Indus Valley Times

MUMBAI,FEB 4: India’s economic image is not affected due to Adani Group’s recent decision to pull out Rs 20,000 crore FPO amid allegations of financial wrongdoings, Finance Minister Nirmala Sitharaman said on Saturday.

The finance minister said there has been an accretion of USD 8 billion to the forex reserves in the last two days alone.

“… our macroeconomic fundamentals or our economy’s image, none of which has been affected. Yes, FPOs (follow-on public offers) come in, and FIIs (foreign institutional investors) get out,” Sitharaman told reporters here.

The minister said there are “fluctuations” in every market but the accretion over the last few days establishes the fact that the perception of both India and its inherent strengths is intact.

Answering a broader question on the allegations against Adani Group, she said the country’s independent financial sector regulators will be looking into the aspect and added that capital markets watchdog Securities and Exchange Board of India has the wherewithal to ensure stability in markets.

“… for keeping the market and the markets regulated in prime condition, the Sebi is the authority. And it has the wherewithal to keep that prime condition,” she said.

The finance minister also said that the RBI has already spoken out on the issue, referring to Friday’s statement, which said the banking sector is resilient and stable.

About ten days ago, US-based short seller Hindenberg Research made a slew of allegations on the corporate governance front against Adani Group.

The Ahmedabad-based group has denied all the allegations and termed it as a calculated attack on India. It has cancelled the FPO even after managing subscriptions to it.

Finance Secretary TV Somanathan on Saturday stood by his comment on the controversy where he called it a storm in a teacup, clarifying that this is in the context of macroeconomic terms and the stability of India’s public financial institutions.

Meanwhile, on the decision to convert outstanding dues into equity at Vodafone Idea, Somanathan said the transaction is being done as a package for all telcos. He said the government share will be held by the Department of Investment and Public Asset Management (DIPAM) where the stake will be considered as a public shareholder.

DIPAM secretary Tuhin Kanta Pandey said the price has been taken at Rs 10 despite the Vodafone Idea shares trading lower on bourses because, as per laws, preferential allotments have to happen at the face value of a share.

The finance ministry officials present at the meet also made it clear that the tweaks on taxation in the insurance front will not impact the policy agenda of deepening penetration and clarified that there was sufficient data to suggest that investments were masquerading as insurance premiums due to which a decision was taken to tax the same.

Sitharaman said there is no timeline which has been decided to end the old tax regime, and the government has only introduced a simpler new tax regime, which has the incentives of lower rates.

The officials also denied that this will impact the savings in the economy.

Chief Economic Advisor V Anantha Nageswaran said citizens are being given an expanded array of choices to determine what they want to do with their money.

Answering a question on introducing the controversial p-notes for GIFT City, Somanathan said it competes with other international financial services centres due to which such provision has to be made and added that India always retains the right to mitigate any perceived risks.

Somanathan said the Rs 35,000 crore outlay for green initiatives will be primarily used for retrofitting in petroleum refineries and augmenting strategic storage capacity.

“Some of the public sector refineries and other infrastructure facilities in the petroleum sector need retrofitting to meet our ambitious emissions and pollution targets,” he said.

On the roadmap to further fiscal consolidation, Somanathan said the government will focus on broadening revenues, avoiding needless expenditure and expanding the denominator by achieving higher GDP growth to meet the goals of having the number at 4.5 per cent by FY26.

When asked about the FY23 budget’s decision to privatise two state-run lenders, Sitharaman said there is no update on that, which she can share.

-PTI