Jaitley says PSU banks, stalled projects challenges facing govt

The finance minister, who was speaking at a Financial Stability Development Council meeting, also said better monsoon and increased foodgrain output would help ease the price situation

The major challenges facing the Narendra Modi government include cleaning up public sector banks, making stalled projects functional and economically viable, and boosting private sector investment, Finance Minister Arun Jaitley said here on Tuesday.

Jaitley, who was speaking at a Financial Stability Development Council (FSDC) meeting, also said that better monsoon and increased foodgrain output would help ease the price situation.

“Due to better spread of monsoon, we are expecting higher production of pulses this year compared to previous years, which in turn will substantially ease their prices in the market,” said an official statement, which was issued after the FSDC meeting, quoting Jaitley. Financial sector regulators, including Reserve Bank of India (RBI) Governor Raghuram Rajan and Securities and Exchange Board of India (Sebi) Chairman U K Sinha, deliberated on the global macro-economic situation and financial developments globally. The FSDC, headed by the finance minister, also decided that India would not let its guard down on preparedness to deal with external vulnerabilities including those arising from Britain's exit from the European Union.

The council also reviewed the measures taken by the government and the central bank for handling stressed assets and discussed ways to manage the situation. It called for continuous monitoring of the situation developing from Britain's exit from the European Union, or Brexit, as it would take a long time for the full situation to unfold.

There should be no complacency on the Brexit situation, said the FSDC, which met  on Tuesday for the 15th time since its formation in December 2010. “The council also discussed issues relating to developing a comprehensive framework for identification of systematically important financial institutions (SIFIs) across all sub-sectors of financial sector,” the statement noted. On maturity of concessional swaps of 2013 against Foreign Currency Non- Resident deposits during September-December 2016, FSDC noted the steps taken by RBI to address the issue and its consequences suitably.

Chief Economic Advisor Arvind Subramanian gave an overview of the state of macro-economy highlighting important issues.

With an uncertain global economy and high volatility in financial markets confronting emerging economies, the Council was of the opinion that India is "much better placed" on the back of improvement in macro fundamentals, a slew of reforms and large forex reserves.

FSDC was set up in December 2010 to strengthen and institutionalise the mechanism for maintaining financial stability, enhancing inter-regulatory coordination and promoting financial sector development. Its members include heads of financial sector regulators - RBI, Sebi, Pension Fund Regulatory and Development Authority (PFRDA), Insurance Regulatory and Development Authority (Irdai) and Forward Markets Commission along with top finance ministry bureaucrats and the Chief Economic Adviser.

Finance Secretary Ashok Lavasa, Economic Affairs Secretary Shaktikanta Das and Financial Services Secretary Anjuly Chib Duggal attended Tuesday's meeting. Besides Rajan and Sinha, Irdai Chairman T S Vijayan and PFRDA Chairman Hemant G Contractor also attended the meeting.