M A I N   N E W S

Capital dose for 7 PSU banks: FM
Tribune News Service

New Delhi, October 22
With elections around the corner, Parliament today formally approved an unprecedented financial assistance from the Consolidated Fund of India to meet the requirements of edible oil and fertiliser subsidy, to refund banks for the loan waivers announced for farmers and to pay enhanced salaries to employees, among other items.

A sum of Rs 2.40 lakh crore has been approved, which is over and above the budget, and all this is aimed at averting a rise in prices of essential items like petrol, diesel, edible oils and foodgrains for extending the Rural Employment Guarantee Scheme to all districts of the country and for paying enhanced salaries to employees following the sixth pay commission recommendations.

The Rajya Sabha today approved and returned the Additional Appropriation Bill to Lok Sabha as finance minister P. Chidambaram, while participating in the debate, said “The UPA government has neither embraced capitalism nor had it embraced communism”. He assured the House that the money was needed or else the only other option would be to raise prices that would burden the common man.

He said the government would inject fresh capital in seven public sector banks to improve their financial health and help them achieve a capital adequacy ratio of over 12 per cent.

He said it was the crude oil price that had hit the country hard as he justified the move to issue oil bonds. In such a crisis, we should not even look at the fiscal deficit. Yesterday, the Lok Sabha had passed the Bill and the Upper House was to ratify it today.

Earlier, the BJP and the Left parties had questioned the move to seek such a huge mid-term assistance. Former finance minister Yashwant Sinha said “Is the government being a party to vested interests when it intervenes to save the markets on day-to-day basis?” Sinha said, “The fiscal deficit is rising and this outflow will add to the burden.”

Sitaram Yechury claimed credit that it was the Left parties that had stalled various Bills to privatise in the past four years and that the main reason as to why India was insulated from the global meltdown.

Explaining the need for this mid-year unprecedented demand for additional grants, the finance minister said the cost of fertilisers had trebled. The government had budgeted for Rs 30,000-crore subsidy on this account and it would not be enough. Another component is the subsidy on edible oils.

“Do we have an option other than subsidise it?” he asked. A sum is earmarked for additional central assistance that is to be provided to the states while another chuck of money is for the employee salaries and to meet the loan waiver for the farmers.

The finance minister said the country would collect Rs 6.87 lakh crore by way of revenue collection and a chunk of the same would be used to finance these schemes.

Short-term outlook ‘cloudy’: PM

The short-term outlook for Indian economy looks "cloudy" in the face of the global financial meltdown and steps are required to prevent the credit crunch from turning into a crisis of confidence, Prime Minister Manmohan Singh said in Tokyo on Wednesday.



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