Active Stocks
Tue Mar 19 2024 14:31:08
  1. Tata Consultancy Services share price
  2. 3,986.00 -3.83%
  1. Tata Steel share price
  2. 149.55 -0.03%
  1. Bharti Airtel share price
  2. 1,234.25 0.75%
  1. Power Grid Corporation Of India share price
  2. 260.00 -1.89%
  1. ITC share price
  2. 409.90 -1.80%
Business News/ Opinion / Online-views/  A right to be wrong?
BackBack

A right to be wrong?

A right to be wrong?

Premium

The manner in which the government intends to subscribe to the proposed rights issue by State Bank of India (SBI) smacks of everything that is wrong.

First, unlike other investors, it will not pay cash for owning extra shares in India’s largest bank. Instead, it will issue marketable government securities of an equivalent sum to SBI. Further, the government will receive dividend and taxes, which, as it points out in its press release of Friday, will far exceed the interest payments on these bonds over the years. That’s a new paradigm in investment lexicon.

Second, the motivation for this elaborate transaction, made possible only because of misuse of sovereign rights, is largely to mask the fiscal impact of such a payout. It enables the government to keep the transaction off its balance sheet and not report it as a cash outgo.

On both counts, the move should be condemned.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 01 Dec 2007, 12:50 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App