Refusing to respond to former Prime Minister Manmohan Singh’s statement attributing the economic slowdown to “man-made blunders”, Union Finance Minister Nirmala Sitharaman on Sunday said the Centre was responding to issues raised by various sectors sectorally. She added that it would go ahead with holding consultations with various sectors.
She was speaking at a press conference on the sidelines of her consultations with the automobile industry in Chennai. Asked for a response to Dr. Singh’s comments, Ms. Sitharaman said: “I don't have a comment. He has made his comment and I heard it with my ears.”
On the message to those who lost jobs or feared retrenchment, the Minister said: “Well, I can only say that we are responding to the industry requirements. Now, across the board, there is no one particular answer that I can give saying this is the magic. We are responding sectorally.” She refused to put a number to the jobs lost, contending that data on job losses focused only on the formal sector.
When pointed to NSSO data that claimed half the working age population was not involved in any economic activity, the Minister said the informal sector had not been appropriately or exhaustively documented but a majority of the country’s employment was in that sector. “And there, if there [in informal sector] is stress or anything, I am ready to hear to respective sectors,” she said.
The government felt that the monsoon would meet the basic requirements for agriculture and even for farming sector, consultations were going on and she was sure the government would be able to respond to them also. “So, sectorally we are responding to the way in which they want the government to respond to the situation we are in.”
Asked whether the government acknowledged the current economic status as an economic slowdown, Ms. Sitharaman avoided a direct reply. “The government has been in consultation with a lot of sectors, which wanted to come and speak to us about the various measures that they expect.”
And having heard from various sectors and having spent some time to see how best the government can respond, the first tranche of announcements were made on August 23 and again on Friday last, she said.
“I also said I will come back again as and when the process of consultations are over and how we can respond. So, I will be coming back to respond on sectors, which we have spoken to and which want some relief,” Ms. Sitharaman said.
As for the automobile sector, “We have very clearly said that everything will benefit by the depreciation that we have announced and there shall not be confusion on the basis of the Government of India looking at promoting EVs. We want all vehicles to have their due market share. It is not as if we are pushing one at the cost of others.”
She said the focus was on the immediate issue of inventory of BS-IV vehicles that needs to be cleared by manufacturers. “There are auto component suppliers whose factory and machinery are readied to supply to BS-IV standards. That would be our primary focus.”
Asked if her recent announcements resulted in any visible changes on the ground, she said since last Friday, at least four NBFCs have come out because of the relief offered.
“At various different levels, the interventions are being felt; it might be taking a while for me to assess and measure them,” the Minister claimed.
On whether a gold monetisation scheme was on the cards, Ms Sitharaman said there was a sentiment in India about buying gold. Revenue Secretary Ajay Bhushan Pandey explained the issues in having a gold demonetisation scheme, since standardisation of gold possessed by individuals was a major issue.
Ms. Sitharaman rejected speculation that jobs would be lost due to amalgamation of nationalised banks.
Later addressing a select media gathering, she explained the rationale behind the consolidation of 10 public sector banks into four large banks. “We have given a lot of mind application to ensure that merging banks have a common technology platform, for easier integration. We also ensured complementarity. For example, a bank that has healthy deposits and another which sees demand for loans,” she said.
In eastern India, banks tend to see deposit growth faster than credit growth. For a bank that has credit demand, say in the south such as Indian Bank, merging with a bank whose deposits can be used for lending, such as Allahabad Bank, makes sense for both. In the absence of such an alliance, the cost of funds would be high for a bank that sees high credit demand.
“If a branch is viable, the bank will continue with it. Each bank will decide on the viability of each branch. SBI, for example, has seven branches in the outer circle of Connaught Circus alone,” she added.