What was the soul of the first budget?
I think power of the people (janta ka bal) defines the spirit of the budget. We want to send out a message that if we people have purusharth (hardwork), aasha (hope) and aakanksha (aspirations), then everything is possible. The prime minister (PM) firmly believes that when you connect common people with government programmes, then what you consider impossible can be made possible. That is why we do not think that this $5 trillion economy (goal) by 2024 is far-fetched or something we will not be able to reach. There is no doubt in our minds. While preparing the budget, we held consultations with the PM and his team, and had daily meetings with stakeholders. We also did crowd-sourcing. When we discussed the subjects with him, the PM would say, people have so many ideas, they are looking at you to provide them necessary facilities to execute them. This is the spirit of the budget. Participation of common people (jan bhagidari) is at the centre (kendra-bindu) of this budget.
The $5-trillion economy is a kind of destination that you and the prime minister have put out for the country, and there seems to be some kind of a convergence among all political schools of thought. But in the budget, if you look at the numbers closely, we are aiming for a nominal growth of 12%, assuming an inflation of 4%; so, implicitly, you are expecting a growth of 8% from this year itself?
Yes. That is right. That is why there was this concern being expressed, ‘Can you reach this?" While jan-bhagidaari (people’s participation) is a force which can always give us the energy, what we have set before us, in fact it will be an overstatement if I say that we have played on the side of caution. We are looking at ways...we know the sectors where we need to plug in with resources, policies and legislative changes, and amendments to existing rules. If we do that, we are sure that we will be able to bring that trigger effect which will catalyse growth. So, we are confident about not just the numbers but also the way in which we are dedicated to have the policy reformatory steps that we have to take.
How will the budget address the challenge of employment?
I have not kept a separate sub-head for employment. But it does not mean that we have not given attention to it. We have allotted funds for credit availability to boost micro, small and medium enterprises (MSMEs); that is a major step. In government procurement also, we have openly said that there would be an e-platform. So, those who had a problem of market access will get a major relief. Thirdly, the PM believes that traditional industries should get patents. ‘Srijanatmakta’ (creativity) is the USP of India in various sectors. If we help them obtain patents and take them to international market, then they will get connected to the economy of the country and contribute to it. So, it will not only lead to job creation but also retaining of jobs as more and more people get connected. So, we will do job creation through MSMEs and promotion of traditional crafts. When we seek investment from abroad for solar panels, solar energy, lithium-ion batteries, computers, laptops, then who will manufacture them: our youth.
You have studiously increased tariffs on a range of commodities that can be made in India. At the same time, you have become vulnerable to a charge that you have become protectionist in an overall inclement global trade environment.
Globally, environment is inclement; because of that, manufacturing industries, in spite of improving the quality of products they produce, are just not able to compete; unless I give them the opportunity to sell abroad as well as within India. Just because of the inclement climate prevailing outside, they are not able to sell outside, and if I open the floodgates, then these industries will come and our own fellows will have low chances of survival. But, if they are already capable of surviving, but are not able to progress, then at least it is the duty of the country to help them compete when the environment improves. So, it is a deliberately calibrated policy. We have the capacity to produce; we need to bring them up to global standards. We shall do everything that it takes.
The prime minister had said that we need to empower women to take the country forward. As a woman finance minister, how do you plan to do this?
We noticed that in the last elections, women voters had come in large numbers, on par with men, to vote. This happened because schemes like Ujwala, opening of bank accounts or MUDRA loans for women, helped women to witness the performance of the government. This is why they came out to vote.
We do not just want to make a women-centric policy, but one with women-leadership at its centre. We are including this aspect in every policy. There is a gender budgeting cell for gender analysis in as many as 15 ministries. A gender budget does not mean allocating separate funds for women. But we should analyse what is there for women in the budget. This (gender budgeting) has been happening since the past 10-15 years in 15 ministries. We want to see what more can we do for women. I have also announced a committee to look into this.
I want to take you to a big paradigm shift that you have undertaken in the budget with respect to financing the fiscal deficit. You are now saying part of it will be funded from abroad. What percentage are you looking to fund from abroad and this kind of paradigm shift basically dollarizes the fiscal deficit, unless you are going for a rupee bond.
This announcement is because we already are looking at a league table, where we are almost at the bottom. Our borrowings outside, by global standards, are below average; that’s a big market waiting for us to tap. Second, given the interest rate abroad, compared to what prevails in India, money-raising will definitely be at lower rates; they are flush with funds and, given the interest rate position there, they are not able to invest their money productively. So, we see a big opportunity for us to raise money from there, considering we have a lower rate at the moment in tapping those markets. We will work out the details, then we will know to what extent we want to tap those markets.
The Economic Survey and now the budget has spoken on investment being the centre of growth. The private sector—they have approximately ₹8 trillion which they are not putting in the economy. How do we boost their confidence?
We have pushed for two things. Like we took a lot of measures for ease of doing business, we now need to focus on ease of living. If we look at ease of living, we will improve connectivity, public services will be simplified; we are already working to simplify tax structures and if we do that for tax rates as well, I believe investments will automatically come. We are making a policy in this regard, so I don’t see a problem there.
The Economic Survey talked about behavioural change and for the first time you linked GST to a new taxation culture, IBC to a new credit culture. A lot of those contours seemed to be implicit in your budget...
Absolutely. I am so happy to see that there is sync between the Economic Survey observations, the budget and also government policy. That very clearly says that the behavioural economics which is a meagrely talked of area has actually worked in India. Subsidies is a standing example where we were able to nudge people to change their behaviour and, as a result, what came back by voluntary giving back was diverted towards the more deserving and needy. Behavioural patterns are ones which we can work towards. We proved through Swachh Bharat Abhiyaan that it is possible. Proving it through public participation is the way with which people have taken to understanding what is Ayushman Bharat, and it is the same route through which financial inclusion has happened. So, I think behavioural economics as a catalyst for transformational change, particularly in countries like India—density of population, people’s receptiveness to public policy all being what they are—it is going to be critical in implementing our policies.
In your speech, you read a beautiful couplet of rice and an elephant. People are trying to understand your message on tax.
This is not from now. It is from the Sangam period…Tamil literature…which is at least 2,500 years old…A poet gives a suggestion to a king that—Maharaja, please understand that if you need to feed an elephant with cooked rice (procured) from a small field, it is enough food for the elephant. But if you do not give that, then the elephant will reach the fields himself and damage the crop.
I am making the same suggestion that was given to the king. I understand that the government is like the elephant. What the people will give in the form of tax, the government thinks that is enough; but if they don’t get that, then the government is not going to make the mistake of being the elephant and hurting the public; and the government also won’t get anything. We will do with what we have been able to collect as tax from the public. We won’t reach there ourselves and take everything out. That is not our attitude; we are content with what you give us.
A movement forward on corporate tax is that you have extended it to more companies.
Only 0.7% of companies will be left (at the top tax bracket).
You have also targeted the 1% super rich with your direct tax proposals. The optics of the budget seem to be suggesting that if you can afford, you should be paying tax.
The conclusion that I brought in...saying that rights are important. All of us will have to assert that when you play your role, your rights are assured, 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 will have to be taken care of. Justifiably, they are right; we will have to take care of them. But how does the government do it without all of us doing our duty towards contribution to this nation?
In your budget, your government has made a strong bet on electric vehicles. You have ended the debate on the whole issue.
Our current generation and future generation will be cursing us if we didn’t put our commitments up and forward. It is one thing for us to go and attend CoP 21 and come back and be able to…like we committed on solar energy and the International Solar Alliance...in the way in which we are investing in renewable energy. This is very consistent with that.
For budget-making, you had to hit the ground running within three weeks. Also, you have broken with tradition of previous BJP FMs by dumping the traditional briefcase.
Earlier, as an MoS (minister of state), I was a participant at stakeholder consultations, but to be there and do it all by myself (is a different experience). Secondly, the institutional mechanism in the finance ministry is admirable. Every department works in a very coherent fashion. Even better is the printing staff; the way in which they work in sync with the departments and to have it done error-free and no glitches.
I thought it was high time that India grew out of this colonial mindset, the baggage of which we have been carrying in the form of a red briefcase. I thought why not get back to being our own, (be) Indian and carry it (the bahi khata) where you want.
Transcribed by Srishti Choudhary and Pretika Khanna.
Ajay Mishra is with Doordarshan.