‘This is a Budget for continuity’
In an interview with Doordarshan, Union finance minister Nirmala Sitharaman talked about how the Budget will spur growth and create jobs
Last year, in the run-up to the Budget, you introduced an interesting moniker, that this was a once in a 100 years Budget. So how would you characterise this year’s Budget?
That time when I made this statement, I had said that this Budget is being prepared at a time when a oncein-100years pandemic has hit us. It so turned out that everybody started saying you’re preparing a once-in-a-hundred-years Budget. But never mind. This Budget is for continuity; for sustaining the stimulus that has been given. We want to honestly undertake the public investment and asset creation, public infrastructure expenditure, and only through this we feel that there will be a crowding in of private investments. This can be achieved only with the government leading the way. And we have unhesitatingly come forward. Otherwise, within one year, capital expenditure going up from ₹5.5 lakh crore to ₹7.5 lakh crore is not insignificant. And within this ₹7.5 lakh crore, we have given ₹1 lakh crore to the states as a 50-year interest-free grant. And that’s not going to be cutting down on their borrowing. It’s over and above the borrowing limit that has been given to them, and therefore it’s not a reduction in what they already have. On the contrary, it’s much, much more than what’s been given to them by the Finance Commission.
You’ve talked about how the public investment should catalyse private investment. But we do know that for the last 10 years, this has not been happening. Do you think this is the turning point where India Inc will rediscover its mojo?
I think so. I can already see signals in that direction because there are many other compulsion points, if I can use that expression. There are other reasons why India Inc will have to come forward. We are leading from the front; we are spending, no doubt. We want to have private investment crowding in, but it’s also a time when the world over there’s a lot of churn happening in the way the manufacturing sector or service sector has formulated its business. Business models are changing. There’s a lot of artificial intelligence coming in, robotics being taken up. Of course, in a country like India where a demographic dividend exists because you have a reasonable number of good graduates, trained manpower which can be upskilled. So there has to be a good blend of robotics, artificial intelligence, and also looking at employing people. And I think industries have seized the initiative.
We’ve seen that the three farm laws were passed in Parliament, then repealed, and then this Budget was passed. Obviously, if they hadn’t been repealed, there would be differences in the Budget. Now, the signal you want to give — the intent is to change the direction of farming; to connect it with industry and food processing; link it with start-ups; you’ve even talked about using drones. Does this Budget plan for the changing direction and nature of farming?
The decision for where the direction and nature of farming will go lies with the farmers. To help them achieve that, the government is prepared. Beyond the income they’re making from just farming — solar power generation, beekeeping, agro forestry, high-yielding seeds — for all these things, this Budget has allocated funds and measures for research and development via our agricultural universities. For exports, we have developed the Kisan rail and systems to airlift perishable goods. We’re trying these measures to try and double the income of the farmers.
But you’ve clearly stated that the PM Kisan Yojana will remain, the MSP will remain?
Yes, not only will the MSP remain, but procurement is at a rate that has not been seen before. In the last 4-5 years, the MSP has been at the highest; the rate is also the highest and so is the quantum of procurement. Through DBT, the money is also reaching them immediately.
Many questions have been raised on whether this budget will increase employment. Can you give us specific points, whether it is through MSME or PLI — how will this Budget lead to an increase in employment?
Just through PLI (performancelinked investment), and this is a conservative estimate, we will create 60 lakh jobs. When the Emergency Credit Line Guarantee Scheme (ECLGS) was launched, there were doubts over whether jobs will be preserved by it. An outside and independent study proved that MSMEs which benefited through this scheme, their employees were not removed. And now PLI is being expanded. Beyond that, food processing, start-ups, and a lot of smaller MSME units have all been included in this Budget. I believe that all this will lead to an increase in jobs.
You mentioned that states are going to be a partner. But all states are not uniform in this country. So there is a capacity issue, even If we keep the politics out of it. So do you think in these kinds of projects, the lack of capacity could be a bind on the ability to ramp up these capitalintensive projects?
They are not the only projects we are doing. Scaled-up projects are certainly there, because the economy needs them. At least in the core sectors where they are coming from, we need that scale. But that doesn’t negate the possibility of other projects, which states can continue doing depending on the size and capacity of the state. And nothing is less or small, every state needs what they need. So we recognise that.
There has been a lot of focus on digital technology. You’ve mentioned ease of doing business and ease of living, e-passports, starting digital banking in 75 districts, linking 1.5 lakh post offices to banks, the national telemedicine health mission — all of this is connected with digital infrastructure. Could you give us some details on what’s happening with 5G telecom, and in the next 1-2 years, what will we be seeing in terms of the digital economy?
Because of Covid, the ordinary person has realised that they can get a lot done via digital technology. Adapting to digital payments is one classic example. Even in developed economies, the rate of adapting to digital economies wasn’t as high. So there is an interest in the common man. And when transactions happen digitally, it’s easy to track. So all the negatives of an informal economy can be negated. We can reap the benefits of formalisation of the economy, and the people choose to use it because it’s easier. And optical fibre is reaching most areas, before our hardcore infrastructure is reaching them. When people are getting digital connectivity, they are getting access to the market — this is something people are understanding. And those who don’t have marketing skills, they are using this digital connectivity to market their products. This has really benefited our small handicrafts industries and weavers. In this country, the informal sector is the strongest. But to make them a formal sector, using these methods is the most useful.
Can we get a clarification on the crypto tax, as the markets are calling it?
There is a process of consultation which is going on about crypto. Before the consultation is completed, I won’t be able to do anything on regulating them or formalising a framework for regulation for them. Second, everything that is crypto cannot be a currency. What is a currency? A currency is something which is issued by the authorities concerned — the government or the central bank. If they issue something, even if it’s digital, only then can it be currency. What happens in the world of crypto otherwise is that they are creating many types of assets using digital technology, and also using the distributed ledger technology. All of them are not necessarily currency. Currency is that which comes from a central bank which has the authority to issue currency. So what we have now made a provision for is for the Reserve Bank of India to issue a digital currency. And that obviously will be based on certain value of gold or money or something of that kind — it will be assetbacked, sovereign-backed in a way. The rest of them — we don’t know yet how we will regulate them because the consultation is still going on.
However, because there is a lot of buying and selling and transacting resulting in some kind of a profit, and it is the sovereign right to tax such transactions and profit-making, I’ve come up with a proposal for a taxation on them. And that is to the extent of 30% for profits earned out of such transactions and also a TDS so that we know who is buying and selling. In the sense, what kind of transaction it is, what is the money trail...
Will there be a law or regulation on this?
We will see based on the consultation.
You have assumed 11% nominal growth in the next fiscal, which is a little on the conservative side, based on what analysts have expected. Is it because you anticipate some headwinds or like last year, you’ve perfected how to under promise and over deliver?
It’s not under-promising, it’s being realistic. Last year, we hadn’t seen the second wave or Omicron. At that time, before the second wave, I had given the Budget. Now, second wave has come, hopefully it’s gone. Now Omicron is on.
But even more, you have the US Fed, you also have the international crude oil prices going up, metals have become very expensive. So we will have to keep all this in mind. We are not getting into details of which is considered a challenge, which is a headwind and which is not. But at the same time, I think the PM has been very clear that we will have to work out a way to make the Budget more of a speaking document — it should say what it has.
Let’s talk about Atmanirbhar Bharat. You’ve specifically mentioned that 68% defence budget will be Make in India and some provisions on customs duties are also to promote Make in India. In the next five years, how well do you see this going?
It’s going well, and its direction is positive. 68% of the defence procurement budget has been set aside to get materials that are made in India. 65% of the defence’s R&D budget is also set aside for research to be done in India, with DRDO, and so the innovation happens here in India as well. Apart from this, we identified 200 items and asked them to purchase these items from Indian companies and to give SMEs guarantee for the next 10 years.
Staying on expenditure, one criticism that has been levelled is that in your estimates on fertilizer spending, food subsidy, and total development — compared to RE, they’re almost the same or lesser. Is this because it’s linked to demand?
That’s right. When programs are demand-driven, we give it as and when we get the data. So if at the moment you see that this amount will take care of the immediate couple of months, we give it and there’s always a supplementary demand in the monsoon session or the winter session through which we can always bring in additional resources which are required. Many of these programmes, because they are demanddriven, you really cannot estimate what’ll happen after three or four months and there’s no point putting it up front and waiting for people to drive the programme. As and when demand arises, we’ll keep filling it.
You said that PM GatiShakti is going to play an important role for the next 25 years. You said it has seven pillars, and the National Infrastructure Pipeline has been merged into it. Which sectors you think are going to fuel this potential growth on which your government will focus in the next two to three years?
All these seven pillars will grow simultaneously if we have to work for the optimum utilisation of resources. It’s like building a road, but without any industrial or residential unit along with it. You can’t just plan point to point, but also think of the comprehensive growth along that road for optimum benefit. Further, if you connect it to a port, it will immensely benefit landlocked regions such as Jharkhand. For example, building an airport in isolation will not help. Because it also needs industry and connectivity, so that manufacturing, services, everyone can avail its benefits. So, development in a comprehensive and holistic way is the essential message of PM GatiShakti.
The middle class, a very important cohort in India, has been hurting for the last two years. So the anticipation among the middle class is always linked to some tax break. You said ‘I did not raise taxes for the last two years’. So what is your message to the middle class who have also suffered during this pandemic?
I fully recognise that every section of the society has suffered. The middle class has also definitely suffered. But when we talk about the middle class, all of us understand and perceive that there is an element of middle class in us also, and therefore we understand the element of suffering. But we also belong to some other group. For instance, if you or your brother or your son would start a start-up and get a benefit, isn’t that middle class? If his children are going abroad, and if I give them all the facility to transfer money for their education abroad and give them a passport which is going to be futuristic, and ensure that when they come back they can have a skill program. If I also make sure that high class universities are set up in India, then is it not addressing the middle class? And similarly, would we want to think that the farmers are not middle class? Would they not get benefits? Will we think that an MSME-running person is not middle class? So the middle class is a large spectrum which has that middle income being the common factor, but is spread across the board. In one or the other way, the government is dealing with them. Affordable housing, is that not for the middle class?
Because of Covid, the ordinary person has realised that they can get a lot done via digital technology. Adapting to digital payments is one classic example. Even in developed economies, the rate of adapting to digital economies wasn’t as high