The government should focus on higher allocation to agriculture and rural areas and also push for infrastructure development in the Budget 2023, former State Bank of India (SBI) chairman Rajnish Kumar has told Moneycontrol.
“It is an election year. So, I’m expecting there will be more focus on the rural outlook. In infrastructure too, I expect a higher allocation which will be the right strategy for the country,” Kumar said in an exclusive chat on January 5 as part of Moneycontrol’s Banking Central interview series.
Finance Minister Nirmal Sitharaman is expected to present the Union Budget 2023-24 on February 1, which will be the last full budget of this government with Lok Sabha elections due early 2024.
Kumar lauded the government for keeping a tight check on the fiscal deficit. “If you look at from overall vision of the government, this government must be given due credit. Even in the Covid period, the government was very mindful of the fiscal deficit,” the former SBI chairman said.
(Watch the full interview here)
The government is on track to meet its fiscal deficit target of 6.4 percent of the GDP for 2022-23 on the back of strong growth in revenue collections, the World Bank said in its India Development Update in December.
High nominal GDP growth in the first quarter supported strong growth in revenue collection, especially Goods and Services Tax (GST), despite tax cuts on fuel, the body said.
Kumar said despite the clamour to loosen the purse strings and disburse money during Covid, the government continued to focus on fiscal deficit. ““We are now seeing the consequences of whoever has done it (referring to countries which boosted economies with easy liquidity during Covid),” Kumar said.
“… I don’t expect, despite being an election year, there will be any compromise as far as the fiscal deficit is concerned. Luckily for the country, the economy is now almost at pre-Covid level, so the tax buoyancy is there which gives headroom to the government,” Kumar, who is the chairman of finetch unicorn BharatPe, said.
Kumar said while he would be very happy if there is any relaxation in income tax, it was unlikely at this juncture. “I don’t have very high expectations on income tax,” he said.
“Greater autonomy and professionalism in the public sector can increase its contribution to the growth story of India,” Kumar told Moneycontrol.
His comments assume significance in the backdrop of a prolonged debate on autonomy, especially for public sector banks (PSBs), and the bid to privatise at least some of the state-run lenders.
Kumar served as the chairman of India’s largest bank by assets between October 2017 and October 2020.
Kumar also pitched for reforms in the Kisan Credit Card (KCC) loan scheme, calling it old-fashioned and a sources of bad loans.
“A relook at the Kisan Credit Card scheme is required. The scheme is old fashioned and leads to high NPA (non-performing asset),” he said. A loan becomes NPA if there is no payment of interest or principal for a period of 90 days.
KCCs are credit cards used by farmers for drawing money. The limits can be increased periodically based on the repayment records.
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