Privatization of Public Sector Banks to Proceed as Planned, Confirms Finance Minister Sitharaman

Privatisation of Public Sector Banks to Proceed According to Schedule

During a press conference in Mumbai, Finance Minister Nirmala Sitharaman affirmed that the privatisation of public sector banks (PSBs) in India will proceed as per the government's schedule, indicating that the process might be undertaken after the general elections in 2024. Sitharaman's statement reinforces her earlier announcement in the Budget for 2021-22, where she expressed the government's intent to privatise two PSBs.

"It (privatisation) will go on as per the schedule and there is no change in it," Sitharaman responded when asked about the progress of the earlier announcement.

Potential Delay and Template for PSB Privatisation

Officials estimate that the proposed privatisation processes for some PSBs may be delayed until the completion of the general elections in May 2024. However, in the meantime, the strategic disinvestment of IDBI Bank, which is technically classified as a private bank but has significant government and LIC (Life Insurance Corporation) ownership, could serve as a model for the privatisation of other PSBs.

Monitoring Inflation and Ensuring Consumer Protection

Government's Vigilance on Inflation

To safeguard consumer interests, Finance Minister Sitharaman emphasized that the government is closely monitoring retail inflation. She assured that the government is actively tracking inflation data at the ground level.

"The government is monitoring inflation. We are monitoring all data on the ground level also. Inflation is already moderating," Sitharaman stated.

CPI inflation has gradually declined from a peak of 7.8% in April 2022 to an 18-month low of 4.7% in April 2023. Furthermore, core inflation, which excludes volatile food and fuel prices, has significantly decreased, reaching a three-year low in April.

Government's Intervention to Stabilize Wheat Prices

During the press conference, Sitharaman addressed the recent rise in wheat prices and highlighted the government's intervention measures. In response to the price surge, the government released grains from its buffer stock to cool down prices and ensure stability in the market.

"Wherever intervention is required, we have been doing it," Sitharaman stated, highlighting the government's commitment to stabilizing commodity prices.

RBI's Currency Withdrawal and Response to Criticism

RBI's Decision and the Minister's Counterargument

In response to former finance minister P Chidambaram's comments questioning the integrity and stability of the Indian currency due to the introduction and subsequent withdrawal of ₹2,000 notes, Finance Minister Sitharaman defended the Reserve Bank of India's (RBI) decision.

Sitharaman further emphasized that questioning the decision of the central bank does not align well with someone who previously held a position in the finance ministry.

"To cast aspersions on the matters of this nature, currency, decision of the central bank does not augur well with someone who was with the (finance) ministry," she said.

On May 19, the RBI announced the withdrawal of ₹2,000 notes from circulation and set a deadline of September 30 for people to deposit or exchange them in banks. This move aims to address concerns related to the circulation of high-denomination currency and maintain the stability and integrity of the Indian currency.

Sitharaman's response indicates the government's support for the RBI's decision and reinforces the authority of the central bank in making such determinations. The withdrawal of ₹2,000 notes is seen as a measure to curb black money and illicit activities while promoting transparency and accountability in the financial system.

Conclusion

Finance Minister Sitharaman reiterates the government's commitment to the scheduled privatisation of public sector banks, with potential implementation after the general elections in 2024. The government's focus on inflation monitoring and consumer protection measures demonstrates its dedication to safeguarding the interests of the public. Additionally, Sitharaman defends the RBI's decision to withdraw ₹2,000 notes, emphasizing the central bank's authority in such matters.