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Supreme Court's judgment on RBI circular procedural, not a major crisis: Arun Jaitley.

Date: 04-04-2019
Subject: Supreme Court's judgment on RBI circular procedural, not a major crisis: Arun Jaitley
Finance minister Arun Jaitley said the Supreme Court’s judgment striking down the February 2018 circular of the Reserve Bank of India (RBI) was not a “major crisis” and was procedural in nature. It could be rectified through appropriate action by the central bank, he said in an interview to ET.

Jaitley dismissed the Congress election manifesto, saying the party was guided by obsolete ideas and populism. A maturing electorate will ensure the BJP gets a “comfortable majority” and the National Democratic Alliance (NDA) will form the next government, he said.

On Jet Airways, Jaitley said its lenders had taken a decision to revive the airline in the larger public interest.

The Supreme Court had on Tuesday struck down the RBI circular, saying it was beyond the scope of the central bank’s powers.

“I don’t see a major crisis. This judgment is really more procedural — this is not substantive,” he said. “A judgment which says procedure or your application of mind or your width of your power is inadequate can always be rectified by an appropriate action.”

The RBI will reconsider it in consultation with all stakeholders and decide on the issue, he said. You don’t question the judgment. You implement the judgment in accordance with what they have said. After all, that’s judicial review,” he said.

In implementing the ruling, the primacy of the RBI and its credibility will have to be maintained, while the sanctity of the IBC process will have to be preserved, he said. When the RBI reconsiders the issue, the central bank should also bear current market conditions in mind, he said.

“There is a difference between decisions dealing with the economy and business and municipal law. So, whoever has to decide will bear those distinctions. Let’s not question their wisdom,” he said, adding that even where discretion is allowed, there can be norms on which this can be exercised.

He said the Congress party’s manifesto didn’t offer a path forward for economic development. “They still haven’t learnt a lesson — you have to increase resources and use them for further economic development, infrastructure creation and a large part to bring down poverty,” Jaitley said.

‘CONG PROMISES WILL HURT MIDDLE CLASS’ “That’s the model we followed in the last five years,” the finance minister said. “If you look at the priority areas (in the Congress manifesto), except the same old slogans, they have nothing new. Now Manmohan Singh says 2030 we will eradicate poverty. This means it took them 69 years to implement Indira Gandhi’s idea of Garibi Hatao. This is a confession of non-performance.”

Jaitley said paying for the Congress party’s welfare programmes would mean raising taxes, which will hurt the middle class.

“In five years, we reduced taxes — we did not raise a single tax,” he said. “The only chapter which is missing in this manifesto is strengthening Indian middle class. That is now a dominant section of your voter.”

He contrasted the record of the Narendra Modi government with that of the Congress-led United Progressive Alliance.

“The manner in which we have handled the Indian economy and compare it with what they had done,” he said. “They left behind a legacy of policy paralysis, corruption, put India in the fragile five. We put it in the fastest gear in the world even in challenging environments.”

Jaitley said he was pleased with the way IBC has shaped up.

“I think the maximum credit goes to the Supreme Court. It has shown exemplary discipline by deciding each case at exemplary speed, laying down the law and everything,” he said. “The NCLT (National Company Law Tribunal) and NCLAT (National Company Law Appellate Tribunal) have also shown some speed.”

Other stakeholders, such as creditors, have acted fairly and the government has maintained an arm’s length distance. “Therefore, some time being taken up in a new law is understandable but I think the early harvest, if I use the word, is fairly ok,” he said.

Jaitley dismissed allegations of aggression on the part of tax authorities to shore up revenues at the end of the fiscal year. Chartered accountants had written to the government asking it to rein in tax officials.

“There is nothing like this — India is changing. People are getting into the habit of paying taxes,” he said. “Even though March 15 was the last day, conventional practice has been that the most significant amount comes between the 27th and the 31st and the spillover continues for a day or two because cheques are deposited before the midnight of the 31st… This is nothing new.”

Source: economictimes.indiatimes.com

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