Finance ministry mapping out action plan for new government

Image result for Finance ministry mapping out action plan for new governmentNEW DELHI: Finance ministry mandarins putting finishing touches to an action plan for the new central government said it includes plans to raise fresh capital for a five-year infrastructure push, as well as a time-bound plan to solve the shadow banking crisis plaguing Indian capital markets.

The action plan was ordered by the current Government in the midst of ongoing elections. All ministries have been working on proposals which are likely to be presented after the new government is sworn in. “Fixing capital needs and financial quick-fixes are part of the overall plan,” said officials. Though the government does not admit it, the overall economic situation is seen as challenging in the face of slowing growth and demand, both in India and globally.

The plan to solve the shadow banking crisis which broke out after one of India’s largest non-banking finance companies (NBFC) — IL&FS — defaulted on payments last year will include a combination of addressing liquidity issues along with an asset quality review of NBFCs with poor quality loans. “The issue is being discussed with SEBI and RBI. Some steps have been taken, more can be expected to follow as a new government gets sworn in,” said officials. Several other NBFCs have announced delays in pay-back of deposits and some have suffered rating downgrades.

Officials said this was one of the `key’ priorities in its action plan, as was the need for infrastructure financing. The government estimates that some Rs 20,000 crore of infrastructure financing is required annually. The Finance ministry, meanwhile, feels that this money could be raised from a combination of long term infrastructure bonds, as well as money raised through insurance and pension funds.