Yes, that is one, and also see normally, tax relief will not be this range, and will also not be simultaneous across the board. You were at two (lakh rupees starting tax slab), then you’ll raise it to 2.5 or you were at five (lakh), you will raise it to seven (lakh). Now, from seven (lakh), I am taking to 12. So that’s a big deal.
Yes, because the rate change has happened simultaneously. So, as a result, you find that the benefit is accruing to every income holder, irrespective of the amount that he earns. Everybody gets benefits. Other than that, those who have been given the rebate, get the clean knockout — no tax to be paid. So we targeted the group with rebate, and also because of the rate change, everybody derives benefits.
From 2019, or 20, Prime Minister (Narendra) Modi clearly told me to “use technology and get the faceless (assessment) going”. We want to have trust in the taxpayers. We don’t want any rent-seeking happening. We also want the taxpayer to do his own assessment and make it simpler. We brought in the faceless assessment. We also brought in Vivaad Se Vishwas clearance at that time. We brought in a taxpayer’s charter. We also used to issue certificates to prompt taxpayers, regular taxpayers. So, the attempt was to tell the taxpayer that we respect his contribution and we continuously recognize that contribution and also that we respect him. And this is true from 2019.
So now it was very clear that... Prime Minister was very clear that for the taxpayers...for their respect, samman ...something needs to be done. So, we worked out different possibilities and came back with this. It is first and foremost a measure to respect those taxpayers, honest taxpayers, who, without fail, are paying towards the country’s nation-building attempts. It will certainly have a follow-up, in that consumption will improve, and hopefully, they will save a lot more than before. Discretionary spending may happen. We don’t know, but our intent and the primary motive was to make sure we honour the taxpayer.
Simplification. I said this in my July (2024) budget—simplification, easy compliance, taxpayer friendly. Above all, interpretative problems should not be there. Language should be a lot more tightened, not loose.
Yes, we hope that it will be at least half the size of the (old tax code).
Well, let’s see, I want to pass it in the session. The first (half of the budget) session ends and the second (half of ) session commences. Normally, standing committees go through this (kind of bill).
Definitely, this will be simpler than what it was earlier, it will be easier to comply, it will use less words to convey the same things. And several amounts which we used as either benchmark or ceiling are all being reviewed— whether they are relevant today, whether they need to be there today. And there will be a very decriminalised approach to dealing with the penalties. As it is, Income Tax does not arrest you and take you anywhere. It is only in other offences in Companies law etc. But even here, we are going on the route of trust and saying “alright, you tell me where you are...you self-declare the reasons” and so on. To that extent, I think it will be a very progressive approach to dealing with income tax.
We don’t know what it is going to be for us. But you raised a pertinent point. On Mexico, on Canada, on China, whatever is being imposed, will that have a bearing on us. It may indirectly have a bearing on us, but specifically on us, we don’t know yet what is going to happen. We’ll be watchful, but we can’t predict at the moment, what will be the effect on us.
We’ll have to make sure that industries are facilitated to find newer markets, and that because of atmanirbharta (self-reliance), we are able to produce many of the things that we need to produce for our essential commodities. But finding new markets is part of what the export promotion engine is speaking about. And in that we have highlighted finding new markets, increasing the capacity of ECGC and Exim Bank to fund more trade. All this is happening. So we are constantly strengthening the institutions which help in trade promotion.
Customs duty rationalization is being carried forward for the last two years. As a sequence to that, this time also customs rationalization has happened. This is an ongoing exercise for us to make sure India is able to import without duty burden. Items which we don’t have in this country and which are important for raw material purposes, for the MSMEs, we need to get them at affordable prices. Similarly, there are labour-intensive (industries), whether it is leather, footwear, textile, or toys. We need to get some things from abroad. We need to get them at an affordable price. So these are considerations of why we are rationalizing customs, not in response to anything else.
Well, Press Note 3 still governs today. [The note mandates prior government clearance coming into India from any country with which it shares a land border; that includes China, which was the main target of the note]
In an economy where everybody is a stakeholder, how can I give up on anyone? The economy needs all the stakeholders to play.
Not at all. In fact, the states are more keen to get more money invested, and (so are) the departments in the Centre which are also doing the investment. The prominent four big ticket capex spenders are roads and national highways, railways, defence and home. Home has spent so much in the vibrant villages (programme), and the border road villages (scheme). Roads are ever-expanding. We have taken over some of the state roads also because they are not able to maintain them. So, the expansion possibilities exist in these four (departments), and these four are still wanting more. They are continuously growing. The capacities are growing. The need is growing.
Just in time release is happening (by the states). So, when they are in a position to put their share (of funds; some of the schemes require states to contribute a share), our money also goes. Otherwise, they receive (central funds) and keep it (in the) Treasury account. So, the single nodal account, when it came, we made it clear that the moment you put the money, I send the money. This is a transitional phase as regards Centre and state financing, and also between department financing, everybody is now coming on board to the digital system. So, there are mismatches with that. They’re getting corrected.
That is where the high-level committee has been formed now to see how best we can bring in simplified soft-touch regulation. Several regulators, the non-financial regulators, are also possibly looking inwards or very clear that their agenda is within their silo. That it can have an impact on others is not probably appreciated. So when this high-level committee will look into these sorts of things and come out with a report, we expect that there will be a lot more smooth flow between people who have a common cause.
We’ll have to first of all standardize from among the central government regulators, and then it depends on the high-level committee how it wants to look at it. The terms of reference will have to also be drafted. That will happen soon, sooner rather than later. Once that is done, they will be able to come up with a report.
I think we have placed emphasis on all the three sectors we want to boost. That is why you find that low-productivity districts are also being taken up for agricultural enhancement, improving production, providing skills, providing storage, and warehousing. Money is going to all this through various different rules, cooperatives, primary agricultural cooperative societies, district cooperative societies, and so on. So, agriculture value addition, marine value addition, MSMEs, exports—so this is where I think we are pulling all the stops to make sure money flows and with RBI also opening up the window for liquidity, greater credit will be available.
I won’t be able to say.
No, this year’s capital expenditure contracted because of the elections, which you yourself admitted. Where else have I cut the expenditure? Otherwise, there’s never been a cut in any item at all. When we are wanting to give stimulus for growth, why would we want to cut down on expenditure anyway?
I think the central government is (boosting) every segment where there lies potential through either PLI or employment-linked incentives. (We are) pushing the agenda forward on semiconductors, mobile manufacturing, in sunrise sectors—renewable energy, atomic energy. Now, artificial intelligence is getting a global capability centre framework. So, we also think many states are keen to move forward on these lines. So, I think a lot more cooperative federalism between the Centre and State is one of the very important ways in which we can move forward.
No, as it is the Constitution that gives me power under Article 293, to see how the states and their borrowings are and we broadly guide them on it, and their respective FRBMs also guide them on it. So beyond that, there isn’t any plan.
Yes. As a result, many states suffer as well. Like Punjab, Himachal…their debt is being moved to the next generation. That is a hard reality, which they have to face.
It’s a very interesting question. I think it’s also at the state level; these kinds of questions should be asked. It’s not just the Centre driving it. Every assembly should discuss it, because opposition parties in the states are also responsible towards the people in that state. So, this discussion is a very critical discussion, irrespective of parties, and it should happen at the state level. I would think, because the Centre has shown, at least under the Prime Minister’s leadership, that we’ve all been very careful about how we are managing our finances. And if we have come out openly to say how much my debt to GDP will be in the coming years, these kinds of discussions should happen at the state (level too).
No, I’ve explained that several times. It will run its course.
(Smiles) I don’t know yet.
Manas Pimpalkhare contributed to the interview
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