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 Economic Times - - Economy: Macro, Micro & More -

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.


₹ 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.

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