India’s turnaround will be sustainable in long term: PM Modi tells HT

  • Shishir Gupta, Hindustan Times
  • Updated: Jul 05, 2016 08:26 IST
From his plans of inclusive growth and ‘tax terrorism’ to sharing BJP’s strategy in UP polls, PM talks to HT about everything, from UP to GDP. (Reuters)

From promising balanced, inclusive growth and plans to tackle “tax terrorism” to sharing the BJP’s strategy in next year’s elections in Uttar Pradesh, Prime Minister Narendra Modi responds by email to wide-ranging questions from Hindustan Times:

J-K chief minister Mehbooba Mufti won the Anantnag by-elections with a thumping majority, a sign that the PDP-BJP alliance is working ? What steps does the Centre plan to take to strengthen the alliance in future?

Let me begin by once again congratulating the chief minister of Jammu and Kashmir Mehbooba Mufti ji for her victory in Anantnag. She has won by a very good margin. My best wishes to the people of Jammu and Kashmir, for the state’s development.

I would be happier if the Hindustan Times had asked me a question related to the development of Jammu and Kashmir. But since you have given importance to the political perspective, I will answer that as well.

Any coalition is based on two things. One is trust, and the other is development initiatives which both parties agree on. We were aware of this fact, even when we embarked on the alliance with the PDP, and we are aware of it today as well. On this, I must appreciate the PDP as well, because it cannot be denied that given our respective ideologies, it was difficult to walk together. But we agreed to come together on a common agenda of development and progress, in the sensitive State of Jammu and Kashmir.

When Mufti Saheb passed away, there were many who said that this alliance will fall apart; there were some who began a countdown to this. But what clicked was trust and steadfastness to a common agenda.

Recently, the Union government has given a special package of over Rs 80,000 crore to the state of Jammu and Kashmir. The PDP-BJP Government will use this package for the development of Jammu and Kashmir.

We must understand that being a national party it is our responsibility that the sensitive state of Jammu and Kashmir gets a stable government. That is why we decided to form a coalition government with the PDP.The alliance between the PDP and the BJP, in Jammu and Kashmir, respects the mandate of the people of the State. The coalition has been formed to fulfil the hopes and aspirations of the people, especially the youth of the state. Its key mantra is development.

Q. Uttar Pradesh was once considered the most advanced state—politically or on educational front. The state has been in steady decline in the past years through deindustrialisation and poor growth rates? In context of your being the Varanasi MP, how will the BJP revive the state to its past glory?

It is unfortunate, but true that governance in Uttar Pradesh has been deteriorating over the past 15 years. This has resulted in the State declining not just in the field of education, but also in industrial development.

In the ranking of the Composite Educational Development Index- U-DISE, Uttar Pradesh was at the bottom among all States and Union Territories in 2014-15. This ranking was based on four parameters: Accessibility of schemes for the people. Infrastructure, teachers, and outcomes. So this means, Uttar Pradesh is in bad shape on each of these parameters.

Our strategy will be to take Uttar Pradesh on the path of development. The Union government has especially approved projects worth more than one lakh crore rupees for Uttar Pradesh. Out of these, Rs 68,000 crore are for roads, and Rs 27,000 crore are for railway, power and petroleum projects.

We must pay attention to balanced industrial development in the State. Eastern Uttar Pradesh cannot be neglected. It is an area that is economically, educationally, and industrially backward. To reduce this imbalance, we are investing significantly in the region for the Dedicated Freight Corridor project. Eighteen nodes are proposed along the dedicated freight corridor which will spur development. The Corridor will also provide a boost to chemical, cement, fertilizer and other industries. The Union government is also working to restart the fertilizer plant in Gorakhpur at a cost of 6,000 crore rupees. A new AIIMS is also proposed in Eastern Uttar Pradesh. These steps will transform the industrial and economic landscape of Eastern Uttar Pradesh. Uttar Pradesh will return to glory only through its villages, its farmers, and its people. The State needs a government which is determined and committed to implementing development schemes. I am sure the people of Uttar Pradesh will side with development.

There is a feeling among a large section of Muslim community in India that they have been politically used over the years and yet been economically deprived and largely ignored. The community is encouraged by PM’s words of Sabka Saath, Sabka Vikas but disillusioned by elements who talk about Muslim free India. What is the PM’s message to the community that is now standing on cross roads?

You are correct in pointing out that in the past few decades, caste and community have been used negatively for political gain. This has gravely hurt the social fabric of the country. But now, various caste groups, various communities are becoming more aware. People have begun to recognize such political tactics quite well. The last Lok Sabha elections have proved that such elements will no longer be accepted in India. Such elements lost badly in the elections. Unity in diversity is India’s speciality. Communal harmony is this nation’s character. Our Ganga-Jamuni culture is reflected in the sayings of Kabir to Raskhan, Rahim and Amir Khusrau. To strengthen this emotional unity further, we must scale new heights of development. That is why we are moving forward with the mantra of Sabka Saath, Sabka Vikas.

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Q. The Indian economy has grown at 7.6% in 2015-16, but critics said that this growth rate is not borne out by real sector markers. Industrial output growth, it is pointed out, is inconsistent and the real estate continues to remain in a slump. When do we expect a sustained turnaround?

Frankly to me, one of the key indicators of performance of the economy in real terms, is the change in the purchasing power of the common man. Economists and statisticians keep arguing about pros and cons and variations of different statistical measures. Such measures have their own importance, but I do feel that ground reality is well reflected in purchasing power of the common man. The figures show clearly that in the last year there has been quick growth in the sales of automobiles, tractors and consumer durables. Electricity consumption has grown nearly 15% in the last 2 years. This reflects purchasing power in the hands of ordinary people.

Beyond that, coal production has increased and coal imports have been reduced by Rs 28,000 crore. Rural roads are being constructed at the rate of 100 km per day in the past 2 years against an average of 74 km in the preceding three years. Capital expenditure of railways showed a dramatic increase of 60% in 2015-16. Even in terms of the private sector, the number of large companies with low leverage getting upgrades is seven times the number getting downgrades. As you know, this is not a statistic from the government but one from rating agencies. All of these are concrete real sector markers. Therefore, it is clear that there is a turnaround. I would also point out that these changes have been achieved in spite of two consecutive years of drought, five preceding years of gloom and a weak global economy. In spite of these handicaps, international financial agencies and credit rating agencies acknowledge that we are the world’s bright spot. Given the handicaps we faced, this is not an accident. It is the result of concerted policy actions taken by this Government. We have also taken a number of steps in the direction of good governance, ease of doing business, skilling the workforce, encouraging innovation and fostering the start up system. These will further strengthen the growth impetus. Therefore, the turnaround we have witnessed will, I am confident, become a sustainable long term growth path.

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Q. You have repeatedly said that this government is against any form of “tax terrorism”. Yet high profile disputes such as retrospective tax issue involving Vodafone remains unresolved. What has prevented the government from settling this dispute at the earliest to send out the right signals to the government?

This government has made it very clear it will not resort to retrospective taxation,. Any new issues arising have been quickly resolved. As per our commitment, even while successfully re-negotiating the Mauritius double tax avoidance treaty, we have provided a clear transition arrangement to avoid any retrospective effect. The legacy issues left behind by the previous government are involved in litigation and arbitration, and we will have to abide by the legal process. In this budget we have announced a one-time settlement scheme for such cases where the interest and penalty will be waived if the tax is paid. Apart from these, we have taken many steps to make our tax policy simpler and more predictable. For new companies which forgo exemptions, a tax rate of 25% has been announced. For small businesses we have doubled the limit for the presumptive tax scheme from Rs 1 crore to Rs 2 crore. Under this scheme, detailed accounts need not be maintained and tax can be paid at a flat rate on the total turnover. Since taking office, the income tax limit has been raised. The tax reliefs for saving, for payment of house loans for middle income housing, and for persons in rented housing have all been increased substantially. All these have given relief to the middle class. Special steps have been taken to speed up refunds through e-governance and a record number for refunds were granted last year. I am sure Hindustan Times readers would have noticed the difference in prompt processing of refunds. We will continue to move in the direction of predictable and fair taxation with courteous service to honest taxpayers through better use of information technology and e-governance.

Q. How you would describe the impact of initiatives such as the Make in India campaign. Some critics say it hasn’t moved beyond being a catchy slogan and India remain a difficult place to do to business in?

Make in India has already begun to achieve tangible and specific results. Let me give you some examples. GE and Alstom are now building modern railway locomotive factories in Bihar, to replace imports by Railways. This has become possible because of our new FDI policy in the railway sector. Cellular phone production has increased significantly. Automobile exports have also increased. We have started exporting metro rail coaches to Australia. The long pending and much delayed light combat aircraft has finally become a reality, and the Indian Air Force has at last started flying the indigenous fighter aircraft. The take off of the Tejas fighter is a moment of pride for every Indian and a symbolic take off of indigenous defence production. Our new garment policy will also give a further boost to Make in India. Major thrust we have given through our new Hydrocarbons Exploration and Licensing Policy (HELP) is also part of our Make in India strategy. The bidding process for small wells under the new policy has already started. We are exporting vaccines. As regards ease of doing business, let me give just one example: When the World Bank President met me last week he expressed astonishment at India’s rise of 19 ranks in the global Logistics Performance Index. We are now above developed countries like Portugal and New Zealand. We have much more to accomplish, but we have made an excellent beginning.

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