By announcing two major schemes for marginal farmers and unorganized workers in its 1 February budget, the Narendra Modi government has sought to win back the trust of a sizable chunk of voters ahead of general elections due by May. In an interview, finance minister Piyush Goyal, who wears many hats in the government, defended the farm package and the departure from convention in the interim budget. Edited excerpts:
One of the central pieces in your budget is the agri package. You must have had time by now to weigh both positive and negative responses. One of the criticisms has been it is too little. Is there scope for a rethink?
The nation has welcomed this PM-Kisan Yojana which Prime Minister Narendra Modi has introduced. Farmers all over the country recognize that this is the first time they have a government which consistently for five years has kept on bettering the prospects of farming in India on a sustainable basis and preparing them in such a fashion that the marginal farmers with less than a hectare also are able to make farming more viable and remunerative.
Sitting in air-conditioned rooms, you can’t understand how valuable this amount will be to these very small farmers before every crop. We are only recognizing and appreciating the contribution of farmers in making India food-secure. But in that process every four months before the crop, once they have this amount in their hands, they get a chance to meet any small requirement—like buy some fertilizer or pay the electricity bill. I feel you should go out in the field and meet the small farmers and see what joy this has brought to them. Of course, one can keep hoping for better and better. I hope the state governments also contribute. But I believe this is the first time a sustainable solution has been found to this problem. Against the UPA providing ₹52,000 crore in 10 years to farmers through loan waivers, we will provide ₹7.5 trillion in 10 years to farmers. Farmers also see what is sustainable and good. They are super smart and understand what is good for them.
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Why are landless and tenant farmers not covered in PM-Kisan scheme?
Because there is no database in the country. We believe our scheme should be such that it actually reaches the beneficiaries on the ground. We don’t believe in announcements which are never going to fructify, like what Congress used to do.
So by implication, you are saying in future when you have the database, it can be extended to landless and tenant farmers?
I am sure we are now going to be creating those databases. Earlier, there used to be a practice where the tenant farmer’s name was there on the landholding. After independence, I think, after the lands were transferred from the tillers at that point of time, that practice has stopped. So wait for the appropriate time. When we have the databases, we will take a decision on that.
Will the ₹6,000 per year payment be inflation-linked?
You can always be looking at what has not happened and not be happy with what has happened. I think it is a great respect we are paying the farmers and you should recognize that this is a valuable contribution to that small and marginal farmer at a crucial time before the harvest that he will be getting every year.
The convention in interim budgets has been not to touch the direct taxes. What forced the government to break with the tradition?
We have not touched anything. All the tax proposals remain the same. We will do that in the final budget. But if you look at what (former finance minister P.) Chidambaram did in the 2014 interim budget, he reduced the taxes on SUVs (sport utility vehicles) and luxury cars.
But that is indirect tax, not direct tax.
Any tax. Tax is a tax. He was so concerned that he could not wait three months to bring down the cost of high-end cars. That’s the Congress’s working. Modi, BJP and the NDA’s working is that whatever is good for the middle class cannot wait. Otherwise, all these 3 crore odd people will have to pay through TDS and then have to go back and seek refund. So we ensured there is certainty in their minds. But the final proposals will be there in the final budget once it comes up in July.
So rather than giving benefits on the rich people’s cars, giving benefit to 3 crore middle class people is far better.
With the tax rebate for taxable income up to ₹5 lakh are you signalling that if BJP returns to power, it will increase the tax exemption limit to ₹5 lakh?
How can I say that? This is for the final budget to decide. In the final budget what will happen how can I speculate about it?
The NDA government has reformed indirect taxes through GST. One of the unfinished reform agenda, however, is direct taxes. What is the road ahead?
We had set up a task force under Arbind Modi, which was reviewing direct taxes. Unfortunately, it could not complete the work as Modi superannuated. We hope that the task force’s recommendation comes out quickly. (CBDT member Akhilesh Ranjan is the convener of the task force). We want income tax law to be a lot simpler. I have announced the intention for a new regime of income tax administration for which we have approved the funds also. Tax assessment will be IT-driven and be completely anonymous.
The reduction in corporate tax rate to 25% for all companies was one commitment made by the NDA . It is partially implemented.
See, 99% of the companies are already covered under the 25% corporate tax rate. Small companies are eligible for presumptive taxation. New manufacturing companies are also eligible for 25% rate. For the present, we have achieved the larger objective. After the elections, when the final budget will be presented, the finance minister then will decide how to go forward. Besides, the corporate tax cut is linked to the removal of tax exemptions. It is a work in progress.
The focus of this government has been empowerment rather than entitlement. But through schemes like PM-Kisan, are you suggesting that the next BJP government will focus more on entitlement?
PM-Kisan is precisely about empowerment. Land holdings have now become very small. The scheme will be available to anyone with even a very small land holding. Even a person with 1,000 square metres will be covered under this scheme. The scheme helps everyone, but the smaller the farmer, the more valuable the benefit to him or her. We have made sure supply of fertilizers at the right time without increase of a single rupee in the price. Soil health card empowers them to buy the right product. We have doubled agriculture loans. Pradhan Mantri Fasal Bima Yojna, for the first time, gives full reimbursement of farmers’ losses at a very small premium. We have strengthened the Kisan Vikas Kendras so that it becomes a tool to empower them. The Kisan channel gives them realtime updates. Text messages are sent to farmers, giving them updates on weather and prices. This is a government which believes that farmers should be made to stand on their own feet by truly empowering them. That is the only way forward.
The latest change in the foreign direct investment (FDI) policy has rattled e-commerce players and seems to send confusing signals about the NDA’s commitment to certainty in policies. What is your message to foreign investors?
Not at all. All we have done is to clarify the law. Some people tried to interpret the law in such a fashion and find loopholes, which warranted a clarification. There is no change in FDI policy. The intention was never to allow FDI into multi-brand retail, which is not allowed. Secondly, if that is an anti-competitive activity, government cannot remain a mute spectator.
The GST Council has evolved as a successful model for carrying out reforms in difficult areas like taxation. Can the same model be replicated in reform sectors like power or fertilizers?
Absolutely. I think it is a very good idea. The centre will welcome this approach of cooperative federalism in agriculture, power and many other sectors.
Now the action is in states as much as it is in the central government. State budgets have become very important. Is there scope for coordination between the Union and state governments?
That may not be really workable as each state has its own priority, demands and immediate requirements.
You have praised the CSO for better capturing the growth data and showing higher GDP growth rates. But is it not ironical that another arm of the statistics ministry—NSSO—is getting all the brickbats for reporting that unemployment rate is at a 45-year high and the government is even not ready to release the report?
I have praised them for doing their job. Not because the numbers are higher or lower. You may think NSSO may be in a mess, I do not think so. They are only trying to change with the times. They are trying to fine-tune their understanding of the feedback from the ground. NSSO has to decide when to release the survey. But they can release only when they finalize the figures. Data is a tool for policymakers to take the right decision.
Since the central government is spending more on states by way of the income support scheme, what shape will the 15th Finance Commission recommendations take?
The spending on PM-Kisan or the tax rebate given to the middle class is not a burden on the government, it shows the respect the country has towards them. The direct tax base has expanded, the country is moving towards a formal economy and it is becoming more and more honest. Mr. Jaitley (Union minister Arun Jaitley) had said this government gives premium to honesty. This measure is only a gesture of paying that respect. It is not a burden. It is for the Finance Commission to decide the devolution formula.