Centre atoning for 'sins' of UPA government: FM Nirmala Sitharaman in Rajya Sabha

Finance Minister Nirmala Sitharaman on Friday said her government was washing the "sins" of the previous UPA regime as it had to repay the fuel subsidies they transferred to the future and strengthen the weak bank balance sheets left from the 'dial-a-loan' scheme.

Replying to a discussion on the Budget in the Rajya Sabha, she said the UPA government issued oil bonds to oil companies in lieu of losses they incurred on not raising fuel prices. These bonds were subsidies that were to be paid by future governments.

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In all, Rs 1.71 lakh crore worth of oil bonds were issued, against which Rs 2.34 lakh crore, including interest, has already been paid and another Rs 1.07 lakh crore is left, with the last payment due in 2025-26.

Similarly, her government had to capitalise banks after their balance sheets were weakened by directives to give loans to 'jijajis' (brothers-in-law) and other friends without ascertaining their creditworthiness, Sitharaman said, adding this capital was provided by way of bonds which are payable by 2037.

She insisted there was a distinction between the two bonds, as the oil bonds was for subsidy which is a revenue expenditure and does not create assets, while the bonds for bank recapitalisation has helped nurture lenders to health which has increased their capacity to lend and they are now dividend-paying profitable entities.

"Today, our banks are standing on their own, they can raise whatever amount they want, and this capital infusion is also, if I may be permitted to use the word, the 'paap' (sin) created by them (UPA), we are doing the 'praayashchit' (atonement), whether it is oil bonds or bank recapitalistion," Sitharaman said.

The government infused Rs 3,10,997 crore to recapitalise banks during the last five financial years, that is from 2016-17 to 2020-21, out of which Rs 34,997 crore was sourced through budgetary allocation and Rs 2,76,000 crore through issuance of recapitalisation bonds to these banks.

The finance minister also rejected the Opposition charge of neglecting states, saying transfer to states from central funds has increased.

Replying to assertions that West Bengal's dues have been neglected, she said GST compensation to states is given when the audited figures are provided but West Bengal has not submitted those since 2017.

Addressing concerns of high government borrowing raised by some members, she said India would not have been borrowing if there was a wider tax base.

On NPAs, she said Rs 10.09 lakh crore loans have been written off by banks in the last five years. These have not been waived off and borrowers continue to be liable," she said, adding recovery proceedings continue till such amounts are recovered.

Recently, the finance minister had said the government's efforts to reduce bad loans are yielding results with 12 PSBs reporting a 50 per cent jump in combined net profit at Rs 25,685 crore in the September quarter.

NPAs declined as a result of the government's 4Rs strategy of Recognition, Resolution, Recapitalisation and Reforms, she had said.