One of the things that was expected of this Budget was a stimulus to growth. So if you have to pick two or three themes from the Budget which you think will really give a stimulus to the economy, what would those be?
The first main thing is, as is the analysis done by economists, policy experts and so on is, if private investment is not really catching up, where does it stop? Where does the buck stop? The buck stops at the government’s doors. The government will have to show that it is not waiting for the private investments to happen, it will happen whenever it happens but we have to go about investing, and that’s what we made very clear saying, “Yes, we will invest and in infrastructure.” I want to point out two or three things to you, to prove and strengthen that point.
We are definitely spending on infrastructures, obviously, we have gone into the detail. It is not just that (the) Prime Minister announced it in the Red Fort speech during Independence Day, Rs 100 lakh crore in five years. Soon after that we started, we had a task force, we looked into details, we consulted states, we consulted private sector and came up with a pipeline of 6,500 projects. You’ve seen government for a very long time, within a matter of four months, if we were able to come out with a complete pipeline, and in this budget to help that pipeline see the light of the day … I have given enough concessions for sovereign funds which want to come into India to invest and that condition is also addressed. Infrastructure, if you invest, we give you all these concessions.
That’s not just said as an offer, several funds who have been in touch with us, they want to invest in India. They see India as a potential country for high investments. So, after that we have given concessions for foreign investors, sovereign funds and so on. We have also not just spoken about it, Rs 22,000 crore has already been given for those companies, which are now going to do the handholding and direct investments towards these pipeline projects, third. Fourth, together with this we are also separately investing also in some of the water connectivity, inland water connectivity projects. The Dhubri-Assam link, Brahmaputra link, Ganga link, Haldia link, all this is happening. So, in infrastructure, if the economic theoretician, economists are saying private investment being slow, will public investments happen? It is happening. So that is where, I want to say, the expectation about spend the money in creating assets, and some of the suggestions which had also had been floating around in the media is, “Alright, you’re going to be doing all this disinvestment. The money will come, and it will go away.” You sold the family silver, no. I am very clearly committing myself, disinvestments will happen, but the money will go into the infrastructural lending, institutions that we are creating. So that investment disinvestment money will not go for revenue expenditure, it will go for capex. Capex is what is going to receive it.
When you look at the rural economy, carrying on from what you were saying, one of the things that seemed to have helped this year was the job guarantee scheme, MGNREGA, and you originally budgeted Rs 60,000 crore, but you ended up spending close to Rs 71,000 crore on that. This year, if you look at it, the Budget Estimates are a little down on that. Are you expecting enough of a pick up in rural jobs and the rural economy to sort of offset this, or is it one of these things where, if the need arises you will step in and invest?
The principle behind the MGNREGA is that when the need arises, we’ll give. Need arises is based on the demand, when they come. It’s a demand-driven scheme, so when they come and ask for it we will give it. But if you notice in my Budget speech, I have also mentioned that MGNREGA will also be extended for further creation, because today livestock in many of the water-distressed districts don’t even have enough fodder, livestock maintenance is becoming an issue, and if it is possible for us to use many of those not so fertile lands, I wouldn’t say barren lands, but not so fertile lands, if they are used for cultivating fodder you’re local livestock will survive from it, and that itself can be one of the MGNREGA activity.
So we have tried bringing all those necessary, lose-end tying up, just say local youth and also demand-driven scheme like MGNREGA will flourish.
The idea is, over a period of time, all exemptions will go, because right now at every point I can be taxed either in one way or the other, which itself is a little complex, right?
So, we want to gradually remove everything called exemptions and that is why I am not waiting for that golden day. I have started the process by offering a new stream. I am not forcing people, you can continue to be where you want, if you want exemptions. But gradually, when exemptions go, I will also give an attractive rate with which taxation will be simple.
The tax changes that you’ve made, do you think that is significant enough to have an impact on consumption?
Yes. I am giving you an example, Rs 78,000 is what an individual with a Rs 15 lakh annual salary will save. And he will have to use that money, either in savings or in consumption.
So you feel that this fear that some people have that savings are gone altogether…
No, I don’t think. I mean I don’t want to believe that a taxpayer will have to be goaded to save. A taxpayer is smart enough, intelligent enough responsible enough to take a call on how much he wants to spend and how he much he wants to save, after all, we should trust them to that extent.
On the tax issue itself, the charter that you did. It’s probably the first time that any government has gone out and said as a taxpayer you have some rights of not being harassed and we’ve talked about this in the past also, there is this huge fear that a lot of people have, not just individual taxpayers, but more importantly the corporate sector. So can you just tell us a little bit about this charter?
As you said, I have gone around the country talking to tax administrators to say, “Yes you have a target to collect revenues, but please don’t overreach, we’ve been assuring taxpayers that we shall ensure that there will be a fair assessment, we’ll do it all digitally, centrally monitored, you’ll be given a document identification number, all that is on one level, but beyond that, that the government trusts and respects the taxpayer, how many times the Prime Minister himself has said. There is still this thing about you know, do you really taxpayers, we are building the nation and so on. So we said, we are very clear in our intentions, so why should we even hesitate to put it in the law. So we have made it possible to have it as a part of the statute itself, I think if my research is right, there are only three countries which have it in there law itself: Australia, USA and Canada. I am glad that we have joined that league to assure taxpayers that this government’s intention is to trust and respect wealth creators and taxpayers. We do not mean less, so we put in the law now.
If you look at the tax numbers, some of the tax receipts that you are expecting this year are actually lower than the budget estimates for last year…
Do you think they are achievable this year?
Yes, that is the point I am trying to make corporate tax cut will have a time lag for it to show, but today I bear the brunt of having lost that money as a result my revenue collection will suffer. But if I am able to come back to some kind of a discipline, fiscal deficit by saying 3.5 per cent in my BE, it is because I expect revenue generation to improve, so I can cut my fiscal deficit back down, towards a glide path, 3.8 per cent comes to 3.5 per cent.
Even your nominal growth expectations at 10 per cent…
Realistic, I think.
Yes, and it is the lowest in a long time, but like you said it is realistic.
Realistic because we don’t want to give an impression that we are… in fact I thought in the house, even as I read it out, some members did not even hear me completely, or misunderstood what I said. So I repeated it, in fact, twice repeated it. Saying, “nominal GDP growth 10 per cent”.
(Transcribed by Mehr Gill)
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