Govt should offer one-time settlement to telcos, waive penalties: S C Garg

Former finance secretary Subhash Chandra Gargon Wednesday said the government should offer a one-time settlement scheme to the telecom companies to pay the principal due amount as per the AGR definition and waive the penal interest and penalties.
The massive Rs 1.47 trillion of adjusted gross revenue (AGR) dues are pushing telecom firms to the brink.

In a blog titled 'Rebuilding Telecom Business in India', Garg said the telecom crisis in India is not just limited to AGR-related issues.
"Offer a one-time settlement scheme to the telecom companies (both operating and under resolution) to pay the principal due amount as per the AGR definition as contained in the licensing agreements and waive the penal interest and penalties.
"Alternatively, appoint a board for Vodafone Idea Ltd by ousting the current board on the lines of action taken in the case of IL&FS and DHFL and secure a moratorium of some time on servicing of loans and government dues," he said.
Garg noted that the telecom business -- both voice and data -- is headed towards becoming a duopoly (Jio and Airtel) with the remaining two players, Vodafone Idea and BSNL-MTNL, hurtling towards eventual shutdown, which might as well be an abrupt collapse.
"This has enormous consequences for over 400 million of the customers of Vodafone Idea and BSNL-MTNL in terms of continuous availability of telecom services and also for competitiveness in the industry itself," he said.
Garg also wondered whether the government's proposal to put in billions of dollars (over Rs 70,000 crore) to revive BSNL-MTNL is advisable or not as the country is facing massive economic slowdown.
The Supreme Court last week rejected a plea by telecom firms including Bharti Airtel and Vodafone Idea Ltd for extension in the payment schedule and asked them to deposit an estimated Rs 1.47 trillion in past dues for spectrum and licenses by March 17.
Some telecom firms have said they were already struggling with mounting losses and debt and the additional liability has raised concerns of them defaulting on existing loans.

Retirement decision not linked to transfer, says ex-finance secy S C Garg

Subhash Chandra Garg, who announced voluntary retirement soon after being appointed as power ministry secretary, has clarified that his decision to quit the IAS is not linked to his transfer.
He said he informed the Prime Minister’s Office (PMO) earlier this month about his retirement plan. “I had discussed my voluntary retirement with the PMO on July 18, much ahead of the transfer order. There is no connection between the two. I formally submitted the application on July 24,” he said.

When asked about the Budget proposal on sovereign bonds, that has raised quite a stir, Garg said that while he was in the finance ministry, no one had opposed the idea. In a major bureaucratic reshuffle, he was shifted to the power ministry on Wednesday. The issuance of overseas bonds was estimated at $10 billion.
“The sovereign bond issuance is intended to ease pressure on domestic availability of resources, especially private sector. It was a very well considered decision, has enormous benefits and risks are much less.
During the time I was there (finance ministry), I didn’t hear anyone, including the government, questioning it,” said Garg, while addressing the media after taking charge at the ministry of power on Friday.
He said India’s external liabilities are very small and make for a perfectly legitimate case to consider sovereign bonds.
“Of the G20 countries, 19 issue sovereign bonds. So, India will not be the only one to do that,” he said.
On July 17, Garg refused to sign on the report finalised by the former Reserve Bank of India (RBI) governor Bimal Jalan-led committee reviewing the central bank’s economic capital framework (ECF), this paper reported on Friday.
When asked about this, Garg said the report is not final. “I have been saying this; the committee is still deliberating on it. So now, those deliberations will be taken forward by new representatives of the department. The committee has not come to any conclusion.”
Replying about his plans for the power sector, he said improving the financial condition of power generation and distribution companies (discoms) are his top priorities. “There are several very important issues in the power sector, distribution reforms and finances of the sector. There are some places where the PPAs (power purchase agreements) are being questioned. We have to bring stability to the sector. There are tariff policy issues that are very important and need to be finalised.”
Regarding another round of financial bailout of state-owned discoms, Garg said this was done three or four times and had not worked. “So we have to look at newer ways,” he said.
The BJP government, in its first term, launched the UDAY scheme for turning around discoms.
The financial part was concluded with discoms issuing bonds against their debt; operational improvement is still not achieved, leading to discoms making losses again.
‘Informed PMO about VRS on July 18’
Garg said he had informed the PMO onJuly 18 about his retirement plan
He defended the Budget proposal of raising resources via issuance of overseas sovereign bonds
The issuance was estimated at $10 billion
He said external liabilities are very small and make for a legitimate case to consider these instruments
Of the G20 countries, 19 issue sovereign bonds. So, India will not be the only one

Didn't sign Jalan panel report because it's not final: SC Garg

Former finance secretay Subhash Chandra Garg on Friday said he hadn't signed a report written by a committee reviewing the Reserve Bank of India economic capital framework because deliberations were not over.
Garg, in a bureaucratic reshuffle, was moved as the Finance and Economic Affairs Secretary and appointed the new power secretary--a move that surprised analysts because of his key role in framing key government policies like the Union Budget.

"I had discussed my VRS (voluntary retirement) with the Prime Minister's Office on July 18...much ahead of the transfer order. There is no connection between the two," news agency PTI quoted Garg as saying at a media briefing.
"I have on my hand in the power ministry....distribution reforms, issues in transmission and getting power generation. The power sector is very important. I will do my best in the power sector," said Garg about his new work, according to PTI.
Garg's refusal to sign a report written by the committee led by former Reserve Bank of India (RBI) governor Bimal Jalan created a "peculiar situation" for the rest of its members, reported Business Standard on Friday.
The panel now sought the RBI's views on the way forward as Garg leaves the ministry.

Shifted out of finance ministry, S C Garg applies for voluntary retirement

A day after he was transferred to the power ministry, outgoing finance secretary Subhash Garg is learnt to have applied for voluntary retirement. He will be the first finance ministry secretary to do so in 19 years. If the voluntary retirement application is accepted, Garg will leave service more than a year before his scheduled superannuation on October 31, 2020.
In November 2000, E A S Sarma, who was economic affairs secretary in the Atal Bihari Vajpayee government, was moved to coal ministry. Instead of taking up that post, he retired voluntarily, a year and two months before his superannuation date.

A finance secretary is usually moved to one of the other ‘Raisina Hill’ posts, either in the defence or home (external affairs is for diplomats) ministry, or given a constitutional post after super-annuation, like in election commission or finance commission. However, there are also cases where the finance secretary was moved to other ‘non-Raisina Hill’ ministries.
Arvind Mayaram had been serving as economic affairs secretary since August 2012, and was designated finance secretary in April 2014. These were the last few years of the Manmohan Singh government. Just five months after prime minister Modi took charge in his first term, Mayaram was transferred to the post of minority affairs secretary, where he served for exactly a year before retiring.
During Sarma’s time as economic affairs secretary, Piyush Mankad was the finance secretary. The same time as Sarma was moved to coal ministry, Mankad was moved to the post of secretary in department of industrial policy and promotion. He served in that post and later also an additional director general in Asian Development Bank.
ALSO READ: Subhash Chandra Garg: The man who started many fires for Finance Ministry
On Wednesday, an official notification revealed that as part of the first senior bureaucratic reshuffle in the Modi government’s second term, Garg was transferred to the post of power secretary. Atanu Chakraborty, who is currently secretary of department of investment and public asset management, will take over as the economic affairs secretary.
There are various rules governing voluntary retirement of a central government official. Under Rule 48, a government servant can apply for voluntary retirement after completion of 30 years of service. This is the rule likely to pertain to Garg.
Existing rules allow a service member to retire before attaining a age of 60 years, after giving three months’ notice in writing to the state government concerned (the cadre which he or she is a part of), on the date on which he or she completes 20 years of qualifying service or any date thereafter to be specified in such requests.
The notification formalising the first major bureaucratic reshuffle on Wednesday evening was a surprise. However, that Garg would be moved out of North Block, wasn’t. In fact, the buzz on his departure had been gaining traction in bureaucratic circles for a few months now. Owing to a number of factors, Garg – a 1983 batch Rajasthan cadre officer – was seen as one of the most powerful finance secretaries in recent times.

Govt will meet fiscal deficit target of 3.4 per cent in FY'19: S C Garg

Economic Affairs Secretary Subhash Chandra Garg Friday exuded confidence that fiscal deficit target of 3.4 per cent for 2018-19 would be met as the shortfall in indirect tax collection would be compensated by lower expenditure.
"I am very confident (of meeting fiscal deficit target of 3.4 per cent for 2018-19)," Garg said on the sidelines of IVCA conference here.

As per the interim Budget 2019-20, the government has pegged fiscal deficit target of 3.4 per cent for the current fiscal year ending March 31.
"Our assessment at this stage is, in direct taxes, we will probably do as per the revised estimate, indirect taxes, there might be some shortfall, and on the expenditure side, there might be some savings.
"On the whole, we should be where we are," he said.
In the current fiscal, direct tax collection is pegged at Rs 12 trillion (revised estimate).
The government had originally budgeted to collect Rs 11.50 trillion in 2018-19 from direct taxes, which include corporate tax and personal income tax.
Likewise, in 2018-19, GST collection is pegged at Rs 6.43 trillion (RE), which is lower than the targeted Rs 7.43 trillion (BE).
On the indirect tax front, customs collection in the current fiscal is pegged at Rs 1.30 trillion (RE).
Fiscal deficit touched 121.5 per cent of the full-year revised target of Rs 6.34 trillion at the end of January on account of lower revenue collection, according to recent data released by the Controller General of Accounts (CGA).

Timely data on NBFCs can avoid repeat of IL&FS-type crisis: S C Garg

Economic affairs secretary SC Garg Saturday blamed the lack of real-time data for the ongoing crisis in the shadow banking sector and also called for sound regulations to help develop the sector in an orderly manner.
The government is trying to work with the Reserve Bank to create a system for more information about the NBFC sector, the secretary added.
Following the liquidity crisis in NBFC major IL&FS that began last August, the entire non-banking financial services sector has been passing through a crisis, primarily related to liquidity and many blame the same to a crisis of confidence rather than anything fundamental.

ALSO READ: NCLT allows govt to reopen IL&FS Group's books for the last 5 years
Following the IL&FS defaults, many major NBFCs like DHFL and Indiabulls among others had bad times leading to a massive fall in their stock prices.
"Sound regulation is necessary for the development of NBFCs. Any regulation that throttles growth is not a good regulation," Garg told a CII summit on the sector.
There is a need to create regulations that serves the needs of NBFCs and investors, and also those of the borrowers, and thereby serving the overall financial stability, he said.
"IL&FS crisis shows there are lots of gaps not only in terms of regulations but also in data collection, information, interaction with the government or the regulators.
ALSO READ: RBI report calls for fine-tuning institution scanning after IL&FS crisis
"Today, we don't even know who to talk to in NBFCs and there are no organisations that represent them," Garg said.
Underlining the need for robust and real-time data, Garg said the government is trying to work with the Reserve Bank to create a system for more information about the sector.
"Data-points are very poor today when it comes to NBFCs. When the IL&FS episode happened, we wanted to look at how much change is taking place in financing side, where who they are lending to and what kind of assets they have. We don't have the data on NBFCs even on a monthly basis, forget daily, which we need," he said.
Garg also called for a better and mature understanding of the funding needs of NBFCs saying they need large, long- term funds. Addressing the same event, banker Uday Kotak, who heads IL&FS now, said as financial conglomerates grow, there is a need to ensure that inter-group and intra-group transactions gets much higher attention.
The secretary also reiterated that government will not allow any fiscal slippage this year.
Garg further said the Bimal Jalan-headed panel on identifying an appropriate economic capital framework for the RBI will have its maiden meeting on January 8.
ALSO READ: Malabar Hill property among realty IL&FS will auction off to pare debts
He also reiterated that the government has not taken any decision to stop printing the Rs 2,000 notes, which was introduced soon after the government cancelled Rs 1000 and Rs 500 currency notes in November 2016.
The move was later criticised by many as contributing to black money--the very same reason that led the prime minister to announce the note-ban. But almost the entire Rs 15.6 trillion of the cancelled notes returned to the system, nullifying these claims.
"There is no move (to stop printing of Rs 2000 notes).These notes remain in circulation and are available and nearly Rs 7 trillion are in circulation today," Garg said.
There were media reports that the government asked RBI to scale down printing of these highest value notes.
Meanwhile, the NBFCs have made a few demands to the government, including opening up alternate source of funding and providing modes of refinance from the government.
"We think review of the risk weighting for NBFCs other than asset financing and infrastructure NBFCs will help improve the flow of bank money to the sector," CII said in a memorandum to the government and called for allowing some the of PCA banks to lend to the sector.

Govt says no concern over rupee, analysts see no benefit for exports

As the rupee slid to its all-time low, the government tried to assuage sentiments on Tuesday, saying that the fall in exchange rate was because of external factors and was not a cause of concern.
“The rupee is depreciating because of external factors. There nothing at this stage to worry,” Economic Affairs Secretary Subhash Garg said.
Speaking to reporters, Garg said the Reserve Bank of India had spent about $23 billion to intervene and support the rupee.
On what could happen if the fell to 80 against the dollar, Garg said it will not be a concern, provided all other currencies depreciate in the same range. The rupee, he said, is still better compared to other currencies. “Our assessment is that the fall of rupee is a temporary phenomenon,” he said.
On Tuesday, the rupee crashed to record low of 70.09 against the US dollar on global concerns, over Turkey’s economic woes that have impacted various emerging markets.
Garg also said while the RBI had sufficient foreign exchange reserves, its intervention in the currency market may not be of much help as of now, as the weakness in the rupee was a result of global factors.

ALSO READ: Rupee breaches 70-mark against dollar, experts say volatility manageable
The RBI’s foreign exchange reserves were at $402.7 billion in the week ended August 3, down $1.49 billion over the preceding week, latest data released by the central bank showed. The central bank has always stated that it does not seek to target a particular level for the rupee’s exchange rate against the dollar, and uses its reserves to ease volatility in the currency market.
“Apart from the recent elevation in prices and input costs, other factors leading to the rupee weakening include continuing global trade disputes. In the period ahead, expectations of three rate hikes by the USFed this year is likely to define the path that rupee can be expected to take. The anticipation of US laying tariffs on India as well as withdrawal of benefits for Indian industries, can be expected to add to these woes,” said Anis Chakravarty, Partner and Lead Economist, Deloitte India.
ALSO READ: Rupee fall spooks India Inc boardrooms; CFOs worry RBI may hike rates again
Analysts feel that the continuing fall of the rupee may not help exports as figures showed that export growth in July moderated to 14 per cent, down from the 17 per cent growth in June. A weaker currency is traditionally considered to be advantageous to exports as global importers generally flock to nations which sell at a lower price. The same trend of depreciating currencies, however, has been true for other competing economies such as Bangladesh, Indonesia and Vietnam and most importantly China.
ALSO READ: Where is the rupee headed? Experts weigh in
“It is not going to help in the way everybody thinks. All major currencies of emerging economies is depreciating, with some going down at a faster rate. At least our exports will have a level playing field, and should not lose out on business but had it been an exclusive Indian phenomenon it may have helped exports much more than people expect now.” Ajay Sahai, Director General of the Federation of Indian Export Organizations said.