HDFC Bank attained a market capitalisation of Rs1,10,288 crore, which was over Rs400 crore than that of SBI, according to BSE data. On the other hand, SBI’s shares fell by 1.32% commanding a market cap of Rs1,09,848 crore at close of trade on Tuesday

Mumbai: HDFC Bank on Tuesday surpassed State Bank of India (SBI) to become the country’s most valued lender with a market capitalisation of Rs1.1 lakh crore, reports PTI.

With a 0.23% gain in its share price, HDFC Bank attained a market capitalisation (market cap) of Rs1,10,288 crore, which was over Rs400 crore than that of SBI, according to the data available with the Bombay Stock Exchange (BSE).

SBI’s shares fell by 1.32% commanding a market cap of Rs1,09,848 crore at close on the BSE.

Further, ICICI Bank became the country’s third largest private sector with a market capitalisation of Rs91,132 crore at the end of the trading session.

A company’s market capitalisation is determined by multiplying its share price with total number of shares.

HDFC Bank scored the ninth spot in terms overall market cap, SBI Bank bagged the 10th position and ICICI Bank managed 13th place.

Overall, Reliance Industries is the country’s most valued firm with a market cap of Rs2,82,495.43 crore, followed by oil and gas major ONGC with a market cap of Rs2,21,415.82 crore.

At the third place is TCS with a market cap of Rs2,19,783.77 crore, Coal India (Rs2,00,607.59 crore) stood at fourth spot and ITC (Rs1,63,681.70 crore) was fifth.

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