For the first time in India, a bank — IDBI Bank — which was held by the government, will soon become private. This is not disinvestment but the government exiting a bank, said TV Somanathan, Secretary (Expenditure), Finance Ministry.

The Budget said that the entire government holding in IDBI Bank will be sold to non- government shareholders. Of course, LIC is a shareholder, but it is a shareholder in many private sector companies too. LIC is a financial institution. There's a very big difference between a government-owned bank, and a bank where the government does not have any shared ownership at all. And that distinction is actually quite fundamental, he said.

“This is an important step that’s been taken in the Budget,” he said in his keynote address on Markets and Economy 2020 organised by the United Way Chennai. “Surprisingly, this move has received very little attention,” he added.

Somanathan said that there were a few themes that underpinned the Budget including promoting the growth of the economy without sacrificing macro economic stability. The Budget has attempted to give the economy a prudent fiscal stimulus.

In terms of personal income tax, it is consistent with what was done with corporate taxes a few months ago. It creates an optional low-tax, low-exemption regime. People who are better off will stay in the existing regime. People who will save taxes will move to the new tax regime, he said.

Another important theme in the Budget is strengthening the financial system. There was an important announcement of quintupling the limit of deposit insurance in banks, which was last done over 30 years ago. “This is a long overdue step,” he said.

There is a major thrust on agriculture and rural development where the provisions have increased very substantially.

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