After a marathon speech and a detailed press meeting, I was still full of energy while explaining the most delicate points of the Budget. It provides a strong invitation to private investment, he told Sidhartha and Surojit Gupta. Excerpts
You delivered the longest budget speech. Why such a long speech?
We spent a lot of time getting details, the speech had to be elaborated. Now, if I only said that I am giving almost Rs 3 lakh crore for agriculture and rural development, people would say where will you put the money? I had to specify 16 areas. This budget is not a result of last month's exercise, some residual discussions of the last one have also been included in this. I would like to highlight that this Budget was not only a budget for this year, it was the result of continuous work to address the requirements, both on the supply and demand side, but also to set the course for the next five years. Look, the prime minister has a vision for a $ 5 billion economy goal ... unless he does the preliminary work and puts it into action mode, it won't seem consistent.
Do you think the numbers you have assumed in the Budget are realistic?
Live plus People should know that government spending does not go for dumb things, unproductive things. No. Clearly, it consciously goes for asset construction and this has a cascading effect. Not only does it create the asset, but in the process it employs people in so many subsectors: cement, steel, everything will have a domino effect. It was a conscious decision that we will spend money but we will spend in capital.
You have assumed a nominal GDP growth of 10%. The survey expects a real GDP growth of 6-6.5%. Is the nominal growth of 10% of GDP conservative?
It adds to what it says. Even if inflation reaches 4%, we will have a 6% growth. You cannot tell me that I have not been realistic. By the way I had to say nominal GDP twice. What is the reason for the tax letter? ¢ Only three countries have it. United States, Canada and Australia. Ultimately, it gives the taxpayer a sense of trust. Some of the things that will be part of it are something she can seek comfort. (Anything) that is done is according to the protocol. The whims and personal fantasies of anyone do not govern it and, at the end of the day, when a (fiscal) matter closes, it closes completely.
It has also included clauses to limit the excessive scope of agencies. Do you think this should comfort the industry?
Absolutely. We are not just going about saying ‘we trust you, we love the honest taxpayers, we respect wealth creators’... we are putting it into law. That you have a right and we recognise it. I would think, strictly speaking, tax concessions are important, it helps people to have plus money in their hands. But (a charter) tells you India is at par with some of the best countries in treating their citizens. The PM very clearly said ‘this has to be done’.
The inclusion of SCI has raised some concerns about the security of investments. What is your opinion on this?
At the moment, we are only going for an IPO. At BSNL, have we not recognized the strategic importance of BSNL? But there must be competition in insurance. There should be funds from the private sector for insurance. Why should only the government be doing insurance business?
You have set a great divestment target. Do you have hope for BPCL and Indian air going on and is there a timeline?
My intention when I announced it in July was that we should be able to finish it this year, that is, before March 31. The preliminary work is over. Everything that was announced last year will suffer a divestment. I just can't reap the benefit in this financial year.
¿Podría por favor dar plus detalles sobre el nuevo régimen fiscal? ¿Cómo afectará a varias categorías de contribuyentes?
Ultimately, we want to have plus money in the hands of people. The middle class has been asking for personal income tax rate reduction. This is an opportunity and an opportune time for me to also say I should give you a simple system with lower rates. When I went looking at this, there are 120 exemptions. Do you want me to come with lower rate and also give exemptions? I have removed 70 and I am saying no exemptions, though even in the new system, there are some exemptions. In the long run, with stakeholder consultations, I will slowly move to a regime devoid of any exemptions. The biggest attraction is that I will cut the rate substantially. To start with, a few will be there and gradually we will go on reducing the rate and keep removing exemptions.
Is that one of the tools through which you expect to increase consumption?
Definitely. Newcomers probably earning fairly reasonable amounts will have plus money in their hands. They can choose to buy a car, or put the first instalment to a home or buy shares. If people ask me that removing exemptions removes incentive to save... I am giving plus money in your hands. Spend it or save, it is your business.
What was the thinking behind the new definition of NRI for taxes?
The idea is that we have to make it a transparent system. It should not have any scope for people to play.
In several articles, the customs tariff has been increased. What is the foundation?
We study the impact of cheap imports on MSMEs. Cheap imports of final products, consumer products, no intermediate products, no raw material. Why shouldn't we make it expensive for imports? It is not a meaningless list.