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Income tax rebate a logical extension of steps taken by govt: Jaitley






New Delhi: Union Minister Arun Jaitley rejected criticism for deviating from past by including direct tax proposal in an interim Budget saying the rebate in the income tax was a logical extension of steps taken by the government since 2014.

While in 2009 and then in 2014, the Congress-led UPA had brought indirect tax proposals in keeping with the needs of the economy, Finance Minister Piyush Goyal announced an income tax rebate on earnings of up to Rs 5 lakh.

“Budgets are a political reality in a Parliamentary democracy. So are elections, but this is not a move which anywhere contradicts or deviates from what this government has been doing in the past 5 years. “It’s actually a logical movement in the direction in which we were moving in last 5 years,” he said during an interaction on interim Budget through video conferencing from New York.


Goyal’s move was criticised by the Opposition saying with general election months away, the Prime Minister Narendra Modi-led government had mandate only to present a vote on account and a Budget containing direct tax proposals. They felt that was the job for the next government to do when they present a full Budget for 2019-20 in July.

In 2009, then Finance Minister Pranab Mukherjee introduced a stimulus for the economy faced with global meltdown in his reply to the interim Budget debate. His successor P Chidambaram had in 2014 changed duty structures on some commodities.

“I completely reject this artificial distinction between direct and indirect taxes. You can deal with indirect taxes not with direct taxes. Tell me, giving a boost to the economy, is it not required today in the larger interest of the economy? On one hand, the so-called critics ‘Nawab of Negativity’ are saying that the world’s fastest growing economy is growing slowly. “If that’s the point of criticism, then let us be allowed to give a boost to the economy. And, this higher consumption will certainly give boost to the economy,” he said.

Jaitley said that for the past 5 years, the government has been giving relief in direct taxes and whatever has been done in Interim Budget 2019-20 is a continuation of what started in 2014. With the increased size of Budget, the government has been able to provide benefit to taxpayers.

“Now, size of the Budget has expanded to Rs 27 lakh crore from Rs 14 lakh crore in 2014…small tax payers are entiled to more money in the pocket and whatever more we spend a lot of it comes back as indirect taxes. It’s a movement in the same direction which we started in 2014,” he said.

On the income support scheme for farmers, Jaitley said the farm sector required resources and if the current scheme is inadequate, the Centre will increase its allocation. Pointing out that the sector is in distress, he said, the Centre has taken the first step and “let the state governments of so called critics top it up”.

Income support and subsidy can go hand in hand, he added. Taking a dig at critics of the scheme, he said the Congress had announced a Rs 72,000-crore farm loan waiver but had actually disbursed about Rs 52,000 crore.

Jaitley said the average monthly collection in the first eight months of the GST roll-out was Rs 89,000 crore which increased to Rs 97,000 crore in the 10 months so far this fiscal.

“If the collections are growing at 11-12 per cent in the second year then with increased compliance, the collection in third and fourth year will be much higher,” he said.



Growth likely to reach 7.5% next fiscal: CEA




New Delhi: The economic growth is likely to accelerate to 7.5 percent in 2019-20, from 7.2 percent projected for the current fiscal, Chief Economic Adviser K V Subramanian has said.

“We have done the projections. All the external agencies and internally our estimates are also 7.5 percent (2019-20). The nominal rate we are expecting is 11.5 percent and inflation of about 4 percent,” he told PTI.

The Reserve Bank of India, in its latest monetary policy review released last week, too projected an economic growth rate of 7.4 percent for the next fiscal.


Talking about average growth in the last four years, he said the GDP growth rate has been 7.3 percent, highest across all government since liberalisation. This growth rate has been achieved amidst very low inflation.

Prior to 2014, the average inflation was in excess of 10 percent, he said, adding the significant reduction in inflation can be attributed to setting up of Monetary Policy framework that mandates the RBI to keep it within a particular band.

Monetary Policy Committee, the interest rate setting body headed by the RBI Governor, has been given objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent, while supporting growth.

Earlier this month, Finance Minister Piyush Goyal in the Budget Speech had said that India is solidly back on track and marching towards growth and prosperity.

The past five years have seen India being universally recognised as a bright spot of the global economy, he said, adding that the country witnessed its best phase of macro-economic stability during this period.

“We are the fastest growing major economy in the world with an annual average GDP growth during last five years higher than the growth achieved by any government since economic reforms began in 1991,” he had said.

On fiscal deficit, Subramanian said, it has been secularly coming down and India is on the glide path to achieving the target set under the FRBM (Fiscal Responsibility and Budget Management) Act.

“This fiscal prudence has been achieved despite greater devolution to states. So as part to 14th Finance Commission, 42 percent is devolved to states from earlier 32 percent,” he said.

The Budget pegs fiscal deficit to be at 3.4 percent of the GDP for 2019-20.

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Jet Airways plans to raise about Rs 2,500 crore through rights issue




Mumbai: Cash-starved Jet Airways plans to raise about Rs 2,500 crore through a rights issue. Its lenders are also looking at a debt-to-equity conversion.

While lenders may convert Rs 1,000 crore of debt into equity, they will also participate in the equity infusion through a rights issue as part of the deal.
Additionally, promoter Naresh Goyal and Etihad Airways, which owns a 24 per cent stake in the airline, will infuse around Rs 2,000 crore into the airline, sources aware of the development said.

Lenders are expected to participate in a rights issue to raise capital. Government-owned infrastructure fund National Infrastructure Investment Fund (NIIF) is likely to buy a 19 per cent stake for Rs 1,500 crore. Along with the NIIF, banks will own a 51 per cent stake in the company.


The NIIF was approached by lenders after Etihad Airways refused to increase its stake beyond 25 per cent without an exemption from open offer. The Securities and Exchange Board of India (Sebi) did not agree to the idea. NIIF Chief Executive Officer Sujoy Bose did not respond to multiple queries about the matter.

Sources said Etihad Airways would infuse around Rs 1,450 crore to maintain its stake at 24 per cent, promoter Naresh Goyal would bring in Rs 550 crore to hold around 21 to 22 per cent.

Goyal has already infused Rs 250 crore into the airline.

“At the first stage of the resolution plan, lenders have agreed to convert around Rs 1,000 crore of debt into equity. In the second stage, there will be a rights issue of around Rs 2,500 crore in which banks will participate. This process is subject to approval from the promoter, lenders and Etihad Airways. It may take around two months to close,” said an official of a state-owned lender.

Another source said the SBI-led consortium would release around Rs 550 crore in the next 15 days to bridge the immediate funding gap.

He said: “The draft resolution plan has been approved by the Jet board and needs approval of the boards of banks and Etihad. Besides, the approval of various regulatory authorities is also required. This would take a few months. There is an interim funding requirement of Rs 500-1,000 crore. Banks will make an assessment and lend the fund against security”.

The airline has a funding gap of Rs 8,500 crore. “There will be equity infusion, sale or sale and leaseback, debt-to-equity conversion, and refinancing of aircraft. A combination of all these will help to reduce the debt of the company. But, I will be unable to give you the numbers right now,” said Amit Agarwal, chief financial officer at Jet Airways.

The company’s board approved a draft resolution plan, which comprises conversion of debt into 110.4 million shares.

Jet had a gross debt of Rs 7,654 crore as of December-end, comprising aircraft loans worth Rs 1,700 crore. About 60 per cent of the loans are dollar denominated. Jet has called an extraordinary general meeting next week to secure shareholders’ nod for the issue of 110.4 million shares to lenders.

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RBI threatens action against Yes Bank for disclosing nil divergence report




New Delhi: The Reserve Bank has warned Yes Bank of regulatory action for disclosure of nil divergence report in violation of the confidentiality clause, the private sector lender said.

Yes Bank in a press release earlier this week had said the RBI has not found any divergence in the asset classification and provisioning done by the lender during 2017-18.

In a regulatory filing , Yes Bank said it has received a letter from the RBI which noted that the Risk Assessment Report (RAR) was marked ‘confidential’ and it was expected that no part of the report be divulged except for the information in the form and manner of disclosure prescribed by regulations.


“Therefore, the press release breaches confidentiality and violates regulatory guidelines. Moreover, NIL divergence is not an achievement to be published and is only compliance with the extant Income Recognition and Asset Classification norms,” the RBI said in its letter.

“The issuance of the Press Release has, therefore, been viewed seriously by the RBI and could entail further regulatory action/s,” the letter added.

The RAR also identifies several other lapses and regulatory breaches in various areas of the bank’s functioning and the disclosure of just one part of the RAR is viewed by RBI as a deliberate attempt to mislead the public, the central bank said.

The RBI conducted its first asset quality review (AQR) of banks in 2015 in order to find corporate loan accounts with severe financial weakness which were still classified as standard accounts on the books of the lenders.

Post this review, RBI found a large divergence of Rs 4,176 crore in the reported gross NPAs in the books of Yes Bank for 2015-16.

Further, the RBI judged gross NPAs at Rs 8,373.8 crore for Yes Bank for 2016-17 against the declared gross NPAs of Rs 2,018 crore. Thus, there was a divergence of Rs 6,355 crore or three times the reported amount.

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