Privatising PSBs won't impede financial inclusion, says FM Sitharaman

Finance Minister Nirmala Sitharaman said India's next set of customs reforms is in progress after GST, adding that the country is on track to meet its fiscal goals and become a top-three economy soon

Finance minister Nirmala Sitharaman on Tuesday said the perception that when public sector banks (PSBs) are professionalised or privatised, financial inclusion goals could not be achieved is incorrect. 

“Despite 50 years of nationalisation, the objectives of financial inclusion could not entirely be achieved. After we professionalised the banks, those objectives were beautifully achieved. So the perception that when you try to bring in banks to become professional and if you want to privatise them — which is a Cabinet decision — that the objective of reaching all people, taking banking to everybody will be lost is incorrect. Once you allow banks to function professionally, and allow them to have board driven decisions, every objective of national interest and banking interest will be served,” Sitharaman said while delivering the Valedictory Lecture at the Delhi School of Economics. 

 

Sitharaman said in the name of financial inclusion, keeping banks under government control and not allowing them to professionalise themselves meant that the government had to infuse capital now and then. “The quality of assets suffered. To correct the twin balance sheet problem, it took us six years after Prime Minister (Narendra) Modi came to power. Now I am confident to say Indian banks stand out exemplarily in terms of asset quality, NIM (net interest margin) and financial inclusion,” she added. 

Taking an indirect swipe at the US President Donald Trump’s comment that India is a “dead economy”, Sitharaman said though in­te­rnat­ionally people try to bully India but Indians should have faith in their own achievements. “Who can tell a population of 140 crore people, who are pushing India’s rank from fifth to fourth to third that you are dead? It’s alright for people to taunt us from outside but we within the country shouldn’t decry what our people are doing. All of us ourselves are doing remarkably well in pushing the economy further. That’s why we were able to get 25 million people out of multi-dimensional poverty,” she added. 

Sitharaman said India today can stand up to protect its interests because of its economic strength. “We are at a time when India is moving fast on so many different parameters, largely economic. Of course, India and its population, its location in the global map has strategic significance. But India stands together today and stands tall and stands distinctly on its feet beca­use of the economic strength of India. Today we are standing up to say ‘my economy is strong eno­ugh..tell me why I am wrong if I protect my interests.’  We are able to articulate this because of the str­ength of our economy,” she added. 

The finance minister said after the landmark Goods and Service Tax reforms which simplified the indirect tax structure, the government is doing “immense work” on next generation customs reforms. 

Sitharaman said the government is confident of meeting the 4.4 per cent fiscal deficit target in FY2025-26 before moving its focus to the debt to GDP ratio from next financial year onwards. “For achieving Viksit Bharat, we need to consciously be on the path of reforming and bringing in prudential fiscal management. That’s the responsibility of every finance minister,” she said.