After a marathon speech and a detailed press meet, Nirmala Sitharaman was still full of energy as she explained the finer points of the Budget. It provides a strong invitation to private investment, she told Sidhartha and Surojit Gupta. Excerpts:
You delivered the longest budget speech. Why such a lengthy speech?
We spent a lot of time getting details, the speech had to be elaborate. Now, if I just said I am giving nearly Rs 3 lakh crore for agriculture and rural development, people would say where will you put the money? I had to specify 16 areas. This Budget is not an output of last month’s exercise, some residual discussions of the last one have also gone into this. I would like to highlight that this Budget was not just a budget for this one year, it was a result of continuous work to address requirements, both supply side and demand side, but also to set course for the next five years. See, the PM has a vision for a target of $5 trillion economy… unless I do the legwork and get that into action mode, it will not appear cohesive.
Do you think the numbers that you have assumed in the Budget are realistic?
People should know expenditure undertaken by government is not going for silly things, unproductive things. No. It is clearly, consciously going for building assets and this has a cascading effect. You not only create the asset but in the process you give people employment in so many sub-sectors — cement, steel all will have a ripple effect. It was a conscious decision that we will spend money but spend on capital.
You have assumed a nominal GDP growth of 10%. The survey expects real GDP growth of 6-6.5%. Is the 10% nominal GDP growth conservative?
It adds up with what the Economic Survey says. Even if inflation touches 4%, we will have 6% growth. You can’t tell me that I have been unrealistic. I purposely had to say nominal GDP twice. What is the rationale for the tax charter? ¢ Only three countries have it. The US, Canada and Australia. Ultimately, it gives a sense of confidence to a taxpayer. Some of the things which will be part of the charter are something she can seek for comfort. (Anything) being done is as per protocol. Anyone’s personal whims and fancies don’t govern it and at the end of the day, when a (tax) matter gets closed, it gets closed completely.
You have also put in clauses to limit over-reach of agencies. Do you think this should comfort industry?
Absolutely. We are not just going about saying ‘we trust you, we love the honest taxpayers, we respect wealth creators’… we are putting it into law. That you have a right and we recognise it. I would think, strictly speaking, tax concessions are important, it helps people to have more money in their hands. But (a charter) tells you India is at par with some of the best countries in treating their citizens. The PM very clearly said ‘this has to be done’.
The listing of LIC has raised some worries about safety of investments. What is your view on this?
At the moment, we are only going for an IPO. In BSNL, haven’t we recognised the strategic importance of BSNL? But there should be competition in insurance. There should be funds coming from private sector into insurance. Why should only government be doing insurance business?
You have set a huge disinvestment target. Are you hopeful of BPCL and Air India going through and is there a timeline?
My intention when I announced it in July was that we should be able to finish it this year, meaning before March 31. The legwork is over. All that was announced last year will undergo disinvestment. Only, I can’t reap the benefit in this financial year.
Could you please elaborate on the new tax regime? How will it impact various categories of taxpayers?
Ultimately, we want to have more money in the hands of people. The middle class has been asking for personal income tax rate reduction. This is an opportunity and an opportune time for me to also say I should give you a simple system with lower rates. When I went looking at this, there are 120 exemptions. Do you want me to come with lower rate and also give exemptions? I have removed 70 and I am saying no exemptions, though even in the new system, there are some exemptions. In the long run, with stakeholder consultations, I will slowly move to a regime devoid of any exemptions. The biggest attraction is that I will cut the rate substantially. To start with, a few exemptions will be there and gradually we will go on reducing the rate and keep removing exemptions.
Is that one of the tools through which you expect to boost consumption?
Definitely. Newcomers probably earning fairly reasonable amounts will have more money in their hands. They can choose to buy a car, or put the first instalment to a home or buy shares. If people ask me that removing exemptions removes incentive to save… I am giving more money in your hands. Spend it or save, it is your business.
What was the thinking behind the new definition of NRIs for taxation?
The thinking is we have to make it a transparent system. It should not have any scope for people to game it.
On several items, customs duty has been raised. What is the rationale?
We studied impact of cheap imports on MSMEs. Cheap imports of end products, consumer products — not intermediary products, not raw material. Why should we not make it expensive for imports? It is not a mindless list.
via PM clearly said we need a tax charter: Nirmala Sitharaman – Times of India
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