Banking will be part of strategic sector for privatisation, Chief Economic Adviser Krishnamurthy Subramanian, said on Thursday, throwing light on the government's new policy for public sector enterprises (PSEs). Mr Subramanian was addressing the media on projections on Indian economy by ratings agencies Fitch, Moody's and Standard & Poor's (S&P) via video conferencing. Mr Subramanian also said that the work to identify strategic and non-strategic sectors is still under progress. His comments come after Finance Minister Nirmala Sitharaman last month said that there will be a maximum of four public sector companies in strategic sectors under a new policy that will be formulated by the government for PSEs.
Mr Subramanian also said that economic growth this year will depend on recovery from the economic fallout from the coronavirus pandemic, adding that it is uncertain whether that takes place in the second half of this year or next year. He said both the scenarios are part of government's baseline expectations and that it is working on a "large range" of growth estimates for this year.
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He said the finance ministry is keeping under consideration all options such as deficit monetisation and evaluating their pros and cons.
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Commenting on the projections made by ratings agencies, Mr Subramanian said reforms undertaken by India are being acknowledged by them and that it is a critical element for growth next year. He also said that India's ability and willingness to repay is "gold standard" and that the country's fundamentals demand a "much better rating".
He mentioned that ratings agencies Fitch and S&P have projected India's growth rate at 9.5 per cent and 8.5 per cent, respectively for the next year, adding that is a "good news" that the overall rating has been maintained by both the agencies.
Earlier during the day, Reserve Bank of India (RBI) governor Shaktikanta Das also held a video conference meeting with the top bosses of ratings agencies.
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