Universal Basic Income on Table, Needs to be Debated
All those who are involved in delivery mechanism must deliberate upon idea and see how this can be converted into a scheme, because what you implement is a scheme
The next round of FDI reforms could put more sectors on the automatic route and raise the limit for others. The Bharat Net programme will have far reaching impact and the government sees more room for rationalising its schemes. In an extensive interview, finance secretary Ashok Lavasa, who is also the expenditure secretary, tells Deepshikha Sikarwar & Vinay Pandey how the emphasis under this government is on execution and completion of schemes. Edited excerpts.
There was talk of universal basic income (UBI) before the budget. Where are we on that? UBI, of course, is an idea which has been put on the table and I think that idea is more to do with the efficiency of delivery mechanism. It’s one of the alternatives which has been placed for debate and I think this debate should be carried forward. All those people who are involved in the delivery mechanism and who fund the existing schemes, must deliberate upon the idea and see how this can be converted into a scheme, because ultimately what you implement is a scheme.
ON UBI SCHEME
₹ 1.68 lakh crore over BE last year, you will find it substantially directed to agriculture and rural development sectors, social sectors and infra. Also, some of the important schemes have been given a major increase. One important segment, which has not been commented upon enough is the Bharat Net programme, the connectivity in village. This is the backbone on which your DBT has to ride. In investing in Bharat Net, you are actually investing achieving the efficiency of your expenditure also in the long run.
Allowances part of the Seventh Pay Commission are likely to come next year. Have you budgeted for that? We have made a provision. We kept in mind the additional liability the allowances might invite. This year in 2016-17, the government had to bear additional burden of ₹ 70,000 crore on account of pay commission. That burden has already been absorbed and whatever comes by way of allowances we would be able to take care of.
Why did you decide on only 3.2% fiscal deficit and not 3.5% to create more room for fiscal boost? For the simple reason that report has not been re-examined in its entirety. It would be unfair to pick up one aspect of the report and justify the decision of the government on the basis of that report. We have gone by the government’s assessment of the current situation, the requirement of schemes where the government has committed to spend. This government’s emphasis, one thing which is very distinct, is that it is very keen that the scheme should be completed rather than starting too many schemes. That is why in this budget you will find there is hardly a new scheme which has been announced and all the effort is on consolidation.
Do you see more room for bringing down the number of schemes even more? This is an exercise which was undertaken in this current year and a num- This year has been much better than what had been achieved in the past and we will try to reach the number we have projected. Obviously, a lot also depends on the externality and the environment
ber of central sector schemes and centrally-sponsored schemes were curtailed substantially. I do agree there is room for further rationalisation. In this budget, a number of schemes which were going on have been dropped, also because you are closing the plan period also. We had advised the ministry to take a careful look if they want to continue with particular schemes. So, many such schemes or sub-schemes have been discontinued. This is a work in progress.
The budget numbers have become lot more credible and there is not
much slack. In that context, there is a large risk from the high revenues budgeted from disinvestment and almost 25% rise in personal income tax. How do you see these? Personal taxes, I don’t think, are over ambitious. Overall, direct taxes are about 15%. I don’t think it will be difficult. Increasingly, you are moving towards an environment where tax-to-GDP has to grow. More and more digitalised transactions will take place and more compliance will take place. On the disinvestment side, this question is being raised is the government being very ambitious. I am sure if we had said we will do ₹ 50,000 crore we would have been told you are not ambitious enough. Disinvestment is a policy priority of this government. This year has been much better than what had been achieved in the past and we will try to reach the number we have projected. Obviously, a lot also depends on the externality and the environment.
FM had talked about FDI reforms. So, what are we looking at there? I think about 94% is already on the automatic route. Whatever is left whether that can be brought on automatic route. Whether percentages (FDI limit) can be increased. These are the residual things left as far as FDI policy is concerned. The other announcement is about FIPB. Unless there is clarity on alternative mechanism, the FIPB will continue to provide the services it is meant to. DIPP could be the coordinator once the FIPB is not there. What form the alternative will take that we will work out soon and announce.
One area where we did not hear much is the subsidy reform and food subsidy is the big remaining area. So, what is the progress there? On petroleum, there is a reduction. On fertiliser, it is at the same level. On food subsidy, there is an increase, but that’s on account of spread of districts under the Food Security Act. The additional provision is meant to take care of that extended coverage. But within the PDS system, what kind of reforms is brought about that is the key to reducing the subsidy. There, in terms of identification of eligible beneficiaries, is an important component. Out of the 5.5 lakh PDS shops, about a lakh and seventy thousand already have PoS machines and most of them are Aadhaar-enabled. Once you have all the PDS shops Aadhaarenabled, it will lead to removal of the number of beneficiaries either are duplicate or ghost or whatever. That should bring about some efficiency just as it has brought about in the case of kerosene.