Finance Minister Nirmala Sitharaman said there is a big market for India abroad to sell sovereign bonds as low interest rates in those markets make Indian instruments attractive. She said that government is dedicated to take all policy reformative steps. Excerpts from her post-Budget interview with DD News
On the $5 trillion which you’ve mentioned, it’s kind of a destination that you and the Prime minister have put out for the country. There seems to be some convergence among all political schools of thought but in your Budget, if you look at the numbers very closely, you’re heading for a nominal growth of 12 per cent and inflation of 4 per cent. So implicitly you’re expecting a growth of 8 per cent from this day itself.
That’s right. That’s why when there’s this concern being expressed about — can you reach this? Whilst Janbhagedari (public participation) is a force which can always give us the energy (for) what we have set before us. In fact, it will be an understatement if I say that we’ve played on the side of caution. No, we’re looking at ways in which we know the sectors where we need to plug in with resources — with policy, with legislative changes, with amendments to the existing rules. So, we are confident therefore not just by the numbers but also the way we’re dedicated to have all the policy reformatory steps that we have to take.
You’ve increased tariffs on a range of commodities that can be made in India and the PM at G-20 summit also talked about leveraging India’s massive market size for 5G saying that India is going to be a serious stakeholder in determining the kind of technology. But is it true that you’ve become vulnerable to a charge that you’ve become protectionist?
Globally, because of that environment, our own manufacturing industries, in spite of probably improving on the quality of products that they produce, they’re not able to compete. Now, unless I give them the opportunity to be able to sell abroad and also sell them in India and just because of the climate, they’re not able to sell outside. If I open the floodgates up, those industries will come and then our own fellows will have no chance of survival. At least it’s the duty of the country to make sure that they’ll be able to compete. Survive first to compete and compete when the environment improves. So, it’s a deliberately calibrated policy. If we have the capacity to produce, we need to bring them up according to the global standards.
There is a big paradigm shift which you have undertaken in the Budget i.e. financing the fiscal deficit. You’re saying that a part of it will be funded from abroad? What’s the percentage you’re looking to fund from abroad? Secondly, this kind of paradigm shift basically, it dollarises the fiscal deficit unless you’re going for a rupee denominated bond issuance?
First thing is, this announcement is because we already are looking at the league table, we’re almost at the bottom. Our borrowings outside, by the global standard are below average. That’s a big market waiting for us to tap. Second, given the interest rates abroad compared to what prevails in Indian currency, money raising from abroad will definitely add lower rates and they’re flushed with funds because with the interest rate position, they’re just looking to invest their money productively. So, we see a big opportunity for us to raise money from there. Considering, one we have a lower rate for tapping those markets, two they’re flushed with funds — both put together, if we tap that market, we will be able to better fund development activities. And that is what we’ve decided. Of course, we’ll get into the details of it and then at that stage we’ll determine what’s the extent that we have to tap those markets.
If I can link it to the Economic Survey which the ministry brought out Thursday — it talked about behavioural change and for the first time you’ve linked GST to a new taxation, input tax credit to a new credit culture. A lot of that context is implicit in your Budget?
Absolutely. I am so happy to be able to see that there is a sync between the Economic Survey observations and the Budget and also government policy. That very clearly says that the behavioral economics, which is a very much talked about area has actually worked in India. It is a standing example of how where subsidies went, we were able to nudge people to change their behaviour. And as a result, what came back — by voluntarily giving back — was able to be diverted to the more deserving and needy. Now, if behaviour patterns are the ones with which we can work; we proved through Swachh Bharat Abhiyaan that it is possible. Also, proving it through public participation is the way in which people have taken to understanding what is Ayushman Bharat. And it is the same route through which financial inclusions happen. So, I think the behavioural economics as a catalyst for transformational change, particularly in a country like India (with) the density of population, people’s receptiveness to public policy being what they are, it is going to be critical in implementing our policies.
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One movement forward on the corporate tax is that you have extended it to for more companies and you have also targeted the 1 per cent in your direct tax. So, the optics of the Budget seem to be suggesting that if you can afford, you should be paying tax?
Absolutely. The conclusion that I brought in saying rights are important. All of us will have to assert and never forget that when you serve your role, when you play your role, your rights are always ensured. But it is also time for all of us to think of our duty. We can’t at the same time say that there are so many poor who are left to be taken care of because we failed to do so.
Justifiably they are right, we have to take care of them. But how does the government do it without all of us feeling our duty towards contribution for this nation, and there cannot be a better context for it than this year when it is the 150th year of Mahatma Gandhi. And soon, we will be remembering all of our freedom fighters while marking the 75 years. —(Transcribed by Sarah Khan & Megha Biswas)