Government seeks Rs 13,000 crore surplus from RBI, says Subhash Chandra Garg

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New Delhi | Published: November 19, 2017 12:59:55 PM

Economic Affairs Secretary Subhash Chandra Garg said that the government is only seeking Rs 13,000 crore of surplus lying with the Reserve Bank. He said that the government has not asked the central bank to pay any special dividend.

Subhash Chandra Garg, SC Garg, Economic Affairs Secretary, RBI director, RBI, government funds,On privatisation of Air India, Garg said it is progressing “reasonably steadily” and the plan about how to privatise has also been broadly worked out. (PTI)

Economic Affairs Secretary Subhash Chandra Garg said that the government is only seeking Rs 13,000 crore of surplus lying with the Reserve Bank. He said that the government has not asked the central bank to pay any special dividend. “There is no proposal at this stage to ask for any special dividend. What is being discussed is to only ask for what the RBI earned this year but did not distribute. That is about Rs 13,000 crore. That’s what the government has suggested the Reserve Bank to transfer,” Garg told PTI. In August, the RBI had paid a dividend of Rs 30,659 crore for the fiscal ended June 2017 which was less than half the Rs 65,876 crore it had paid in 2015-16. The government had budgeted for a Rs 58,000 crore dividend from the RBI in its Budget for this fiscal year.  RBI’s profit was about Rs 44,000 crore, of which Rs 30,000 crore has been distributed and Rs 13,000 crore it retained towards risks and reserves. So the government has made a suggestion that the Rs 13,000 crore may also be transferred, he said. The government had last month announced an unprecedented Rs 2.11 lakh crore capital infusion in PSU banks, which are grappling with high non-performing assets (NPAs). Asked about the contours of the recap bonds, Garg said “the recapitalisation package is in the final stages. The Department of Financial Services is working on it and soon we would see all these aspects being addressed”. Of the Rs 2.11 lakh crore, Rs 1.35 lakh crore would be infused through recapitalisation bonds and the remaining Rs 76,000 crore through budgetary support and banks diluting equity in capital market.

Credit rating agency Moody’s had last week upgraded India’s sovereign rating after a gap of over 13 years citing reform push and steps being taken by the government to solve the high NPA problems in the banking sector. Bad loans in the sector have neared Rs 10 lakh crore. Garg said Moody’s has acknowledged the reform process and believes that India is in a position to control its debt and put its banking sector in order. “The kind and quality of reforms, the boldness of reforms, the structural, fundamental needs of reform is what has persuaded them to believe that India is now on a longer term high growth path …That (reform) process will continue and I don’t see any slackening in reform effort,” he said. The US-based rating agency cited government efforts to reduce corruption, formalise economic activity and improve tax collection and administration, including through demonetisation and GST, as well as improvements to the monetary policy framework and measures to clean up non- performing loans as reform steps which would foster sustained economic growth.

On privatisation of Air India, Garg said it is progressing “reasonably steadily” and the plan about how to privatise has also been broadly worked out. Asked if it would happen in the current fiscal, Garg said, “I won’t put a timeline on when this is likely. Air India is not just one company, there are other assets.” The government has ‘in-principle’ decided to disinvest the Air India group as a whole or its constituents fully or part thereof through the strategic sale with transfer of management control. Air India has a debt burden of more than Rs 50,000 crore. The Cabinet, in June, had decided on strategic disinvestment of the loss-making Air India, which is staying afloat on taxpayers’ funds, and a ministerial panel is working on the modalities.

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