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*Budget is in line with our ideology. The government has to do only as much as is expected from it. The government should have an impact but not make you feel indebted: Nirmala Sitharaman (Ramesh Pathania/Mint )
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#OPINION : 03/02/2020 : 2043.
##It’s a jan-jan ka budget, touches every section: FM Nirmala Sitharaman : 02 Feb 2020, Sukumar Ranganathan : Mint : Media Report : PMINDIA.
Sukumar Ranganathan Editor Mint
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#Most of the things where we are putting our equity, we are also saying it should be in public private partnership mode. We are also saying that states will have to be in it, says FM
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Topics :
Nirmala Sitharaman - Budget
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In seven months, Nirmala Sitharaman was called upon to present her second budget. In her own words, she began preparing where she left off in her debut effort in July. Immediately after presenting the budget, Sitharaman took time off to speak to Mint on the thinking behind the budget and defended the underlying math. Edited excerpts:
#1. What would be your headline for the budget?
This is a jan-jan ka budget (budget for the people). I wanted to make sure that we are able to touch every section which expected something from the budget and that is one of the reasons why the ministry found it difficult to make it brief. Even last night, I had to tell them to cut down the length of the speech. We closed the budget speech at about 9pm last night. You are all looking at me speak, but this budget speech has been in preparation for the last six months.
#2. One very big strand of your budget has been this emphasis on market forces. To give you an example: normally where FMs would have used the fiscal space to spend more, you have chosen the option of cutting taxes and giving power to individuals and companies on how they spend. Is this a seminal shift in the ideological approach to budget-making?
It is a shift to suit, and in line with, our ideology. The government has to do only as much as is expected from a government. The PM made this clear when he said—government should have an impact but not make you feel indebted, the government’s role cannot be overwhelming. If I have to constantly spend, collect, it is never going to end. You will never be able to work out a mechanism through which the economy can drive itself at a pace at which it can move, not generate too much heat and at the same time be sustainable in the way in which it moves forward. Most of the things where we are putting our equity, we are also saying it should be in public-private partnership (PPP) mode. We are also saying that states will also have to be in it. This whole idea of only the central or state government (will spend) no longer works. It has to be all three together. Where I have land, I give you land. Where I have power generation capabilities, I give that but where others will have to come in, they will.
Similarly in railways, some of the prime routes are suffering because the net collection has not been improved nor is cross-subsidy any longer justifiable. You can’t leave the poor (paying) high rates. Some of these routes will be given out in PPP model. Bengaluru suburban is using railway tracks around the city; the decision between the state and us is that it should be on metro pricing model. It can’t be railway subsidizing tickets and the (state) government running it. That is just not sustainable. In everything that we have announced, the directional change in which that project will have to run for itself (is made clear); eventually (it will have to) be sustainable on its own, is the plan.
*Even in infrastructure, this sovereign wealth fund, instead of the classic model of the government going out and investing money you have created the space for them to come in and made it very attractive for them…
We have given them enough incentive. We have made sure that the money they earn over interest and other things will not be taxed, provided they spend on infrastructure, provided they lock in for a certain number of years. It is not like it’s just been given. Every single word uttered in the budget has gone through different layers and all of us will own it up. The time that the PM has given to see that they are falling in place is amazing.
#3. The other thing that we have noticed in the last five years is that the public sector is no longer what your political opponents call ‘family silver’. In this budget, you have taken it to a different level. You are trebling your disinvestment receipts. Are we seeing another big shift?
Yes. If you have noticed, I have said that money from disinvestment will go to the companies which are going to be investing in long-term infrastructure. Sale of ‘family silver’ is not going for revenue expenses, it is going towards greater asset creation, responsible disinvestment, responsible sale, if at all, of family silver. That is again being put towards asset creation. That asset which you no longer can run efficiently and make profit is clearly offloaded, but here we put (the receipts) into the infrastructure pipeline. The two companies which I’ve mentioned will receive the funds. They will take the money. It is a responsible way in which public expenditure is being handled.
#4. So you are saying it won’t be used to balance the fiscal deficit or to finance it?
No, I have very clearly told you that this is how it is going. Is that a general off-the-cuff remark? No. We have already given ₹22,000 crore towards pipeline projects to these two companies, which means we are putting the money where our mouth is.
#5. But is this number achievable?
Absolutely, I think because to be fair, the last announcement was made in July. Again to be fair, the officials have done tremendous footwork to get it all off the table.
*LIC will be the key, I guess to meet the disinvestment target..
The leg work was done between July and now. Because all this has its own timelines, I am not benefiting by the same this financial year, but it’s going to the next (fiscal). But ruthlessly to think you did not do it within a financial year and will you be able to do it next time is not right because this time we have done the footwork and it’s going to be ready immediately after the commencement of the next year.
#6. And what is the idea behind getting LIC to do an IPO?
(To get) More money to be invested by retail investors, more money to come in from others. Why should it be only the government investing? More public, more opening up. The crowding out does not happen; crowding in should come in now.
You are projecting an increase in your income tax collections despite the cut that you are pushing through right now; so, do you think it is achievable?
*I am keeping both the systems going, right?
#7. Or you are expecting some buoyancy?
Of course. Because income tax I don’t think is suffering now. The direct tax collection is going on fine. The GST got affected and it is now restored.
#8. In fact, there is a significant increase in GST, even in these things… you are expecting a recalibration of rates? You are counting on that?
Yes, that will also be a part. But there is a lot of removing the deadwood, the evasion which is happening is being plucked. Otherwise, technically, as per media assessment, nothing has changed in the overall.
#9. Going back to your statement of involving states as a stakeholder. Are we also seeing this budget signal the limits of a Union government shouldering the economic burden as it were, and is now looking to involve states?
No, no I wouldn’t see it like that. Why should we involve the states more? (Because) Most of the activity happens there. The land is with them, zones are with them. If we want every district to be an export hub, the activities start from them. The economic survey has one very interesting data if you noticed. The chief economic advisor has based it on hard data and he has taken on board nearly 480-odd districts in doing that data. Because of private entrepreneurship, the growth is unbelievable at the district level. So, why would it not have an optimism about revenue generation?
#10. The stock market seems to have reacted adversely to the budget. As an FM, does it concern you?
It is not a fully open stock market today (Saturday). Not all wings of the stock market have been operational today. We will have to wait for Monday.
#11. So it doesn’t worry you as an FM?
I am confident that the stock market will get the full picture of the budget by Monday.
The food subsidy numbers reveal a steep cut in outgo in 2019-20. Do you think it is bad optics especially for a pro-poor government?
*No, no. Can I, for optics’ sake, change it? I can’t. It is also seasonal. It is also lot of mobility-related issues.
#12. This budget has been prepared under difficult circ*mstances. Within eight months you gave another judgement to the people. Was it a difficult budget looking at the background of the current state of the economy?
Current state of the economy is showing clear signs of improving. But yes, since July till now, post a lot of discussions every week or 15 days, we have been making announcements. From July to December, we have put in a lot of hard work for various facets. For example: on 31 December, the infrastructure pipeline was also announced.
There have been detailed discussions on each facet with the industries, related ministries, finance ministry. Whatever announcements we could make, we have had made. But this doesn’t mean that the topics which were left out at that time, they have been permanently forgotten. Rather, whatever topics were left out earlier, the same have been brought and discussed in this budget. So, we have responded to all the topics we have been working hard on since the previous budget has been dealt with either at that time in the previous budget or now in this budget. So, we are consistently working hard and if due to our work, if the common man and the sections which we are working for get benefitted, we will feel satisfied that our work is completed.
#13. If you look at all the numbers, there is a level of pragmatism. Some of the tax receipts you are estimating this year are lower than last year. You think they are achievable?
Yes, (benefits from) corporate tax cut will have a time lag to show. But today, I have to bear the brunt in showing that I lost the money [in revenue]. But if I am able to come back to some discipline in fiscal deficit by saying 3.5% in the budget estimate, it is because I expect revenue generation to improve.
(Transcribed by Pretika Khanna, Japnam K. Bindra and Prathma Sharma)
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JAYA HIND
JAYA BHARATHAM
VANDHE MATHARAM
BHARAT MATHA KI JAY.
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