The Center clearly indicated that it would not be possible to revise the Rs 2 million limit for loans that would benefit from its proposal. He said this had come to this after considerable deliberation. “Fiscal policy is the responsibility of the government,” the Finance Ministry said in an affidavit.
The decision to shoulder the burden of compounding interest and the categories of borrowers to be supported are made by the government in the specific context of the pandemic and the vulnerability of this specific class of borrowers. Such decisions, including the realization of spending commitments arising from such decisions, follow a well-established procedure within the government and these procedures cannot be dispensed with, “the Finance Ministry said.
The CS had asked the government to consider the possibility of relieving other classes of borrowers, as well as various sectors of the industry, after the government in its affidavit of October 2 announced the exemption of interest on interest for loan installments of up to Rs 2 million for MSMEs and individual borrowers during the six-month moratorium period from March 1 to August 31. It had also asked the Center to record the report of the Kamath Committee, which considered the restructuring of loans taken by large borrowers.
In response, the Center said that it has already announced a financial package of Rs 21.7 lakh crore under the Garib Kalyan and Aatma Nirbhar packages covering various sectors. In response to the SC’s question as to why these decisions are not yet notified, the ministry said: “Decisions may mature into a memorandum / circular / office order after following the mandatory procedure that must be continued considering the huge impact financial involved. ”
“Said process would consist of obtaining an appraisal carried out by the Expense Financing Committeeand, subsequently, it will be submitted to the Union Cabinet for approval. After the Union cabinet approves it, an OM / circular / order will be issued, which would need the subsequent authorization of Parliament to incur expenses, which exceed the current budget provisions, “he explained.
“Going beyond what has been decided and presented to the SC can be detrimental to the general economic scenario, and the national economy or the banking sector may not be able to assume the inevitable financial restrictions that result from it,” said the ministry.
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