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<ul><li>The former secretary at India’s Ministry of Finance says that as much as ₹4 lakh crore is recorded as off-budget expenses. </li><li>This is the first time a recently-retired bureaucrat spilled the beans on India’s fiscal deficit. </li><li>India’s fiscal deficit for 2017-18 is at least 0.9% more than what was reported by the government, said Garg. </li></ul>According to the former secretary at India’s Ministry of Finance, <keyword id="6636252" type="UNKNOWN" weightage="20" keywordseo="subash-chandra-garg">Subash Chandra Garg</keyword>, India’s financial health is not as bad as it seems. It is much worse. In <a href="https://subhashchandragarg.blogspot.com/2020/01/state-of-indias-fiscal-deficit-and-debt.html?m=1">a blog post</a>, he said that the government has left many of its expenses hidden – and they amount to over ₹4 lakh crore ($57 billion). The fact that successive governments in India <a href="https://www.businessinsider.in/interim-budget-2019-delayed-subsidy-payments-mod-indias-real-fiscal-deficit/articleshow/67655180.cms">have ‘managed’ accounts</a> to make the books look better, is known. But this is the first time a recently-retired bureaucrat spilled the beans on the magnitude of misinformation. Garg’s revelation has come six months after <a href="https://www.businessinsider.in/india-loses-top-bureaucrat-garg-who-quit-after-being-shunted-from-finance-ministry/articleshow/70389613.cms">his unceremonious exit </a>from the North Block, which houses India’s Finance Ministry. He had to ‘voluntarily’ retire early after a failed attempt to stall the government’s push to extract money from the Reserve Bank of India. The insider’s take on India’s finances India’s fiscal deficit for 2017-18 is at least 0.9% more than what was reported by the government, according to Garg. Fiscal deficit ⁠— the difference between the government’s debt and liabilities ⁠— should be equal to planned borrowing for the year. If it is not, that should be a red flag. “Some liabilities related transactions are recorded by deducting a corresponding debt receipt from the expenditure/ investment made. Such transactions are described popularly as Below the Line, Off Budget,” he explained in his blog. Show me the money Most of the off-budget expenses went into rescuing public sector banks which are burdened by toxic loans. In 2017-18, as much as ₹80,000 crore was invested as equity into these banks as a part of its Indradhanush (rainbow) plan. Agencies like <keyword id="1384850" type="COMPANY" weightage="20" keywordseo="India-Ratings">India Ratings</keyword> <a href="https://www.businessinsider.in/value-of-government-investment-in-psu-bank-stocks-is-less-than-the-market-value/articleshow/70731040.cms">have called this infusion </a>a money pit, from which nothing can be recovered. The very next year, it spent as much as ₹1.6 lakh crore as ‘recapitalisation bonds’ to the banks, including Exim Bank. In other words, the government is indirectly paying for the poor decisions made by banks. A Glaring Gap This money that is spent ‘off-budget’ is also raised ‘off-budget’. They have many other instruments at hand like issuing fully serviced bonds (FSBs), making National Small Savings Funds (NSSF) disburse loans etc., which do not feature in the consolidated fund of India, according to Garg. This year, the gap between its earnings and expenses is as wide as ₹7 lakh and this is what has been reported. If the real deficit is much more, then India would have to resort to the age-old rule of beg, borrow or bury. It seemed to have chosen the last two options already. SEE ALSO <a href="https://www.businessinsider.in/value-of-government-investment-in-psu-bank-stocks-is-less-than-the-market-value/articleshow/70731040.cms">Indian government’s ₹3 trillion gift to banks ended in a money pit</a> <a href="https://www.businessinsider.in/policy/economy/news/rbi-financial-stability-report-finds-billions-lost-in-bank-fraud-this-year/articleshow/72998905.cms">Indian banks found ₹2.6 lakh crore frauds in first six months of FY20– only because RBI looked ‘closely’</a> <a href="https://www.businessinsider.in/policy/economy/news/india-is-slowing-down-so-fast-that-even-experts-cant-keep-up/articleshow/72295703.cms">India is slowing down so fast that even experts can’t keep up</a>

A former Finance Ministry insider reveals a hidden $57 billion worth ‘off-budget’ expenses in India

<ul><li>India’s Finance Minister Nirmala Sitharaman reiterated that the country’s new laws around cryptocurrencies are currently awaiting approval from the Union Cabinet.</li><li>The Union Cabinet is India’s highest decision-making body.</li><li>However, this does not necessarily mean that the new laws will come into existence any time soon.</li></ul>India is racing to keep up with the cryptocurrency craze in the country. India’s Finance Minister Nirmala Sitharaman reiterated that the new regulations around cryptocurrencies in India — the Cryptocurrency and Regulation of Official Digital Currency Bill, 2019 — are waiting on approval from the Cabinet before it can be introduced into the Parliament. She had <a href="https://www.businessinsider.in/cryptocurrency/news/indias-new-crypto-regulations-are-ready-for-the-monsoon-session-of-parliament-according-to-sitharaman/articleshow/84168068.cms">stated</a> this earlier as well, ahead of the Monsoon Session in July this year. The Union Cabinet is India’s highest decision-making body. Only the Prime Minister, Narendra Modi, and other ministers of rank are a part of the Cabinet. The supreme body needs to give the green light before the new laws can be introduced for debate in Parliament. <div type="ExtQuote" text="Cabinet note is ready on cryptocurrency. I am awaiting [sic] Cabinet to clear that." auname="India’s Finance Minister Nirmala Sitharman told reports on August 18"></div> Those in the know, requesting to remain anonymous, told Business Insider that the government is most likely mulling over a softer stance given the recent surge in <a href="https://wazirx.com/signup?invite=2kpah6gr&amp;utm_source=business-insider&amp;utm_medium=referral&amp;utm_campaign=microsite&amp;is_retargeting=false&amp;shortlink=BI&amp;c=site&amp;pid=Business%20Insider&amp;af_click_lookback=7d&amp;af_channel=Business%20Insider&amp;af_adset=article&amp;af_force_deeplink=true">crypto</a> adoption and awareness within the country. This means that it's possible that the Cabinet will not approve the bill in its current form, as seen in the <a href="https://www.businessinsider.in/finance/news/indian-cryptocurrency-players-in-huddle-as-government-mulls-ban/articleshow/80610668.cms">draft</a> ahead of the Budget Session of Parliament in February. The <a href="https://www.businessinsider.in/stock-market/news/bitcoin-has-surged-to-a-record-60000-as-stimulus-hopes-and-big-name-backers-fuel-demand/articleshow/81486473.cms?utm_source=msn&amp;utm_medium=referral&amp;utm_campaign=msn_content_partnership">massive surge</a> in Bitcoin’s price earlier this year, coupled with <a href="https://www.businessinsider.in/finance/news/rbi-inflation-forecast-for-next-year-is-high-close-to-shaktikanta-das-target/articleshow/85092332.cms">high inflation</a>, has led young investors to invest in <a href="https://wazirx.com/signup?invite=2kpah6gr&amp;utm_source=business-insider&amp;utm_medium=referral&amp;utm_campaign=microsite&amp;is_retargeting=false&amp;shortlink=BI&amp;c=site&amp;pid=Business%20Insider&amp;af_click_lookback=7d&amp;af_channel=Business%20Insider&amp;af_adset=article&amp;af_force_deeplink=true">cryptocurrencies</a> as an alternative financial instrument, despite their reputation for being heavily volatile. This is partly due to <keyword id="2721952" type="PERSON" weightage="20" keywordseo="crypto">crypto</keyword> exchanges like WazirX, CoinDCX, CoinSwitch Kuber, and others garnering new funding. And that funding is going towards <a href="https://www.businessinsider.in/cryptocurrency/news/wazirx-coindcx-and-other-indian-crypto-exchanges-will-reportedly-have-new-advertisement-guidelines-in-the-next-seven-to-ten-days/articleshow/84756896.cms">heavy-weight sponsorships</a> in the mainstream — like the Euro Cup and the T20 cricket tournament between Sri Lanka and India — which is driving awareness among the masses. <cmsannotation type="cmsannotation" annotationid="What happens if the Cabinet does not approve India's crypto bill?" comment="subhead" text="What happens if the Cabinet does not approve India's crypto bill?">What happens if the Cabinet does not approve India's crypto bill?</cmsannotation> If the bill is rejected by the Cabinet, then it’s possible that things will have to start from scratch all over again, especially if the Indian government is looking to take a softer approach to cryptocurrencies. “The government seems to be still in the process of determining the way forward, which may through either an existing committee or a new one with industry consultation where required," Rameesh Kailasam, the CEO of IndiaTech, told Business Insider in an <a href="https://www.businessinsider.in/cryptocurrency/news/indias-crypto-bill-is-unlikely-to-be-up-for-discussion-this-month-and-it-may-be-a-while-before-we-see-it-in-parliament/articleshow/84401863.cms">earlier interview</a>. The way the passing of a bill works in India is that a committee is assigned to draft the bill. The committee is headed by one, or in this case, multiple ministries. Given the vast application of cryptocurrencies — even though the Ministry of Finance’s Department of Economic Affairs is leading the charge — other stakeholders like the Ministry of Electronics and Information Technology (MeitY), the Securities and Exchange Board of India (SEBI), and the Reserve Bank of India also are a part of the process. Once the committee has drafted the bill, it then needs to be approved by the Finance Ministry. Once they approve it, it goes over to the Ministry of Law for another layer of endorsement to ensure it ticks all the boxes and doesn’t include any language that could get the government into trouble. Only once the bill has cleared both those thresholds does it make its way to the Cabinet. The ministers then discuss the bill to ascertain if any changes are required. If they feel the bill isn’t up to the mark, it will be sent back to the Finance Ministry. If not, the bill is presented to the public for comments before being introduced into the lower house of Parliament, the Lok Sabha. They then have three readings of the bill before it is passed to the upper house, the Rajya Sabha. Even then, the bill nevertheless needs approval from the President before it is <a href="https://prsindia.org/files/parliament_track/1417684398--Parliament%20as%20a%20Law%20Making%20Body_0.pdf">eligible</a> to come into effect. Depending on the changes suggested, it’s possible that the bill may not clear the Cabinet approval stage of the process. They could request for the Finance Ministry and other stakeholders to form an entirely new committee to draft a new version of the bill. They could even ask for a change at the helm with a department other than the Department of Economic Affairs — that, however, is unlikely. “The government seems to be looking at this afresh considering that there needs to be a different take on how to regulate cryptocurrencies rather than push for an outright ban” said Kailasam. <cmsannotation type="cmsannotation" annotationid="How could a new crypto bill in India be different from the old one?" comment="subhead" text="How could a new crypto bill in India be different from the old one?">How could a new crypto bill in India be different from the old one?</cmsannotation> The original committee that drafted India’s crypto bill was headed by Finance Secretary Subash Chandra Garg. Other members included MeitY Secretary Ajay Prakash Sawhney, SEBI Chairman Ajay Tyagi, and RBI Deputy Governor BP Kanungo. The <a href="https://prsindia.org/billtrack/draft-banning-of-cryptocurrency-regulation-of-official-digital-currency-bill-2019">version</a> of the crypto bill proposed by them, the draft of which was released ahead of the Budget Session of Parliament in February, bans all ‘private’ cryptocurrencies and lays out a plan for India’s apex banking institution to launch its central bank digital currency (CBDC). <div type="ExtQuote" text="Under the draft Bill, mining, holding, selling, issuing, transferring or use of cryptocurrency is punishable with a fine or imprisonment of up to 10 years, or both." auname="Excerpt from the Draft Banning of Cryptocurrency &amp; Regulation of Official Digital Currency Bill, 2019"></div> The definition of ‘private’ cryptocurrencies was however ambiguous. Most speculate, as per the comments of RBI governor Shaktikanta Das, that this covers all cryptocurrencies traded on exchanges including Bitcoin, Ether, Dogecoin, and others. <div type="ExtQuote" text="The RBI has major concerns with respect to private cryptocurrencies. We have conveyed these concerns to the government. The government will examine the issue and act accordingly." auname="Reserve Bank of India (RBI) governor, Shaktikanta Das, during the RBI’s Monetary Policy press conference on 6 August 2021"></div> This, however, does not mean that the central bank is proposing to ban the underlying blockchain platforms. One can ban Ether but the Ethereum blockchain, which facilitates the implementation of smart contracts, does not necessarily have to be pulled down. But, if the government is looking to take a softer stance, in line with the Supreme Court’s judgement in 2020 that abolished the RBI’s ban on cryptocurrencies, a new bill will likely have to be drafted. And, that process will again take its own sweet time cutting through the red tape. This means, just because the crypto bill is awaiting approval from the Cabinet, that it’s a done deal — especially as more and more Indian citizens are investing in cryptocurrency. <a href="https://forum.businessinsider.in/">For a more in-depth discussion, come on over to Business Insider Cryptosphere</a> — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/cryptocurrency/news/one-third-of-indians-hold-cryptocurrencies-and-youngsters-are-leading-the-charge/articleshow/85364856.cms">One third of Indians hold cryptocurrencies and youngsters are leading the charge, according to a new report</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/cryptocurrency/news/cricket-is-jumping-on-the-nft-bandwagon-heres-how-fans-can-splurge-on-digital-collectibles-in-the-sporting-world/slidelist/85302503.cms#slideid=85302611">Cricket is jumping on the NFT bandwagon — here’s how fans can splurge on digital collectibles in the sporting world</a>

India’s crypto bill will still have a few hurdles to clear before becoming a law, even if the Cabinet approves

<ul><li>On 9 October, <keyword id="6354731" type="DOMAIN" weightage="20" keywordseo="state-bank-of-india">State Bank of India</keyword> (<keyword id="13222" type="CITY" weightage="20" keywordseo="SBI">SBI</keyword>) announced plans to purchase ₹450 billion worth of “good quality loans” off the balance sheets of non-banking financial companies. </li><li>The amount is exactly three times SBI’s original acquisition target of ₹150 billion for the current financial year. </li><li>The move will inject some much-needed liquidity into India’s NBFCs, which are finding it difficult to raise funds at feasible rates from debt markets. </li></ul>On 9 October, State Bank of India (SBI), India’s largest bank, announced plans to purchase ₹450 billion worth of “good quality loans” off the balance sheets of non-banking financial companies (<keyword id="6355260" type="UNKNOWN" weightage="20" keywordseo="NBFC">NBFC</keyword>), which are currently dealing with a shortage of funds. Subash Chandra Garga, the secretary of the government’s economic affairs department, tweeted his support of the move. 
 
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 The amount is exactly three times SBI’s original acquisition target of ₹150 billion for the current financial year. The NBFCs will sell the loans on a full-cash basis so as to finance their immediate lending operations. Despite reports that it has been <a href="https://www.business-standard.com/article/companies/centre-pressuring-lic-sbi-to-bail-out-il-fs-nirupam-118092900460_1.html">“pressured” </a>into giving the non-banking financial sector a lifeline, SBI seemed clear in its motivation. This is a good deal for the state-owned lender. It is purchasing the loans at very attractive rates given that NBFCs are struggling amid the potential default of <keyword id="6357293" type="UNKNOWN" weightage="20" keywordseo="ILFS">IL&amp;FS</keyword> and its subsidiaries, which has sparked a market meltdown and fears of a liquidity crisis. As a result of the crisis, NBFCs are unable to raise short-term funds from debt markets at feasible interest rates. This is a huge problem given that these institutions are important sources of funding for <keyword id="17408" type="DOMAIN" weightage="20" keywordseo="infrastructure">infrastructure</keyword> and housing projects as well as the MSME sector. More importantly, small businesses count on loans from NBFCs ahead of the festive sales season, which is scheduled to start this week. Setting aside the fact that SBI’s balance sheet will likely be strengthened with high-yielding assets, the move will inject some much-needed liquidity into India’s NBFCs. It will also help SBI achieve its priority-sector lending targets, under which it allocates a certain amount of its credit portfolio to the agriculture, MSME, housing and education sectors. When faced with a shortfall in its priority lending targets, India’s state-owned banks usually purchase loans from NBFCs, which lend to these sectors. Separately, the Reserve Bank of India is also doing its part to inject some liquidity into financial markets. On 9 October, the central bank announced that it was purchasing ₹120 billion worth of government securities to ease cash flow pressures in the financial sector ahead of the festive season.

Bailout or opportunism? India’s largest bank is tripling its loan purchases from desperate NBFCs

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A former Finance Ministry insider reveals a hidden $57 billion worth ‘off-budget’ expenses in India

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India’s crypto bill will still have a few hurdles to clear before becoming a law, even if the Cabinet approves

Prabhjote Gill

Bailout or opportunism? India’s largest bank is tripling its loan purchases from desperate NBFCs

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