Keen to reignite long-term financing: Finance Minister Piyush Goyal

Union Finance Minister Piyush Goyal has proposed a long-term infrastructure bond with a fixed coupon rate.

At an interaction, organised by the Indian Chamber of Commerce, the Union minister said, long-term financing was a worry for the segment, especially after the transformation of IDBI and ICICI. 

The minister said he had suggested the idea of a 25-year bond to a senior official of the largest bank over the weekend. 

"I am open to suggestions on how to reignite long-term financial infrastructure," he added. 
 

In the last four to five weeks, the minister said, the focus had been on regaining ability to get credit back into the system. "We are already in double-digits credit growth, banks are getting confident," he said. 

On non-performing assets (NPAs), Goyal was optimistic of the new 'Sashakt' idea. The scheme divides stressed assets into three classes -up to Rs 500 million; Rs 500 million to Rs 5 billion, and above Rs 5 billion - and prescribes the resolution method.

"I agree there can be genuine business failures. Business inherently mean risk and risk has to be factored in. Bankers also have to be more conscious," he said.

On rising oil prices, Goyal said, "Oil prices have gone up and down in the past. As they go up, government will have to respond with pro-active measures and we are fully geared." 
 

"As they go down, we have to capture the value, so that social welfare schemes can be given a thrust."

Vague statements were being made that the government collected a huge amount of taxes when oil prices went down. The total amount that would have come as additional revenue to the government would not have exceeded Rs 2.5 to Rs 3 trillion, he said.

The previous government had left Rs 1.3 trillion of oil bonds, subsidies of the the period prior to 2014. Also, there were other unpaid subsidy bills. 
 

"When the times were good, they didn't save for a rainy day," Goyal said, referring to the UPA government. The current government was geared for any adverse condition, he said.
 

A single rate for goods and services tax (GST) was not tenable, as it would nullify the concept of progressive taxation and tenets of equitable distribution of income, he said.