Finance Minister Nirmala Sitharaman claimed on Monday that the government and the Reserve Bank of India (RBI) have been working in "complete harmony" on key issues, implying that both are on the same page on the subject of cryptocurrencies.
Following a meeting of the banking regulator's central board, Sitharaman gave a joint press conference with RBI governor Shaktikanta Das, indicating that talks between the government and the central bank on various elements of cryptocurrencies are ongoing.
The FY23 Budget proposes a 30% tax on any income derived from the transfer of virtual digital assets. The loss from the sale of these assets cannot be offset against other income, and payments paid on the transfer of digital assets will be subject to a 1% TDS. Despite the RBI's doubts, this decision sparked speculation that the government could legalise cryptocurrencies.
However, Sitharaman has now clarified that the government has the "sovereign right" to tax revenues generated by virtual digital asset transactions and that the Budget statement neither legalised nor forbade cryptocurrencies.
She has stated that any decision to ban or not ban will be taken after extensive consultations.
In response to the ABG Shipyard fraud, the finance minister pointed out that the account first became a non-performing asset (NPA) during the UPA-II administration (November 2013). In fact, under the current environment, banks took significantly longer than usual to identify the shipping company's wrongdoing. She said that banks often take 52-56 months to detect such crimes and conduct follow-up procedures, in an attempt to deflect criticism from the Opposition about the Central Bureau of Investigation's delay in filing FIRs.The government has charged ABG Shipyard, its former chairman and managing director Rishi Kamlesh Agarwal, and others with defrauding a consortium of two dozen lenders led by ICICI Bank, resulting in losses of Rs 22,842 crore in what is being called the country's worst banking scam.
In response to price pressure, RBI governor Das stated that by removing the (unfavourable) base effect, inflation momentum has been on a downward slope since October 2021. When asked about the RBI's inflation estimates for the coming fiscal year, governor Das said the projections are "strong," but they are subject to downside and upside risks linked with global crude oil price movements.
Last week, the central bank predicted that headline inflation will peak in the fourth quarter of 2021-22, within the tolerance band (2-6 percent), then moderate closer to target in the second half of 2022-23, allowing monetary policy to remain loose.
The central bank has forecast retail inflation for FY23 at 4.5 percent, down from 5.3 percent in the current fiscal year, assuming a regular monsoon in 2022.
Das also stated that a decision on the issuing of sovereign green bonds, which was mentioned in the most recent Budget as a way to raise funds for green infrastructure, will be taken at a meeting of the cash and debt management monitoring group next month.
“The main rationale behind going for green bonds is that world over there is a lot of investors who have dedicated funds to invest in green bonds,” he said.
The governor also said the proposal for the inclusion of government securities in the global indices is a “work in progress”.