Government to carry on with banking reforms, Finance Minister

Finance Minister, Nirmala Sitharaman at the Elara India Dialogue said that the Centre will carry on with the reforms in the banking sector that envisage privatisation of two lenders, underscoring North Block's resolve to pursue economically beneficial measures otherwise deemed politically difficult to execute.

"We've already shown that we are very committed to the divestment process. For instance, the LIC public issue wasn't easy, but we did it," Sitharaman told delegates at the meeting. "We are committed and will go ahead with the banking sector reforms, and even the Cabinet has given clearance. We have mentioned it in the budget, and we shall take it forward."

The government has plans to divest its stake in two public sector banks. Government’s policy and planning platform, NITI Aayog had recommended privatization of Central Bank of India and Indian Overseas Bank.

According to media reports, both North Block and the LIC of India are likely to dilute stakes in IDBI Bank, the corporate-focused lender revived through government intervention after it ran up significant bad loans. Reports have suggested initial bids for the dilution of government equity in IDBI Bank might be invited soon, with New Delhi seeking to close the deal in FY23.

The minister also said that the government is looking at boosting export competitiveness and bring down input costs for exporting industries.

"We would like to engage further with those sectors which are actively engaged in exports," she added.

Meanwhile, domestic steel and iron ore prices have declined sharply after the imposition of export duty on steel, iron ore and pellets on May 21.

On the windfall tax on fuel exports, the finance minister said the government is not interested in advocacy, and the windfall tax was levied only after consulting the industry. "Every 15 days, we shall review the windfall tax in consultation with the industry," she said.The finance minister said the visible increase in tax collection is due to the technology that was brought in. She said that the entire tax payment system was digitally monitored, enabling the authorities to enhance the accuracy quotient.

"Anomalies in the system have been corrected because of how we use the data, artificial intelligence, etc., and we were able to track the flow of money,” Sitharaman said. "Widening the tax base is still an issue, and we have to make a lot of effort to bring in a greater number of people."