Not Worried About Rating Agencies, Says Nirmala Sitharaman
India’s borrowing plans in the next fiscal won’t crowd out the private sector as there will be predictability and enough liquidity, according to Finance Minister Nirmala Sitharaman.
The government’s borrowings have been announced well in time and in a year when liquidity is in abundance, so crowding out won’t be an issue, the union finance minister said on the sidelines of an event at the Indian Institute of Management, Ahmedabad on Thursday. Nor is the government worried about rating agencies as the higher borrowing number is in order to stimulate growth, followed by an articulated path of fiscal consolidation, she said.
On the new privatisation policy, Sitharaman said the government is not on a spree to divest every public sector company.
“When the policy was announced, it clearly identified what would be the strategic sectors,” she said. “The presence of the public sector will not be totally removed but bare minimum presence will be there in strategic sectors… We are paving for the presence of public sector in a big and scaled-up way so that they are professionalised and well-managed.”
Other key highlights from the interaction…
- Keen on accessing funds at market-determined yields, so decided to not borrow from the NSSF any longer as it’s comparatively expensive.
- State-owned firms are not sufficient to meet the economy’s growing demand; government wants state-owned firms to be professionally run.
- “Government will surely achieve the disinvestment target for FY22 as there is better appetite in the market and we have come up with a realistic number.” Last year, the target couldn’t be met due to Covid-19 and the year before, economy was slowing down, so there was low appetite for disinvestment.
- Inflation targeting has been well managed and there is constant interaction with the Reserve Bank of India on it. “We have never allowed inflation to go beyond acceptable levels.”
The finance minister also commented on rising fuel prices and the heavy central and state levies on fuel, emphasising these taxes are an important source of revenue. She said reducing taxes on petrol and diesel is a dharam sankat (dilemma) and for the burden on customers to go down, both the centre and states need to talk. “Will see what can we do about it.”