The government is open to further stimulus measures to boost the coronavirus-hit economy, Economic Affairs Secretary Tarun Bajaj said on Wednesday.
Finance Minister Nirmala Sitharaman had announced a slew of measures to spur demand and ramp-up capital expenditure earlier this month. This was the third stimulus package since the outbreak of the COVID-19 pandemic.
The government had announced a Rs 1.70 lakh crore Pradhan Mantri Garib Kalyan Yojana (PMGKP) in March to protect the poor and vulnerable sections from the impact of the COVID-19 crisis.
It was followed by the Aatmanirbhar Bharat Abhiyan package of Rs 20.97 lakh crore in May, primarily focussed on supply-side measures and long-term reforms.
"So I think with all these efforts, and as I said, as the finance minister said, we are seeing what all other things can be done (to boost the economy)," Bajaj said while addressing a virtual event organized by CII.
Earlier this week, Sitharaman had said the option for another stimulus package had not been closed.
"I have not closed the option for another stimulus package if it comes out to be, because every time we announced one, it has been after a lot of consideration of inputs which have come from various sections of society.
"Then we sit and work it out within the ministry and Prime Minister's Office and then take a final call. So, I have not closed the option to come up with one more stimulus," Sitharaman had said.
Speaking about the capital markets, Bajaj said the government had taken many measures to deepen the market.
Citing an example, he said, "we have undertaken some reforms, and it is an ongoing process. In the last Parliament session, the Bilateral Netting of Qualified Financial Contracts Bill was converted into an Act, after the passage of both the houses and the President's assent was received."
As per estimates, it would result in a capital saving of Rs 50,000-60,000 crore for banks alone in this whole process.
"I urge the insurance companies and the regulators in that area to look at credit default swaps now that the netting bill has been passed. And if that happens, I think it should assist the bond markets as well," he said.
Bajaj also said Sebi and the finance ministry are in touch on the 'backstop facility.'
Sebi had earlier said it plans to set up a 'backstop entity' to buy illiquid investment-grade corporate bonds from mutual funds. On the direct listing of Indian companies on overseas exchanges, Bajaj said the Companies Act amendment bill passed by Parliament recently has provisions.
"The regulations and the other guidelines are in the process of reaching a finality. I have personally held very extensive discussions with the players in this area. I think this is also another step which was waiting to happen, which will give a fillip to some of our industries and some of our so-called unicorns a chance to pick up capital," he said.
He also emphasized that the players should desist from defrauding investors as regulations in the capital market sector are mostly based on disclosure, and the 'buyer beware' principle.
"I think we need to acknowledge that and honor that. Time and again, we do see that some issues crop up in the market, which takes the confidence of the people away.
Obviously, because of these regulations, there's flexibility in the design of member-client agreements, especially the agreements of portfolio management, but there is information asymmetry, and we have recently come across a large number (of such cases)," he said.
He said the industry needs to look inwards and see what can be done, besides the steps taken by the stock exchanges and the regulator.
For example, he said the regulator has come up with some stricter regulations on AT1 bonds. He pointed to some cases of retired citizens being cajoled into buying AT1 bonds or senior citizens being pushed for insurance products that are not conducive for their age and risk profile.
"So, I think these are also issues that are important for the capital market to have a look at," he added.