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Journalism of Courage
India Inc on Thursday told the government that the economic slowdown was intense, and it must offer a stimulus package – apart from swiftly ensuring greater and smoother flow of credit at reasonable rates – to stir growth that crashed to a five-year low of 5.8 per cent in the March quarter.
In their meeting with Finance Minister Nirmala Sitharaman, the corporate leaders also raised concerns about overzealous taxman and the new corporate social responsibility (CSR) rules that provide for a jail term up to three years for violation.
JSW Group chairman Sajjan Jindal said the minister assured that no coercive penal action would be initiated for non-compliance of CSR rules and the government would move judiciously on this move. Assocham president BK Goenka sought a stimulus package of over Rs 1 lakh crore for the investment cycle to pick up.
More steps to get NBFCs back to health and improve their lending ability could be in the offing, with the participants telling the minister that the crisis in the shadow-banking space after the IL&FS default has hit consumption. Pitching for affordable credit, the corporate leaders said banks would be willing to transmit the benefit of the RBI’s repo rate cuts to borrowers meaningfully only when the government slashed the interest rates on deposits under small savings schemes.
The Finance Minister is learnt to have assured that she would look into the matter of greater transmission by banks.
While the RBI had pruned the repo rate by 75 basis points since February (before the latest reduction by 35 basis points on Wednesday), state-run banks had cut only 10 basis points in the median marginal cost of lending rate for one-year tenor between February and June, said TV Narendran, vice president of CII and MD of Tata Steel. Most private banks didn’t do even that much. While a five-year National Savings Certificate fetches an interest of 8 per cent and Sukanya Samridhhi scheme 8.5 per cent, SBI is offering 6.8 per cent for deposits above 1-year tenure and can’t possibly trim the rate further for fears depositors would shift.
Jindal said: “It was decided that the government is going to take action very soon to revive industry. We got positive feedback from the Finance Minister.”
Piramal Enterprises chairman Ajay Piramal said that industry raised matters such as reluctance of banks to lend. “I am told that there will be action soon. So, we will wait for that,” he said. —FE
