‘Expect 8% growth from this year’: Finance minister Nirmala Sitharaman
Union finance minister Nirmala Sitharaman presented her and the 17th Lok Sabha’s first budget. In doing so, she broke a significant glass ceiling as it makes her the first full-time woman finance minister to present a budget.Updated: Jul 06, 2019 08:45 IST
Union finance minister Nirmala Sitharaman presented her and the 17th Lok Sabha’s first budget. In doing so, she broke a significant glass ceiling as it makes her the first full-time woman finance minister to present a budget. In an interview to Doordarshan, Sitharaman spoke on a host of issues including certitude in the government promoting electric vehicles and the road to making India a $5 trillion economy.
Which challenges did you have in mind while you were preparing the budget draft? What was the soul of this first budget?
I think, power of the people defines the spirit of the budget. We want to send out a message that if we people have purusharth (hard work), aasha (hope) and aakansha (aspiration), then everything is possible. The Prime Minister firmly believes that when you connect common people with government programmes, then what you consider impossible can be made possible. That is why we do not think that this $5 trillion economy [target] by 2024 as farfetched or something we will not be able to reach. While preparing the budget, we held consultations with the PM and his team, and had daily meetings with stakeholders. We also did crowd sourcing. When we discussed the subjects with him, the Prime Minister would say, people have so many ideas; they are looking at you to provide them necessary facilities to execute them. This is the spirit of the budget. Participation of common people is at the centre of this budget.
Watch | ‘People’s strength soul of budget’: Nirmala’s interview after debut Budget
This year in the budget, if you look at the numbers closely, we are aiming for a nominal growth of 12%, assuming an inflation of 4%, so implicitly you are expecting a growth of 8% from this year itself?
Yes, that is right. That is why there was this concern being expressed, ‘can you reach this?’. Jan-bhagidaari (people’s participation) is a force, which can always give us the energy. What we have set before us, in fact, it will be an overstatement if I say that we have played on the side of caution. We are looking at ways in which we know the sectors where we need to plug in with resources, policies and legislative changes, and amendments to existing rules. If we do that, we are sure that we will be able to bring that trigger effect which will catalyse growth. So, we are confident about not just the numbers, but also the way in which we are dedicated to have the policy reformatory steps that we have to take.
You have shared your vision a for $5 trillion economy. What will be your immediate focus when you set out to transform this vision into action? How will the budget address the challenge of employment?
I have not kept a separate subhead for employment. But it does not mean that we have not given attention to it. We have allotted funds for credit availability to boost the micro, small and medium enterprises (MSMEs). That is a major step. In government procurement also, we have openly said that there would be an e-platform. So, those who had a problem of market access will get a major relief. The PM believes that traditional industries should get patents. If we help them obtain patents and take them to international market, then they will get connected to the economy of the country and contribute to it. So it will not only lead to job creation but retaining of jobs as more and more people get connected. So, we will do job creation through MSMEs and promotion of traditional crafts. When we seek investment from abroad for solar panel, solar energy, lithium ion batteries, computers, laptops, then who will manufacture them? Our youth.
The PM had said that we need to empower women to take the country forward. As a woman finance minister, how do you plan to do this?
We noticed that in the last elections, women voters had come in large numbers, at par with men to vote. This happened because schemes like Ujjala, Ujwala, opening of bank accounts or MUDRA loans for women, helped women to witness the performance of the government. This is why they came out to vote. We do not just want to make a women-centric policy, but one with women leadership at its centre. We are including this aspect in every policy. There is a gender budgeting cell for gender analysis in as many as 15 ministries.
A gender budget does not mean, allocating separate funds for women. But we should analyse what is there for women in the budget? This has been happening since last 10-15 years in 15 ministries. We want to see, what more can we do for women. I have also announced a broad based committee to look into this.
I want to take you to a big paradigm shift that you have undertaken in the budget with respect to financing the fiscal deficit. You are now saying, part of it will be funded from abroad. What percentage are you looking to fund from abroad, and this basically Dollarises the fiscal deficit until you are going for the rupee bond?
This announcement is because we already are looking at a league table where we are almost at the bottom. Our borrowings outside by the global standards are below average. That’s a big market waiting for us to tap.
Second, given the interest rate abroad, compared to what prevails in India, money raising from abroad will definitely be at be lower rates and they are flushed with funds, given the interest rate position there, they are not able to invest their money productively. So, we see a big opportunity for us to raise money from there.
The economic survey and now the budget have spoken on investment being the centre of growth. The private sector, they have approximately R8 lakh crore which they are not putting in the economy. How do we boost their confidence? Do you think this budget has raised solutions for this?
We have pushed for two things. Like we took a lot of measures for ease of doing business, we now need to focus on ease of living. If we look at ease of living - we will improve connectivity, public services will be simplified; we are already working to simplify tax structures. And if we do that for tax rates as well, I believe investments will automatically come. We are making a policy in this regard so I don’t see a problem there.
The economic survey talked about behavioural change and for the first time you linked GST to a new taxation culture, IBC to a new credit culture. A lot of those contours seemed to be implicit in your budget…
Absolutely. I am so happy to see that there is sync between the economic survey observations, the budget, and also government policy. That very clearly says that the behavioural economics which is a meagrely talked of area has actually worked in India. It is a standing example of how where subsidies went we were able to nudge people to change their behaviour… Behavioural patterns are ones which we can work towards.
A movement forward on the corporate tax is that you have extended it to more companies..
Four hundred . Only 0.7% of companies will be left over.
You take that and you have also targeted the top 1% in your direct tax. The optics of the budget seem to be suggesting that if you can afford you should be paying tax.
The conclusion that I brought in saying that rights are important. All of us will have to assert that when you play your role, your rights are assured but it is also time for all of us to think of our duty. There cannot be a better context than this year when it is the 150th year of Mahatma Gandhi and sooner we will be remembering all our freedom fighters for marking the 75th anniversary.
Another thing that is being praised in this budget is discipline. You didn’t break the tradition that had been ongoing for the past five years. The target of fiscal deficit has been estimated at 3.3% and hope that it will be fulfilled. This is being welcomed by everyone. You saw discipline as the first full-time defence minister and now here. What is the future course of action for fiscal consolidation?
Discipline plays a very important role in the defence ministry. It is a balancing act and that is the case here as well. Here without forgetting welfare measures but at the same time staying on fiscal management because the impression that the people outside and industrialists make is on that discipline. When there is too much splurging, then there isn’t a lot of respect. It is very important.
In your budget, your government has made a strong bet on electric vehicles. You have ended the debate on the whole issue. The auto industry has been lobbying against it, to slow it, to calibrate it…
We have made it very clear where our commitments are. We can’t afford to delay steps that we need to take keeping environment in mind, pollution in mind. All our current generation and future generation will be cursing us if we didn’t put our commitments up and forward. It is one thing for us to go and attend CoP 21 and come back and be able to… like we committed on solar energy and the international solar alliance.
By the way in which we are investing in renewable energy. This is very consistent with that.
There was also the issue of NBFC’s (non-banking financial companies) which you have tried to address. How will NBFCs benefit and what is there for banking facilities?
The government of India after studying the issue has given a comprehensive reply. After the Finance bill, the regulatory powers are clearly being given to the Reserve Bank of India. This is not just for general NBFCs but also housing NBFCs. There are a lot of issues – solvency, liquidity, and a lot of NBFCs have assets which are not worth much. At this stage, to give a response we have comprehensively worked out through which regulatory powers will go, a window will open. In that window we are clearly saying that in the first 10% there is sovereign guarantee.
You had to hit the ground running and have produced this budget in about three weeks. What was your experience?
To do it all within three weeks - and I won’t be able to compare it to doing it in three months because this is the only thing I know now. Earlier, as an MoS, I was participant at the stakeholder consultations but to be there and do it all by myself, I don’t have the advantage of doing it in three months. Probably now I can do it in lesser time. Secondly, the institutional mechanism in the finance ministry is admirable. Every department works in a very coherent fashion. Even better is the printing staff. The way in which they work in sync with the departments, and to have done it error free, no glitches.
I thought it was high time that India grew out of this colonial mindset - the baggage we have been carrying in the form of a red suitcase. I thought why not get back to being our own Indian and carry it [the traditional bahi khata].
What is your message for the common man?
I said this while presenting the budget as well. Through the Parliament, rules and reforms can be discussed. The common public believes this does not affect them but… all of this is happening for the public. Even though they may not be interested in the discussion, it is reaching them through the performance of the government. It is reaching you as a smoke-free kitchen, as roads, as financial inclusion. This is the work that has happened in the last five years. The discussions here are happening for you and we will show it through our performance.