Economic Affairs Secretary R Gopalan has shown an ability to grasp ground realities in pushing critical reforms. In an interview to Santosh Tiwari and Vrishti Beniwal, he indicates consensus would be the key for allowing foreign direct investment (FDI) in the retail sector. Edited excerpts:
Infrastructure funding has been a focus area in the Budget. Creation of an infrastructure debt fund is one step. What would be the working model?
The regulation part of the fund is currently being worked out. Whether it will be joint regulation or will be regulated by Sebi (Securities and Exchange Board of India) would be finalised in due course. The attempt is to make sure there is less tweaking of existing regulation to create this kind of debt fund. It would require one more round of consultations with RBI. We are also assessing the process side of it. We want to complete the whole process by the end of the first quarter (June).
What is the finance ministry’s view on giving new bank licences to industrial houses? How do you plan to avoid a conflict of interest?
RBI had floated a discussion paper last year and the work on draft guidelines for a wider consultation is on. The views expressed from various quarters on draft guidelines will be taken into account. We don’t want the government to take a view bypassing all the comments.
There was an expectation that 51 per cent FDI in the retail sector would be announced in the Budget. However, the finance minister only hinted at the possibility of FDI policy changes during the course of the year. What would be the future course of action?
A broad consensus on that has to be completed. People have different views on the matter. We all realise the importance of giving a good feeling for increasing FDI into the country and that would depend on the way we work towards creating a friendly environment for FDI. Organised retail getting into farm-to-fork will benefit the whole supply chain. Farmers would get better returns and leakages would go down. Net revenue would certainly go up with the kind of discipline farmers will have to adopt. Technology will reduce wastages.
However, with this, there is need for change in the delivery chain at the state level. The problem at the state level, including those due to current APMC (Agricultural Produce Marketing Committee) regulations, will have to be tackled. The idea is to bring down the transaction cost. It is not that multi-brand retail is the only solution. It is difficult, as we have to take people along. We feel this will be beneficial for farmers, as well as others.
The Budget has proposed viability gap funding (VGF) in health and education. Will it be 20 per cent or more?
Health and education have got infrastructure status. This will ensure additional funding to these critical sectors. In this process, we need to be sure we are directing the resources to places where such facilities are lacking. At the moment, it is not clear whether VGF funding would be 20 per cent, 15 per cent or 30 per cent. We have to work on this.
A number of financial sector bills were slated for tabling in the Budget session. With the session now getting curtailed, would you manage to introduce these?
Parliament may have a special session in May. The PFRDA Bill and State Bank of India (Subsidiary Bank Laws) Amendment Bill may be introduced in that session. The Banking Laws (Amendment) Bill may come in the current session itself.
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The Financial Sector Development Council has held a few meetings.
What are the major areas that have been discussed?
We have deliberated on how global conditions could influence our growth this year, the factors which could pose some threat to the economy in the short term or medium term, and what kind of steps should be taken.
With the rising crude prices, do you think changes could now be made in the petroleum duty structure?
The finance minister has already said in Parliament that he will deal with this in his reply to the Finance Bill.
