Waiving Compound Interest Would Cost the Government 6500 Core
To support the small borrowers the center had decided to fund the compound interest payment for them during the six-month moratorium period. But a senior government official stated that this move would cost the government 6, 500 crore.
Today, the Supreme Court has scheduled to hear a few petitions that are demanding waiver of interest charged by banks in installments that have been deferred for repayment by the RBI through a six-month moratorium imposed since March. This issue was also listed for yesterday’s hearing but has been postponed.
However, the government has informed the apex court that is it ready to face the consequential burden of waiving compound interest. The interest could be either for any individual or entity whose loan repayment is less than 2crore, irrespective of whether they have availed loan repayment moratorium or not. Although, the government has not stated the cost implications that would involve sponsoring compound interest of borrowers as well as belonging to private lenders.
The finance ministry is also going to take up proposals related to establishing a development finance institution and a new policy on the public sector enterprises to the Union Cabinet shortly. With the public sector enterprise policy, the government is all set to define the strategic sectors that would possess about four state-owned units. Also, the public sector firms in other sectors would be privatized. Further, the government would take the stake in the proposed development finance institution and this move is expected to bolster the private sector participation investments in the economy.
Furthermore, the government would also examine the 20, 000 crore Vodafone tax attribution case, to check whether the bilateral investment treaty signed between the Netherlands and India, has any jurisdiction over taxation matters.
“We haven’t taken a decision on whether we will go for an appeal or not against the Vodafone arbitration award. The government is clear that it is against the principles of retrospective taxation, but you have to examine the judgment (of the Permanent Court of Arbitration) carefully to know the matter in hand,” said the official.
The Permanent Court of Arbitration at The Hague has sustained the plea of Vodafone Group in its long-pending case against the income-tax department’s demand for Rs 20,000 crore. This was made on the acquisition of Hutchison Whampoa’s stake in what was Hutchison-Essar in 2007 through an overseas deal. The government has kept its option open for another round of relief measure “if the need arises,” the official said.
Finance Minister Nirmala Sitharaman has announced on Monday that a two-pronged stimulus package has been aimed at bolstering the capital expenditure and spurring consumer demand during the upcoming festive season. The demand is estimated to be Rs 73,000-crore boost by the end of this fiscal year.