Finance Minister Nirmala Sitharaman.
Credit: PTI Photo
Mumbai: Union Finance Minister Nirmala Sitharaman on Tuesday commended Indian financial sector regulators for doing a "world-class job" and bringing greater transparency into the system.
Underlining that she is not against questioning or critiquing regulators, Sitharaman said there is a need to be "extremely conscious" about contributions made by them as well.
Speaking at the Financial Express Best Banks Awards here, the finance minister asked everybody to look at the emerging facts that are coming out in the SEBI matter, where the regulator's chairperson Madhabi Puri Buch has been accused of impropriety.
"I strongly recommend that facts are taken on board before we discuss anything to do with the regulators, strictly speaking," she said, replying to a specific question on whether a monitoring mechanism is required for regulators in India or if the regulatory governance structure is fine.
She said the regulators are being "looked up" by their peers in the world for improvements that they have got, including in markets, banks and insurance sectors.
"Indian regulators, and the way in which they are functioning, have actually brought greater transparency to the system," the minister said, seeking to de-link the comments from the Sebi matter.
To a question on competitive populism through freebie schemes, Sitharaman said there is a need to look at a state's financial ability to bear the burden of announcements for the welfare of the poor.
She said that in some cases committed expenditure is going up to 80 per cent, whereas the development needs are being overlooked.
The minister said that spending by the state governments on political promises should be based on the fiscal capacity of the concerned state.
Making it clear that she was not against welfare measures, Sitharaman said, "We cannot deny help to the poor for moving out of poverty".
On the rollback of the lateral entry scheme of officials, she said it was not because of "coalition compulsions" but to improve upon the idea.
She also said that the government was not acting under any pressure as the BJP won less number of seats in the Lok Sabha elections.
The pace of decision-making remains the same, the minister said, pointing out decisions on initiatives involving Rs 15 lakh crore taken by the new Cabinet since the current government came to power in June this year.
She said there is a need for more debate on whether to go ahead with the Economic Survey's idea of excluding food from the headline inflation and added that there is little commonness between consumer price inflation and wholesale price inflation.
Discussions on manufacturing get limited to mobile phones because of the high exports in the segment, Sitharaman said, adding that others like semiconductors and renewable energy are also seeing investments.
She said consumption is getting better in rural and urban areas.
Addressing fears of savings being funnelled into investments to an audience of bankers, the minister thanked the digital investment platforms for doing a "great service" for the country, which has helped ensure that middle-class Indians can take the risk by entering markets rather than comfortably sit by deploying the resources in low paying accounts.
She also gave out a slew of data supporting the argument, including the surge in the number of demat accounts to 17.1 crore as of September 2024 from 2.31 crore in 2014.
Sitharaman also exhorted banks to ensure that they do not practice either overlending, which can lead to asset quality stress or underlending, which can impact their profitability, underlining that the health of the banks actually determines the health of the economy and the financial health of households.
She also asked banks not to be "stingy" in appointing cybersecurity professionals who will be highly useful in preventing any attacks.
The finance minister also appealed to banks and other financial institutions to help the government's programme by giving internships to deserving youth and exposing them to the requirements of the industry.
She rued that a large number of engineers are qualified academically but do not know much about the industrial requirements.