Finance Minister Nirmala Sitharaman on Monday said privatisation of public sector banks (PSBs) will happen as per the government’ schedule, indicating that those may be taken up after general elections in 2024.
“It (privatisation) will go on as per the schedule and there is no change in it,” Sitharaman said while responding to a question on progress of her earlier announcement to privatise two PSBs.
She was speaking at a press conference in Mumbai on the achievements of the Narendra Modi government in the last nine years.
In the Budget for 2021-22, Sitharaman announced the government’s intent to take up the privatisation of two PSBs.
As per the new Public Sector Enterprises (PSE) policy, the government would minimise the number of state-run firms in five strategic sectors, including banking while fully exiting from non-strategic sectors.
The government must either amend or repeal the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980, usually called Nationalisation Acts, to remove the hurdle to privatisation. However, the relevant Bills are yet to be introduced in Parliament.
The government may delay processes for the proposed privatisation of some PSBs until the coming general elections are completed in May 2024, officials reckon.
In the meantime, the strategic disinvestment of IDBI Bank (technically a private bank) by promoter LIC and the government (a significant shareholder) later in the current fiscal would provide a template for the privatisation of PSBs.
Speaking at the event, Sitharaman also said that the government was monitoring retail inflation and would not let the guard down on it to insulate consumers from price shocks.
“The government is monitoring inflation. We are monitoring all data on the ground level also. Inflation is already moderating,” she said.
CPI inflation has gradually declined from a peak of 7.8% in April 2022 to an 18-month low of 4.7% in April 2023.
Sticky core inflation has moderated significantly to almost a three-year low in April, signalling a pass-through of lower input costs by producers.
RBI governor Shaktikanta Das recently said inflation print for May could be lower than 4.7% in April.
The finance ministry recently said prices of commodities sensitive to El Nino weather effects, such as coffee, rice, palm oil and natural rubber need to be continuously monitored.
Sitharaman said wheat prices rose in recent months, the government released grains from the buffer stock to cool prices.
“Wherever intervention is required we have been doing it,” the minister said.
Responding to former finance minister P Chidambaram’s comment that the introduction of `2,000 note and its subsequent withdrawal have cast doubt on the integrity and stability of the Indian currency, Sitharaman said that the RBI was well within its rights in withdrawing the notes.
“To cast aspersions on the matters of this nature, currency, decision of the central bank does not augur well with someone who was with the (finance) ministry,”
she said.
On May 19, the RBI announced the withdrawal of `2,000 notes from circulation and asked people to deposit or get them exchanged in banks by September 30.
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