Am bound by FRBM targets: Nirmala Sitharamanhttps://indianexpress.com/article/business/budget/am-bound-by-fiscal-responsibility-and-budget-management-targets-nirmala-sitharaman-5818980/

Am bound by FRBM targets: Nirmala Sitharaman

In an interaction with reporters, the finance minister said she had to work on the Budget numbers in the narrow time period between two bookends.

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Union Minister for Finance Nirmala Sitharaman. (Express Photo: Prem Nath Pandey/File)

FINANCE MINISTER Nirmala Sitharaman said on Saturday that she was not overcautious in compressing the fiscal deficit targets in the Union Budget and said she was bound by the FRBM (Fiscal Responsibility and Budget Manage-ment) Act to achieve these targets. She said there was enough in the Budget to kickstart the “virtuous growth cycle” and “trigger consumption”, which in turn would spur the investment cycle.

In an interaction with reporters, the FM said she had to work on the Budget numbers in the narrow time period between two bookends. “I was working within tight boundaries — of the Interim Budget and the Finance Commission,” she said, responding to a question on whether she could have budgeted for higher expenditure in the backdrop of a slowing economy.

Sitharaman also said the disinvestment targets were set realistically. “We already have a list of PSUs that were cleared by the CCEA in the last term. We have to set the ball rolling on this,” she said. The government has targeted to raise Rs 1,05,000 crore, over 31% higher than Rs 80,000 crore realised in 2018-19.

According to the FM, the Budget focused on fundamental reform measures such as that in the labour sector, where the proposed three new codes that the government is piloting will have a positive impact on the investment sentiment.

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Sitharaman took the markets by surprise after the Budget narrowed the fiscal deficit target although the economy is struggling for lack of a stimulus after growth slowed to a 20-quarter low. The fiscal deficit for the current fiscal was estimated at 3.3% of GDP in Friday’s Budget, down from 3.4% projected in February’s Interim Budget.

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On the Budget proposal to let the government raise money in foreign currency in overseas markets to partly meet its gross borrowing, Sitharaman indicated that it was an enabling provision. “We have taken a call to do this. The timing and other details will be worked out,” she said.

Sitharaman said the government is closely monitoring the non-banking financial companies (NBFCs) sector and has tried to adequately address their liquidity and solvency issues. The Budget provided for credit guarantees to support NBFCs in a move aimed at boosting lending and reviving consumption growth.

She indicated that the NBFC crisis seems to have bottomed out and the government, along with the RBI, will work together to steer the sector out of the crisis. “Largely it (NBFC crisis) has reached a peak in terms of challenges that they are facing. The problem probably is not over yet but it can only plateau rather than worsen… the deteriorating situation has reached its bottom… now it has bottomed out,” she said.

Stating that “comprehensive solutions” have been announced, she said, “We shall be closely monitoring with RBI to see how it’s moving. So strictly speaking, I feel the NBFC issue has been addressed.”

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The Budget proposed that public sector banks would purchase high-rated pooled assets of financially-sound NBFCs, amounting to a total of Rs 1 lakh crore during the current financial year. For this, the government will offer a one-time six months’ partial credit guarantee to PSBs for first loss of up to 10%.

“If anything, it can only improve or it can be going on plateau for some time and then probably improve… I cannot say it has come to a closure. I cannot say it has ended. I cannot say the problem is over… We will still be careful about watching it,” she said.

Speaking about the Budget provision to increase the minimum public float in listed firms to 35% from 25% currently, on which the government has asked the markets regulator Securities and Exchange Board of India (Sebi) to vet the proposal, Sitharaman said, “I am yet to hear response. Parliament is debating about it.”

On the issue of bringing down government stake to below 51% in PSUs, Sitharaman said the move would help increase retail participation and deepen the market.