Mumbai: Though the Centre may manage to achieve the debt-to-GDP ratio target of 40 per cent by FY23, the states achieving the 20 per cent target looks difficult as most of them have not budgeted so far, warned a report.
The states’ aggregate debt-to-GDP ratio for FY19 has been budgeted at 24.3 per cent and according to their FY19 budgets, only 10 of the 20 states will have debt-to-GSDP ratio of under 25 per cent in FY19, noted the report by India Ratings’ chief economist, DK Pant. The NK Singh committee, which is reviewing the Fiscal Responsibility and Budget Management Act of 2003, has suggested that the fiscal policy try to reduce the debt-to-GDP ratio to 60 per cent by FY23, with the Centre’s at 40 per cent and the states’ combined at 20 per cent, instead of improving the revenue to fiscal deficit ratio.
Eight states namely Himachal, Jammu & Kashmir, Kerala, Manipur, Meghalaya, Nagaland, Punjab and Rajasthan had debt-to-GSDP ratios in excess of 30 per cent in FY18, suggesting that the aggregate debt-to-GDP ratio needs to be corrected by 8.92 percentage points between FY18 and FY23, Pant noted.
Although there have been instances of debt-to-GDP ratio declining by over three percentage points in a single year and by over 11 per cent for six years at a go, all these periods were characterised by an average minimum nominal GDP growth of about 14 per cent per annum and average aggregate revenue receipt-to-GDP ratio of around 20 per cent, according to him.
Though the aggregate revenue receipt-to-GDP ratio has been budgeted at 22 per cent for FY19, Pant said achieving a nominal GDP growth of about 14 per cent looks difficult. Sustainability of debt-to-GDP ratio relies on the primary balance-to-GDP and the rate spread (excess of nominal growth over average interest rate on debt).
India Ratings said during FY90-FY18, the country’s debt-to-GDP ratio witnessed five phases: During FY90-FY92, it rose to 72.89 per cent from 70.06; while during FY93-FY97, it declined to 64.37 per cent from 72.01; to rise again to 83.23 per cent from 66.29 during FY98-FY04. During FY05-FY11, it again declined to 65.60 per cent from 82.13, while it remained range bound at 66.58-68.92 per cent during FY12-FY18.
During the past five years, while revenue-to-GDP, interest-to-revenue, debt-to-revenue and positive rate spread trends were favourable for debt sustainability, rising interest payment/GDP, continuous primary deficit/GDP proved to be a negative, the note said. From a global perspective, the country remains an outlier in terms of both consolidated debt-to-GDP and debt-to-revenue ratios.
While the median value of the consolidated debt-to-GDP ‘BBB’ countries was 37.8 per cent in 2017, for India it was a high 69 per cent. But European countries like Italy had a higher ratio at 131.8 per cent and Portugal’s stood at 125.7 per cent, according to the rating agency.
RBI needs to ensure stability: Shaktikanta Das
New Delhi: The head of the Reserve Bank of India (RBI) said he would take the steps necessary to maintain financial stability in the country and help create favourable conditions for growth.
India’s economy has grown because of measures such as the nationwide goods and services tax and the insolvency and bankruptcy code that prevents wilful defaulters from bidding for stressed assets, Shaktikanta Das said in his address to an investor roundtable.
The country’s growth story is backed by its strong domestic fundamentals, he said, citing lower inflation.
Annual retail inflation rate dropped to an 18-month low of 2.19 per cent in December, strengthening the views of some economists that the central bank could ease monetary policy next month.
India’s top business groups on Thursday urged the central bank to cut its benchmark interest rate by at least half a percentage point and lower the cash reserve ratio it imposes on banks.
The country also needs to watch out for any sudden turbulence in the gloal financial market, Das said.
Centre removes two PNB executive directors for lapses in Rs 13,500-cr fraud
Chennai:The Central government has removed two Punjab National Bank (PNB) Executive Directors — Sanjiv Sharan and K.Veera Brahmaji Rao — for the lapses in the Rs 13,500 crore fraud allegedly perpetrated by absconding diamantaire Nirav Modi.
The PNB has intimated the action to the stock exchanges.
“We welcome the Central government’s action to dismiss the two Executive Directors. The scam of such proportions could not have happened without the knowledge of the top management,” C.H. Venkatachalam, General Secretary, All India Bank Employees’ Association (AIBEA), told IANS.
“Perhaps for the first time, the Centra has removed the Executive Directors of a nationalised bank under the Nationalised Banks (Management and Miscellaneous Provision) Scheme, 1970. All these days it was said the top management of government-owned banks — Chairman, Managing Director, Executive Directors — are governed only by the contract of appointment.
“It is also good that the central government has followed the due process of giving the two PNB Executive Directors opportunity to put forth their views before dismissing them,” Venkatachalam added.
According to the Central government’s notification, on July 3, 2018, Sharan and Rao were issued a show cause notice as to why they could not be removed from office for having failed to exercise proper control over the functioning of PNB, thus enabling the fraud through the misuse of SWIFT at the bank’s Brady House branch in Mumbai.
After considering Sharan and Rao’s replies and the comments of the bank’s Board, the Centre removed them from office as it found it was expedient in the interests of PNB.
According to the notification, the dismissal of Rao is subject to the outcome of a plea in the Delhi High Court.
“We are happy to see some action being taken. Whether it is only the two Executive Directors and other officials are also involved in the scam has to be probed in full,” Venkatachalam said.
According to him, in the past, low-level officers would have been the scapegoats for such massive scams.
“With the action taken on the top management, people will be satisfied that public sector bank officials are answerable for their lapses,” Venkatachalam added.
In this new world, data is the new wealth: Ambani
Mumbai: Reliance Industries chairman and managing director Mukesh Ambani urged Prime Minister Narendra Modi to take steps against ‘data colonisation’, specially by global corporations, stating that Indian data must be owned by Indians.
Invoking Mahatma Gandhi’s movement against political colonisation, Ambani said India now needs a new movement against data colonisation.
“Gandhiji led India’s movement against political colonisation. Today, we have to collectively launch a new movement against data colonisation,” he said Gandhinagar at the Vibrant Gujarat Global Summit.
Stressing that, in this new world, data is the new wealth, Ambani said, “India’s data must be controlled and owned by Indian people and not by corporate, especially global corporations.”
He further said, “For India to succeed in this data driven revolution, we will have to migrate the control and ownership of Indian data back to India. In other words, give Indian wealth back to every Indian.”
Stating that the “entire world has come to recognise” Modi “as a man of action”, Ambani said, “Honorable Prime Minister, am sure you will make this one of the principal goals of your digital India mission.”
Later in the day, countering Ambani’s call, Governor – Commonwealth of Kentucky, Matthew Griswold, asked Modi “to think in the opposite” in order to realise the tremendous opportunity that lies in Indo-US partnership.
“Honorable prime minister you have been asked from this stage to think about limiting the amount of competition, limiting the exchange of ideas, information and goods. I would encourage you to think in the opposite,” he said.
While stating that it is important to put the people of India first, Griswold said, “It is also important to put their opportunity and our opportunity as citizens of the world to trade with one another and exchange ideas because iron sharpens iron.”
The greatest possibility comes from the exchange of these idea, he added.
“If we can cut the regulations, cut the bureaucracy, cut the red tape, the opportunity is enormous between our nations,” he added that India is now the 10th largest trading partner for the US and “climbing quickly”.
“The opportunity before us between India and the United States is incredible, but responsibility falls on each of one us, those of us in elected positions, those of you in the industry, those of you who represent various constituencies, we have much work to do…we must do this, ” Griswold said.