Aim is to give more opportunities to talented Indian youth: Nirmala Sitharaman
Custom duty reduction in budget to boost Indian manufacturing exports and create jobs. ₹2 lakh crore for youth schemes.
The basic custom duty reduction or elimination of duties announced in the budget will help Indian labour-intensive manufacturing industries export more, finance minister Nirmala Sitharaman said in an interview with Doordharshan. That, in turn, will create more job opportunities. “That is the primary and only reason why this custom duty reduction has been done.” Edited excerpts:
Today, the youth of India is working in important positions in industries across the world. Global companies are looking purely at talent and hence prefer the youth of India. But the opportunities they should get within India are not at the level they should be. That is why we have launched five schemes with a corpus of ₹2 lakh crore to be spent over the next five years. It will benefit 4.1 crore (41 million) youth. This includes first-time employees, as also those who shift jobs. The employers also get benefitted from it so they are encouraged to hire more and also to retain them for at least two years. For skilling, there is a lack of wherewithal and machinery in ITIs (Industrial Training Institutes) across the country which are managed by the states. There has not been that much investment here in the last 20-30 years, but right now there is a demand for skilling and for ITIs to be ready for Industry 4.0, so the money will go towards that. On top of this 1 crore (10 million) youth will benefit from the internship scheme and we will be talking with 500 top companies.
There’s one thing I want to dispel. When we talk about these numbers, people don’t realise that there are multiple schemes that are ongoing for which provisions have already been made. We need to reach the farmers with such inputs which are worthy for them to toil in the soil. Farmers need high-quality seeds. I have spoken about 109 varieties of climate-resilient seeds, which we will soon take to the farmers. We are looking at giving input support to the farmers, and more than 50% of their input cost should be met by the amounts we give them.
Rural development is not just building homes or new roads. Over and above this, we are looking at hard infrastructure in rural areas, be it power and smart meters in villages.
We have been emphasising on how more women being a part of productive activities has to be continued. Women’s participation in the workforce has been highlighted in the Economic Survey. We have come a long way since “beti bachao, beti padhao andolan”. We have emphasised on land and property registration in the name of women in this budget.
Absolutely. Today my speech lasted... nearly one-and-a-half hours. How much can I cover in this time? A lot of people also said I haven’t talked about many states. But that does not mean that money will not flow to those states. Every scheme is being implemented—central as well as centrally sponsored schemes, and besides that projects from the World Bank and ADB (Asian Development Bank), etc. For example, the country’s largest port worth ₹76,000 crore is coming up in Vadhavan in Maharashtra. It wasn’t mentioned in the last speech or this speech, but it is happening. So, I wish to dispel this doubt that schemes like MGNREGA or some other scheme like PM Swanidhi scheme or Mudra; such schemes will always continue. Just because they don’t find mention in the speech doesn’t mean they are being discontinued.
No. First of all, the Andhra Pradesh Reorganisation Act required all this to be done anyway. In the first 10 years after the AP Reorganisation Act came into being, the two states were bifurcated; we have been giving money for the backward district programme, with institutions such as AIIMS (All India Institute Of Medical Sciences) and IIT (Indian Institute of Technology) which have been taken. There are certain projects which are getting staggered. Polavaram is one of the biggest national irrigation projects, with the dam storage capacity being immense. Godavari waters are being kept there and from there it is going into the fields. This is a national project. We will certainly support it, and that is what I have emphasized. Similarly, there is backward region development in Andhra Pradesh, such as Rayalaseema and north coastal Andhra Pradesh. We are only definitely assuring the newly elected government in Andhra Pradesh that we will stand by them.
On the e-commerce and MSME (micro, small and medium enterprise) front, look at the example of what ONDC, or the Open Network for Digital Commerce, is doing. It’s actually given at the cost of the government, meaning they don’t have to pay any charge. It gives access to MSMEs to reach the global market. ONDC has proven to be a very, very powerful catalyst. Now, when you form e-commerce hubs, you’re making sure that because of these digital assets that we have, MSMEs in particular can benefit from them. It’s somewhat like creating a special economic zone but you’re creating it in the digital world, so that these MSME can be onboarded, either by sector or by some kind of a common denominator, and we will be able to give them access to the overseas market. That is a facility which the government will spend on so that MSMEs don’t have to invest in them, and we give them the access for it.
The plug-and-play concept for industrial parks is that big investments for creating such hubs don’t come easily. We want the industry also to participate with us. So when you set up a hub in one place, this becomes the mother centre, and smaller centres can benefit by attaching themselves like a spoke to the hub.
Absolutely. We are consistently moving towards simplifying the tax structure. As it is we moved away from the old tax regime and created a new tax regime to facilitate those who do not need exemptions. They can opt for the new tax regime where the tax is also low. After the launch of the new regime, people said at least give us standard deduction, so we gave ₹50,000 and now we have raised it to ₹75,000 so that there is more money in the hands of the people. We have also further simplified the rates and even reduced it, so that the middle class get some relief in income tax and they think that we have done something to put more money in their hands. When we talk of reviewing the Income Tax Act, the intention is to simplify the structure. I have given one example of old and new tax regimes, but there are other things too that need to be simplified. We will keep working on that so that the Income Tax Act which is such a bulky book today becomes a simple form that is easy to fill and follow. And just like we have introduced pre-filled forms, we will continue to use technology and keep lowering the rates to give relief to people.
First of all, if you look at the selection of items for which I have given a basic customs duty reduction or elimination of duties, they are the essential inputs for labour-intensive manufacturing industries. So these are the gems and jewellery, gold or raw diamonds, leather-related, shrimp-related and textile sectors. These are sectors where you have intensive labour employed. When you bring raw material for cheap, their expansion plans, their plans to export whatever they produce, will all go through a positive change. Because of that, employment will also improve. That is the primary and only reason why this custom duty reduction has been done.
The way in which we have decided to spend money in building capacities, in making sure there are more efficiencies or productivity increase, and making sure youth trained properly to get into good quality jobs, all this will generate economic activity which will give me that comfort to make up for that revenue foregone. We can hope, because of the ways in which we are bringing in factors for productivity gains will help us. Other than that, of course, we also make sure that the tax net is widened, through non-tax revenues in rural and urban areas. So I mentioned about land-related reforms, labour-related reforms, capital-related reforms and entrepreneurship, of course through MSMEs and training, which is happening. So, for land, what kind of reforms, digitisation can we bring in? We are making sure that land records are maintained digitally, stamp duty reduction happens for which we are working with the states. Similarly, for labour reforms, we have exhaustively mentioned in the budget speech.
I have mentioned this as Scheme A in my speech; when a fresh first-time employee is recruited by somebody for a salary up to ₹1 lakh, the government will give ₹15,000 as one-month wage, which will be spread across three instalments. The employer also receives this because he will register him as an EPFO (Employees Provident Fund Organisation) employee. Both employer and employee will benefit through this incentive, in this case involving a first-time employee. The second scheme looks at first-time employees and for anyone else who gets a job; we will give allowances to both employer and employee. However in this scheme, if the employer doesn’t retain him for two years and removes him before that, every incentive given to the employer will have to be refunded or paid back.
We are making sure that under each scheme, there are more and more new people coming in and fresh appointments happen. Companies will be incentivised to grow. Suppose you are already running a company with 100 people, you can scale up. Besides these two, there is ITI and the fourth one is the internship. We intend to seriously implement each of them.
Taxonomy is when you start classifying and is an expression used for various other things which are developing. So, in climate-related matters, how do you tax certain things? Taxonomy is what kind of items come into certain kinds of green energy and what is counted as green. How do you calculate the emission count, and on the basis of that, how do you bring the carbon market to efficiently function? Those are not clear yet for India itself. So, we need to have enough work done through, let’s say, domain experts to understand what is the classification we need. Going forward, for instance, carbon trading will depend on what kind of classifications we make.
I want to clarify that our intention was not to generate more revenue by increasing capital gains tax. We assessed all the use cases of indexation across asset classes and found that nobody got less than 13.5% (of tax incidence) anywhere. So, we kept it at 12.5% so nobody gets taxed more without indexation. The intention was to simplify taxation and increase convenience for the assessee. There should be no confusion over this. If the intention were to raise revenue, I would have put the rate even higher.