‘Higher income will lead to high growth’
Finance Minister Pranab Mukherjee has made every individual taxpayer richer by at least a few thousand rupees a month, hoping they would oblige by spending more and spur demand and growth. Mukherjee, who said “it has been a long three days,” after presenting the UPA government’s second budget on Friday, spoke to Hindustan Times on a range of issues.business Updated: Mar 10, 2010 12:08 IST
Finance Minister Pranab Mukherjee has made every individual taxpayer richer by at least a few thousand rupees a month, hoping they would oblige by spending more and spur demand and growth. Mukherjee, who said “it has been a long three days,” after presenting the UPA government’s second budget on Friday, spoke to Hindustan Times on a range of issues. Excerpts:
On the government’s assumption that higher disposable income will drive growth
Growth will be possible if demand is generated. The stimulus package prevented further sliding down of growth. In the last quarter of last year (January to March 2009), gross domestic product (GDP) grew by 5.8 per cent. Since then growth has started looking up because of higher demand. This can be seen across various industrial sectors. So if there is disposable income and if it is spent, I am confident that it will generate demand domestically. Secondly, when I am talking about 8.5 per cent growth next year, I am also pinning my hopes on the agriculture sector achieving 4 per cent growth.
On rising prices of food and manufactured products
Firstly, the nature of inflation, if you analyse, you will find that it is more or less confined to food items. With the improvement of the supply management, I think this issue can be addressed. I do hope in the next couple of months it will be possible to bring it (food inflation) down to moderate levels. If the oil prices go up to a higher level, it will be different issue altogether.
On the demand to rollback excise duty hike on petrol and diesel
These are not individual views. There is some divergence of opinion among some of our coalition partners. We will talk and then we will see.
On deregulating retail prices of petrol and diesel
These are imported commodities. Our capability of reducing the cost of production is not relevant here. Whatever the prices are ruling in the international market, you will have to get it. The government can absorb a part of it, as it is being done by the quantum of subsidy we are providing to kerosene and LPG. This is an issue that the country as a whole has to discuss and debate.
On the lack of consensus on rolling out a nationwide Goods and Services Tax (GST)
GST cannot be done if everybody does not agree, because an amendment in the Constitution will be required. GST was to be operational from April 1, 2010. A discussion paper has been floated and several rounds of discussions among the state finance ministers are going on. They belong to different political parties and there is a possibility of a consensus.
On political opposition to disinvestment of public sector undertakings (PSU)
Disinvestment is going on since 1991. Is there anybody, who can claim that they are not a party to the disinvestment process? One or two individual cases may wake up. For example, today Mulayam Singh Yadav is in the Opposition. Between 1996 and 1998, he was in the government. During that period also disinvestment took place. BJP (Bharatiya Janata Party) went to the extent of even strategic sales. DMK was part of the NDA government and is now part of the UPA government.
On the auction of spectrum for 3G telecom services
The government has already issued the notice inviting application (NIA) for auction of 3G spectrum. Now the process is irreversible.
On how Part B of the budget speech would change after GST and direct taxes code freeze the direct and indirect tax rates through law
As per the Constitutional requirement, there will be Part B as the Finance Bill has to be approved by Parliament. No tax can be levied except by the authority of law and law can be passed only by Parliament as per Article 265 of the Constitution.