‘Super-rich should take nation-building responsibility’

‘Super-rich should take nation-building responsibility’

In Conversation: Nirmala Sitharaman, Finance Minister

Is India preparing itself to move to one identity for its citizens -- Aadhaar? Well, it is time to start a debate on the issue, but at this stage, the Union Budget has made a provision for doing away with PAN (Permanent Account Number), only to facilitate people, who have an Aadhaar card and not PAN. Finance Minister Nirmala Sitharaman says it cannot be done in a day.

In a post-Budget interaction with a select group of journalists including Annapurna Singh of DH, she shared her views on a number of issues, including why she was compelled to hike taxes on petrol and diesel and why the government chose to set a $5 trillion target for the economy despite knowing that global headwinds were rather strong. Edited excerpts:

The Budget FY20 has missed the middle class?

If the indication is towards higher fuel prices, let me say, if I am investing in better metros, better transport and also in the future of public transport, I would expect there would be a behavioural shift towards more public transport usage rather than insisting on having your own car and a single passenger riding in it.

If I have given people deduction for buying affordable houses, is that for the super-rich? If I have also promoted the use of electric vehicles in the place of those running on fossil fuel, that is for the middle class. On the indirect taxes side, due to the GST, the actual benefit going to the middle-class consumer is Rs 94,000 crore. So, I don’t think I have ignored the middle class.

Markets had factored in fiscal slippage. When there was a chance to boost growth, why fiscally prudent given priority?

There is a law under the FRBM Act, where we have committed ourselves to the gliding path. Till such a time that law exists, I have to comply. We may have this narrative that should we, for a country like India, have that 3% fixation for fiscal deficit or should we be obsessed with a fiscal target? But it is only a debate. It has not come to the extent to bring in a change in FRBM law, allow loosening of the purse strings.

Are your revenue targets ambitious? Disinvestment? RBI dividend? Doable?

If anything, this budget has got a lot of realism into it.

People feel that the target we set for ourselves, are always met. So, the targets are reasonable and achievable. There is no exaggeration in any of the targets, including disinvestment. It is Rs 25,000 crore more and in terms of in-principle approvals, the list is before us. Most of the companies for which cabinet approvals had been obtained have yet not been divested. So, I do not think it is beyond us to touch the disinvestment target.

On easing of FDI norms?

Broadly, as much as possible we want to widen up, open up, touch the highest ceiling of the sectors. But all within the limit of sectoral cap. when I say civil aviation, I am also taking a route of creating an eco-system in India.

I am also saying open up MRO hubs in India, it also implies that look that eco-system is also getting reinforced, so there could be a time when we can think of a bit more than 49%... I am creating this kind of a policy, which is going to open up added activities to civil aviation, it’s going to create jobs, bring in money in terms of investment and add to the capacity which already exists.

Try going to Hyderabad or in and around Bengaluru, the capacity for servicing, maintenance and repair... Indian Air Force personnel themselves, once their retired personnel get out, say that they have lost a lot of trained manpower.

So, we have the immense capacity in the country, which we can utilise. We are thinking on those lines.

Is $5 trillion GDP target achievable in the wake of external headwinds?

Setting a target, irrespective of the fact that certain variables exist, is done so that the government knows that it has to move on a certain front faster. It has many external variables. But what does not have external variables after we opened up in 1991? External variables are now a part of the new normal that we are working on.

If you have ways to address the challenges, why not set a target and move towards that.

What will you achieve with a $5 trillion nominal GDP? A 4% growth and equal inflation?

Our record in bringing inflation under control is fairly good and so much so that people have started talking that such low inflation cannot trigger growth. It has now reached a deflationary stage. So, when you talk of inflation, you talk about a float. It should neither be too high nor too low. We have, in the past five years, brought inflation so much under control that from a consumer point of view it is no longer a worry. Otherwise, do you think the Opposition would not have raised this as an issue in the elections?

Is there any intent to phase out PAN? The budget has talked about Aadhaar with PAN?

No. At this stage, it is more to facilitate. We got so many complaints that look we do not have PAN but does that mean we have to take it with urgency.

So, we are saying, take it if you want it but till then you can survive even with your Aadhaar card. After all, Aadhaar has now been distributed to so many people (1.2 billion) in the country.

So why not have one identity?

We cannot do it within a day. Today, I want to address the problem of people who do not have PAN.

Let us see. After all, in these sorts of things, the mood of the country, the response of the citizens, the technology and its position in terms of ensuring many other factors, all that have a role to play.

Is revenue target realistic?

I have had several rounds of discussions with revenue officials.

Roadmap for $5 trillion economies is disincentivising the super-rich by taxing them more?

We have to participate equally in the duty of building this country. It is not a punishment. It is more sharing of the responsibility. We are using every penny that we are getting by way of taxes for productive purposes.

We cannot afford to have those who are in the poorest of sections of our society to remain without basic amenities – roads, electricity, toilets – we all have to share it. ‘It is part of please participate in building this country exercise’. I have said at the beginning of my speech that we need a mutual trust with India Inc.

We respect that they are wealth creators. We respect them for the job creator’s role that they play. But, still, the income disparity being what it is, shouldn’t all of us participate in it?

NBFC crisis can get better with budget steps?

With the steps that we have announced, the NBFC problem can only plateau rather than worsen. We are monitoring them along with the RBI.