Economy round-up: Govt presses the pedal on GST, says no to privatising state banks
Other | Photo Credit: Reuters

Finance minister Arun Jaitley on Wednesday said that the government is working overtime to ensure that the rest of the legislation on the Goods and Services Tax (GST) is passed during the upcoming winter session of Parliament, so that the new tax system can be rolled out by April next year.

“We have kept a very stiff target (for GST) and the reason is that there is a great national aspiration in support of the reform. And this is adequately exhibited by the fact that both Houses of Parliament have unanimously approved the legislation which is very rare. Secondly, state after state within a period of 20-25 days have kept on ratifying it,” he said. Half the states have already ratified the constitutional amendment on the GST that was passed by Parliament in August.

Jaitley also put to rest speculation that the government could consider privatising state-run banks in the near future. He said that India is not ready for such a scenario.  

“We are trying to consolidate some of the banks, which may otherwise find it difficult in a competitive environment... in one case we are thinking of reducing the government stake to 49% in IDBI Bank,” he said. “But I think India still realises that there has been a very important role that some of these banks have performed.”

Meanwhile, government-owned State Bank of India raised Rs 2,100 crore via perpetual bonds at 9%, even as fears loomed that the bondholders could face payment delays, as state-owned banks posted quarterly losses. Perpetual bonds do not have a date of maturity and the issuer pays an interest in perpetuity to investors, who can surrender these bonds on call dates.

SBI, which is looking to merge with its subsidiary banks, is facing some hurdles from at least one of them—the Kerala-based State Bank of Travancore (SBT). Interestingly, both the state government and the opposition parties are opposed the move, which they say could cause job losses. SBT is a dominant regional bank, through which the state government carries out all its business. SBI’s board has already given its nod for the merger, which will see it become one of the largest banks in the world.

Meanwhile, according to a report in The Economic Times, incumbent telecom companies have written to the Prime Minister’s Office saying they will not entertain Reliance Jio Infocomm’s requests for interconnect points, as they cannot handle the deluge of data that the new network is likely to bring their way. Interconnect points are crucial to the new 4G enabled network, whose subscribers will otherwise not be able to make voice calls to subscribers of other networks including Bharti Airtel, Vodafone, Idea Cellular and state-run BSNL.

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