What is the broad direction of the budget?
The growth story is unfolding and there is no reason to interfere with it. But there is every reason to ensure that growth is distributed among a larger section. That's the message of the budget.
How much will the measures on agriculture help to address supply-side constraints, which are contributing to the rise in prices?
It is the really the supply-side of essential commodities that is exerting pressure on prices, apart from monetary aggregates, money supply, credit growth, global commodity prices — all of which are very high. Those can be addressed by reducing customs duties by tighter monetary stance.
But supply-side can only be addressed by augmenting supplies. Therefore, the budget attempts to give a push to the supply-side by dealing with irrigation, watershed management, ground water recharge, doubling production of certified seeds, more subsidy for fertilisers.
These are measures the budget takes to help the agriculture sector increase production.
How much have the electoral setbacks in Punjab and Uttarakhand impacted the budget?
The results were on February 27, by which time the budget speech was already printed.
So how can the results influence the speech?
But given the electoral reversals, how much political support would you be able to garner to push through crucial economic reforms like labour, pension, insurance, disinvestment?
I am directly concerned with the Pension Bill, the Banking Bill and the proposed Insurance Bill. I hope there is enough political support for them. It is important that these bills are passed. Only then can you mobilise the resources required to sustain high growth.
The overall sense, particularly the stock markets, is that the budget did not have the usual reform punch.
I am glad you mentioned the stock market. It is only one among the many markets in India. There is a market where students have aspirations, where the physically challenged have aspirations, where farmers have aspirations, where unorganised workers have aspirations… These are also important markets.
How will you use forex reserves?
A decision has been taken. We have the Deepak Parekh Committee report. Now the legal and regulatory aspects have to be examined. So the Reserve Bank of India and the government will examine them and once we work these out, overseas subsidiaries will be set up to use a small part of the reserves and start lending for infrastructure. That is an idea that was mooted almost two years ago. It is now taking shape.
You have said that the Tarapore Committee report will be implemented as and when the parameters laid out in it are achieved. Could you expand on this?
The rupee is convertible for the foreign investor. He has nothing to ask more. He can bring in capital, take out capital, bring in dividends, take out profit. He can take out royalties. The rupee is not convertible for resident Indians and that will happen as we come closer to the parameters indicated by Tarapore II. It is always fuller convertibility and not full convertibility. Today, the rupee is convertible for practically every transaction which the average person wants. It is only on the capital account on which there are restrictions.