New Delhi: Finance minister Arun Jaitley defended tax concessions to big corporations saying that, “It is done in order to make Indian products competitive.”
He was fielding questions related to his ministry in the Lok Sabha on Friday morning. When the government was criticised for cutting back on subsidies and extending concessions to the big business and industrial house, the finance minister said, “This government is clearly of the view that high taxation contributes to sluggish growth of the economy.”
“The debate is not whether the subsidies are allowed. It is a question of rationalising subsidies,” he argued, saying that there is need to target subsidies to vulnerable sections, the people who need the subsidy most and withdraw it for people who can afford to buy in the market. “I make no secret of the fact that subsidies will be rationalised,” he said. An expenditure commission is being set up to review the subsidies, the minister informed.
The BJP is stepping out for the first time and stating its pro-market economic philosophy without much ado. Responding to AIADMK’s Thambidurai plea that farmers should get remunerative prices for farmers and that the central government should also implement free electricity for farmers as was being done in Tamil Nadu. Jaitley countered saying, “A government can only spend within its means. If the government borrows for its expenditure, then the next generation will be in debt.
Replying to a question on National Agricultural Bank and Rural Development (NABARD) lending money to rural cooperative banks, he said that interest rates are determined by the Reserve Bank of India, and the crux of the issue is inflation.
Referring to non-performance assets (NPAs), he said that in 2002 the NPAs of the public sector banks amounted to 14 per cent which was very high, and that the RBI has issued a guideline for confiscating the assets of the defaulters. He deflected the charge that most of the bad debts of the nationalised banks were those of the big businesses. “Public sector banks’ NPAs are not necessarily corporate loans,” he said. He was of the view that whenever there was economic slowdown, the NPAs went up because borrowers were not in a position to pay. But the NPAs came down when the economy was back on track. He said that NPAs came down to 2 per cent in 2012 and it stood at 4 per cent at the moment.
He also said that banks usually restructured the debt of the big borrowers, while the failure to pay back is mostly that of retail borrowers.
In response to Congress’ Jyotiraditya Scindia’s observation that while the NPAs in proportion to total credit outflow was 14 per cent in private banks and 40 per cent in public sector banks, Jaitley defended the public sector banks saying they had social commitments unlike the private banks.
Saturday, August 02, 2014
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