Centre drafting response to SC concerns on Adani stock meltdown, says Nirmala Sitharaman

New income tax regime meant to reduce tax burden on middle class; not the government’s job to nudge households towards certain savings through tax incentives, says FM

Finance Minister Nirmala Sitharaman on February 11, 2023 signalled that the government is drafting a response to the Supreme Court’s concerns about the meltdown in Adani group stocks in the wake of a research report published by US-based short seller Hindenburg Research, and stressed that India’s “experienced” regulators are already seized of the matter.

A three-judge bench led by Chief Justice of India (CJI) D.Y. Chandrachud had, on Friday, expressed concerns about the need to protect Indian investors from sudden market volatility, noting that the stock market is not just limited to “high value investors” but also a “wide spectrum of the middle-class”.

“How do we ensure that what happened does not happen again in the future?” the CJI had remarked on Friday. The Supreme Court has sought a note from market regulator, the Securities Exchange Board of India (SEBI), on the regulatory framework for stock markets at its next hearing on February 13, and said that it may even consider setting up an expert panel to act as a “wise guiding force” in the matter.

Ms. Sitharaman, responding to a query on the court’s observations after a meeting with the Reserve Bank of India’s board in the capital, said: “Obviously, you are not expecting me to say to you or to this gathering of senior journalists what I will be saying in court.”

“Second, India’s regulators -- and I am sitting in the company of one of the oldest regulators in the country [pointing to central bank governor Shaktikanta Das] -- India’s regulators are very, very experienced, and they are experts in their domains. So the regulators are fairly seized of this matter and they are on their toes, as always, not just now. So I will leave it there,” the Minister said.

Ms. Sitharaman also hit back at criticism about the new personal income tax regime impacting the savings rate and investments in the country, or seeking to spur consumption over savings, hinting that these were needless “inferences” drawn about “a simple step towards giving more money in the hands of the middle class in particular”.

“This measure of government was purely to reduce the tax burden on the middle class and to make sure that the promise which was given earlier a couple of years ago -- which got delayed because of COVID and other reasons -- that we will simplify the direct taxation, not only just simplify for compliance’s sake, but also reduce the rate so that it doesn’t become a burden on the shoulders of, particularly, the middle class,” she emphasised.