For a finance minister who had presented the Union Budget in the morning, Arun Jaitley appeared remarkably relaxed on Monday evening at his office in New Delhi’s North Block, occasionally allowing for lighter moments. He had the look of a man who knew he had done what had to be done. You can see it in his answers; right from the first one, they are direct, to the pint, and pithy. Excerpts:
Why did your Budget have so much emphasis on the rural sector?
That’s where the stress is. This needed attention. I have taken care of the middle class by introducing a presumptive tax regime, which covers a large number of professionals, and much of the small-scale industry, including traders.
Why wouldn’t you give more tax exemptions to the middle class, or small investors?
There is a limit to which an economy can afford exemptions. On the one hand you say, exempt A, B and C; on the other, you say spend more. Then you say, contain fiscal deficit. These three things cannot all happen simultaneously.
Do you think pumping so much in the rural sector could stoke inflation, as the MGNREGA did earlier?
The rural sector is too low right now [to stoke inflation].
The people in the automobile sector are crying over the cesses you have proposed.
Some people are in the habit of crying.
Is this the beginning of carbon taxation in India?
My increase in taxation is threefold: environment, health, and super rich.
If we combine the rise in coal cess, and the new cesses on cars, can we say that what the West has been demanding....
It’s not just the West, it’s our own responsibility.
Corporate balance sheets are down. Banks are not lending.
Bank balance sheets are down because companies have to pay them. Once the sectors get moving, the sectoral balance sheets will improve, which in turn will impacts banks [favourably]. Simultaneously, you get the banks ready to deal with their own liquidity issues, recoveries, insolvency.
Don’t you need to do more to for the banks?
Yes, more is needed. This is not the end of it.
You mentioned a blueprint for bank consolidation.
Let’s first improve a little.
But the dividend tax may depress the corporate sector further.
The private sector is not investing in exploration and job creation. I have to raise money from somewhere to be invested in infrastructure.
The target for the black money scheme is very high, and you levying a very high charge. There were not many takers for the last scheme to bring in black money stashed abroad.
It’s different from the 1997 scheme. This is not an amnesty scheme, it’s an income disclosure scheme. I had to keep the rate high (45%), or it would have been rejected. Honest taxpayers must not be discriminated against.
Which of today’s Budget proposals will have a long-term impact?
Five to six things: The emphasis on rural , agriculture, and infrastructure, the Aadhaar law that will rationalise subsidies. The deregulation of public transport sector is a big reform in itself. I have created an Ola and an Uber in buses. Why should people in small towns suffer. And you don’t have to spend any money. Young men will put money in running half a dozen or so buses, in places such as Mangalore and Rajamundhry.
Why not divest in ITC?
I will divest, but according to my own agenda. We will decide where to divest and where not to.
Was there more room for tax reforms? From the next Budget onwards, you will be approaching election season. Have you lost the moment?
Chalta rahega (it will go on).