The government did not include landless farm labour in the cash transfer scheme because it does not have a proper database on them, said interim finance minister Piyush Goyal. In an interview to ET, Goyal said the government will reach out to them when it has collected the appropriate data. The minister disputed the contention that fiscal consolidation was on pause, pointing to the Narendra Modi government’s record and said the deficit target of 3% of GDP was achievable in FY21 because of the way the country was growing. Edited excerpts:
There are already expectations that the exemption limit may be raised to Rs 5 lakh in the full budget after the rebate announcement this time.
As the PM said, that is only a trailer, the final budget will be coming in July. In the interim budget, we have not been able to make full proposals that we would have liked to in income-tax. Despite that – in particular middle class and newer middle-class sections, we didn’t want them to go through the inconvenience of going to the tax department for returns, refunds and stuff like that – we thought this (rebate) part cannot wait.
On fiscal consolidation, the 3% target seems so much out of reach. Again, are we on a fiscal consolidation pause as the target for this year and next year is same?
Not at all. In fact, this is the only government which has actually gone down the path of fiscal consolidation. You saw in Congress time, within a year it went from 2.5% to 6.5% and in all our years the glide path has been downward. This has been the only government which has consistently kept a downward glide path of fiscal deficit after NDA1. This is the only government which has given honest budgets. We have said what is the reality and have shown that we have stuck to it. Last year, was the GST (collection shortfall) in one month, March (2018), otherwise we would have been exactly on target. This year we have provided Rs 20,000 crore extra for farmers, so only that 0.1% of slippage (is there). And that also I have explained earlier is (actually) 3.36%. You jolly well know that the government or anyone can adjust Rs 4,000-5,000 crore. But my PM’s instructions are clear: aggregate what is the real picture and show it.
With every constituency seeking a sop, how feasible is the 3% fiscal deficit target?
Very much feasible because we are growing at a speed never seen before. This kind of speed country has never seen for five years consistently. This is the fastest growth India has seen since 1991 for five years average.
The startups and venture capital funds are disappointed as they were expecting something on the angel tax front…
As I said, this is only an interim budget. My tax proposals were in four lines. We will have to wait for the final budget. In the meantime, we have made sure there will be no coercive action. They can rest assured that this government stands for startups. This government will ensure that there can never be a problem on genuine investments. The problem, as I have understood it, is that the attempt to crack down on shell companies and those high-premium fake investments in shell companies has become the cause of some concern. So, we have to sift the grain from the chaff, which is not impossible. Finance minister (Arun Jaitley) will be back soon and I am sure once we get free after the elections we can easily sort it out in such a way that the shell companies are not spared and the genuine investors have no problem.
On revenue side, there is a bit of concern that estimates are optimistic – 13.5% expansion in gross tax and specially 18.2% in GST. How do you see them, particularly when GST rate has been reduced on several items?
This government stands committed to keeping a low or moderate tax rate regime and expanding the tax base wherever they think it can be done. The GST rates coming down is something which I believe with a little lag effect will only increase the revenues, it will not have a negative impact. We saw that in the last month for example. January, typically, is not a month of high revenues, you will appreciate. This is a little lag effect whenever you reduce rates by the time it comes to the marketplace. Very often, old stocks are already out and stuff like that, right? Given the trend, even if we take the.`102,000 crore or.`103,000 crore that we have got in January, which is a month where you normally get about 7.5 or 8% or so of your annual (revenues), so you are easily looking at upward of .`13 lakh crore coming in the next year. That is on today’s levels. If you look at 8% growth next year this straight away nominally becomes at least 10-12% more. So, we can look at this going up to Rs 14.5 lakh crore or so. We have calculated very professionally and carefully. Current year figure has fallen more because of the larger disbursement to the states even for last year’s shortfalls and things like that. So, this year we are trying to kind of bring everything up to date. Then there were a lot of refunds, which are not paid up in earlier periods, which if you recall we have had three or four refund drives. We are planning to have one more right now. This refund drive makes sure everything gets cleared up.
What signal does the budget give to the Reserve Bank of India (RBI) on fiscal side?
It gives a very strong signal that we have not only maintained, if you see by itself 3.3% (fiscal deficit), we have provided honestly for what benefit we are giving Rs 20,000 crore and Rs 75,000 crore, which we are giving to farmers, is the exact amount of slippage. The fact is that this goes into hands, which are consumer oriented in a way. This money will straight away come into the economy, into the market. The interim budget, let’s say, of 2014 – what did it do? It made luxury cars and SUVs cheaper. What we have done is help the middle class and the poor get more purchasing power. It kickstarts growth and spending in the market, gives you money velocity. So, this is the best thing that could have happened for the common man, the poor, for the middle class, for farmers, for unorganised labour,all of them, as well as for economic growth and a push to invigorate the growth process.
Against the income transfer scheme announced for farmers, Congress has announced a minimum income scheme. There is also a large population of poor like landless labour, earning less than farmers, and is still out of protection. Do you have some kind of a broader scheme in mind going ahead?
First of all, for the landless labourers, we have made every effort to find out how we can convert that into an actionable scheme. But there is no database of that. Even if we make a scheme right now, it will only be something without any basis and our government and PM Modi believe that we should first prepare ourselves, just like we did the Jan Dhan accounts, the JAM (Jan Dhan, Aadhaar and Mobile) trinity and prepared the country for reaching benefits to the beneficiaries directly and honestly. It doesn’t make sense to just do a half-baked job and once again get middlemen and corruption in the line.
That person is on your mind – the landless labourer?
Every person in this country is on our mind. But as regards Congress plan, a senior leader of Congress in a media interaction, the day after the budget, when asked where will the money come from for UBI, had suggested that we can stop all other subsidies. So, I think Congress needs to answer the people of India that will a cooking gas cylinder now become more than 2.5 times the current price? The farmers want to know that if Congress comes to power, will fertiliser become five times costlier? Will electricity become five times costlier for the farmers? Is Congress suggesting that the 80 crore people who get foodgrains at Rs 2 or Rs 3 a kg, are they now going to be left to market forces or are they possibly going to be facing the ignominy of even hunger?
So, you will not remove existing subsidies?
We will not. PM Modi and BJP will not allow any of the existing subsidies to be touched by any government.
When you came to power, there was a corporate tax road map that said it would come down to 25%. Most companies are covered but 7,000 big ones are not. Given the way we are looking at the income transfer scheme and the fiscal goals, will that have to be postponed?
We will have to wait for the final budget – 99% of the companies have already got the benefit. New manufacturing companies have got the benefit without a turnover limit. The few left are the large PSUs (public sector units) and large business conglomerates and, as I said in the speech, the nation is grateful to them for their contribution to nation building and I am sure that that is not the only thing, the tax deduction is not the only thing that they are working for. They are also looking for a robust, great nation.
The Insolvency and Bankruptcy Code (IBC) is a big achievement, but several high-profile cases are dragging on.
Now the Supreme Court and the National Company Law Appellate Tribunal are pushing things faster. Whenever you make any such fundamental change it has to be tested at the ambit of law. To my mind, such a big change in law is getting sorted out at the highest level, at the Supreme Court level, I think pretty fast considering the dimension of change. It’s the first time that big people are required to leave management and give up their companies. It’s never happened in the history of India, so obviously, they will all try their best. But this way the courts are clearing out the exact legal position. The good news is that everything that the government has done has stood the test of the highest court of the land.