We are definitely creating jobs of a different kind, says Jaitley
Union minister Arun Jaitley, one of the architects of the interim budget, along with Prime Minister Narendra Modi and finance minister Piyush Goyal, spoke to HT over the phone from New York on the key proposals. Edited excerpts:
What was the logic behind the tax cuts for the middle class?
Average inflation of 10% under the UPA [United Progressive Alliance], and around 4.5% under us has meant that costs have gone up for the middle class. It was about time people earning 7.5-8 lakh a year got something. Which is why we have given the tax rebate for anyone with net income up to ₹5 lakh.
What’s the cost of this?
The tax itself will cost around ₹18,000 crore. Then there is the standard deduction benefit, another ₹4,000 crore. But at least some of this will come back through indirect tax as consumption increases. We expect ₹12,000-₹14000 crore to return.
How about the fiscal deficit? How are you going to manage it?
Tax revenue has expanded; personal income tax base as well as returns have increased. GST [Goods and Services Tax] collections are stabilising. This year, our expenditure has been increased by around ₹24,000 crore on account of the farmer direct income
transfer and other things. That’s resulted in a minor slippage to 3.4%. Next year, we have to budget these for the full year. That’s ₹75,000 crore for the income transfer alone. So we expect the deficit to be maintained at 3.4%. That’s being pragmatic. We can then progressively reduce it to 3.1% in 2020-2.
Are you expecting a one-time transfer of reserves from the Reserve Bank of India?
The committee is looking into the quantum of reserves RBI should hold but we have not factored this into our calculations. If this happens, it will be a bonanza.
The Congress has announced that it will give all poor households a minimum guaranteed income if it comes to power.
The UPA has always followed a rights-based approach. That can’t coexist with a Universal Basic Income scheme. The two are mutually destructive. With Aadhaar, and the direct benefits transfer, we have already implemented parts of the Universal Basic Income concept.
There has been a lot of debate over jobs.
You can’t have 12% nominal growth without creating jobs. We are definitely creating jobs of a different kind.