Ukraine crisis: Crude oil surge a challenge to financial stability, says FM

Union Finance Minister Nirmala Sitharaman on Tuesday said rising crude oil prices amid escalating Ukraine-Russia tensions posed a challenge to India’s financial stability and the government was monitoring the situation.

“Even at the Financial Stability and Development Council (meeting) today (Tuesday), (we looked) at the challenges that posed a threat to financial stability, crude (oil) was one of the things. The international situation is worrisome where we voiced that we want a diplomatic solution for the situation that is developing in Ukraine.”

“Crude (is) one of the most important considerations ... we will keep a watch,” she said while interacting with the media.

When asked about any decision to cut taxes on fuel, she said a day prior to Deepawali the prime minister had announced a cut. Brent crude prices shot up to $99.1/barrel from $96/barrel on Monday after the Russia-Ukraine crisis deepened, but it fell to $97.86.

NSE CONTROVERSY

Sitharaman said the government was looking into the controversy around former National Stock Exchange managing director (MD) and chief executive officer (CEO) Chitra Ramkrishna.

She said she’d get to the “bottom of what is available” to take a view if the sector regulator had done enough in terms of penalising the stock exchange.

“I have no view this way or that way till I get to the bottom of what is available. I am looking into it. I won’t comment whether it (the penal action taken by the Securities and Exchange Board of India, or Sebi) is enough,” she said.

The NSE has been criticised over the controversy surrounding Ramkrishna sharing confidential information with an outsider, a purported spiritual guru, and lapses in HR practices.

The matter, although it has come to light now, dates back to 2013-16. Some have even criticised Sebi for delaying matters and letting off Ramkrishna and former group operation officer Anand Subramanian lightly.

Earlier this month, Sebi imposed a penalty of Rs 3 crore on Ramkrishna and Rs 2 crore each on the NSE, Subramanian and Ravi Narain, another former MD and CEO.

An order passed by Sebi on February 11 showed she supposedly ran India’s largest exchange in an arbitrary manner and shared information such as board agendas and business plans with a “Himalayan yogi”.

LIC IPO

The minister said the market feedback on the proposed initial public offering (IPO) of the Life Insurance Corporation was positive but declined to answer the question if it could slip into the next financial year because the markets had turned volatile, mainly due to global headwinds.

“I can see in the market now the DRHP [LIC] is out, there is a lot of buzz in the market … interest in the market and I am glad the way in which it has been crafted. We will be going ahead with it,” she said.

According to the draft red herring prospectus, the government will sell 316 million shares of the insurer through an offer for sale in the IPO, which will be the largest ever in India. The IPO has seen a strong investor interest as evident in the roadshows, merchant bankers said. Large investors will be keen to participate because LIC is expected to be an index stock.

BANK PRIVATISATION

Even if the Union Budget this year was silent on the privatisation of public sector banks and general insurance companies (an announcement was made in the previous year’s Budget), Sitharaman said the government was staying the course on the disinvestment process.

“On privatisation, we have been on course since last Budget … the Cabinet has already given its clearance,” Sitharman said while saying the government went ahead with Air India disinvestment and the IPO of the LIC.

“That time the question was Air India. The fact is that we are moving forward and that is how Air India got cleared. NINL (Neelachal Ispat Nigam Ltd) got cleared. The LIC IPO was eagerly awaited and that has come out,” the minister said.

Air India was sold to Tata Group, which acquired a 100 per cent stake in the airline in a deal that closed in the last week of January for Rs 18,000 crore.

In her Budget speech on February 1, 2021, the finance minister had announced two public sector banks, in addition to the disinvestment of IDBI Bank, and one general insurance company would be privatised.