FinMin to face House panel questioning this week on economic strategy

There is a correction at the end of this article

Parliament’s standing committee on finance is to meet finance ministry officials on Friday to discuss measures taken by the government on important economic issues such as a depreciating rupee, information on foreign bank accounts of Indians and Moody’s downgrade of bank ratings.

The meeting will be attended by chief economic adviser Kaushik Basu, economic affairs secretary R Gopalan and enforcement directorate officials. “The day-long meeting has been called just before the winter session, as the issues slated to be discussed are likely to be taken up in Parliament during the session,” a member of the panel told Business Standard.

He said the general price rise and the increase in petroleum product prices were also to be discussed in the meeting. And, that concerns had been raised across the board on the issues, with the panel wanting to know the government strategy.

In March 2009, Germany shared a list that contained the names of 26 Indians having unreported accounts with LGT Bank in Liechtenstein. Earlier this year, France shared details of 700 accounts of Indians in HSBC Bank, Geneva. The income tax department is processing these details and is also taking action to recover the dues.

The panel member said, “We want to specifically know what the government is doing with regard to the information on 700 bank accounts received from France”.

Further, global ratings firm Moody's had downgraded the entire Indian banking system's rating last week from ‘stable’ to ‘negative’, citing the likely deterioration in asset quality in the months ahead. Standard & Poor's (S&P) had downgraded the country's largest lender, State Bank of India, by one notch in September. These downgrades have also raised serious concerns.

The recent Rs 2 a litre increase in petrol prices has taken political centre-stage, adding to continuing stress on overall prices. On Tuesday, petrol prices were slashed by Rs 2.22 per litre.

Despite successive Reserve Bank of India rate increases, inflation has not shown any signs of retracting. It remained at over nine per cent in October, for the 11th month in a row.

The rate of price rise last month rose marginally to 9.73 per cent from 9.72 per cent in September, mainly due to the mounting inflation in food articles, specially tomatoes (among vegetables) and pulses, coupled with high demand in the festival season. The finance ministry is to outline for the panel the measures planned to help moderate inflation in the coming months. 

Correction

The article wrongly states that Standard & Poor's had downgraded India's largest lender, State Bank of India, by one  notch in September. We regret the error.