“AatmaNirbhar Bharat will stand on five pillars: economy, infrastructure, our technology-driven system, our vibrant demography, and Demand,” says Union Finance Minister Nirmala Sitharaman, in an exclusive interview with Organiser weekly. Excerpts:
There was much expectation from the Union Budget which is coming after the COVID-19 pandemic. What, according to you, is the focus of the Budget? Do you think the Budget has much in store to spur economic revival?
The Modi Government has, however, long recognised that the MSME sector would also play a pivotal role in India’s growth story. It is due to this belief that the Government has taken so many steps to help MSMEs grow—ranging from lowering their compliance burden under GST to providing them with easy and immediate cheap credit during the pandemic.
Right from the Jana Sangh days, the party has consistently believed in India, respecting Indian entrepreneurial skills, Indian managerial skills, Indian trade skills, Indian business skills and Indian youth. The BJP’s belief has been in India, in Indian businesses and that Indian economic strength derives in large part from Indian enterprises, and thus this Government has given them maximum freedom and given them the respect that they so deserve.
Against this background, the Budget has focussed on six key areas which will not only spur growth, but will also improve the well-being of the people, create employment opportunities for them, protect their health, and ease their lives. These six pillars are: health and wellbeing, physical and financial capital and infrastructure, inclusive development, reinvigorating human capital, innovation and R&D, and minimum government and maximum governance.
In this Budget you have kept the expenditure at a higher level leading to deficit. But this time around the focus has been on capital expenditure. What is the thinking behind this increased focus?
When the Government spends on capital, it is allocating money on actual asset creation. A lot of critics at the start of the lockdown and even after argued that more money should have gone directly into the hands of the people. Yes, this could have created short-term demand. However, there was also the understanding that aggregate demand, especially for non-essential items, remains subdued during times of high uncertainty and so people tend to save rather than spend.
Therefore, during the initial months of the pandemic when uncertainty was high and lockdowns imposed economic restrictions, India did not waste precious fiscal resources in trying to pump up discretionary consumption. The Government instead chose to channel that money into the asset creation route, through which it gives encouragement for sectors that will help create better roads, ports, and other infrastructure facilities. Thus, it has both short-term and long-term impacts. So the way in which we have looked at this is that capital expenditure is a sure-shot way to create that virtuous cycle.
Also, don’t forget, capital expenditure on roads, railways, etc., also creates a large number of jobs and so the multiplier effect is there.
Another area has been the health sector. You got a lot of applause for this, as this has been a neglected area for long. Besides, you have plans to spend Rs 35,000 crore for Covid-19 vaccines.
The lesson the Government learnt from COVID-19 is that infrastructure for health cannot and should not be calculated simply on the basis of the number of hospitals constructed. While critical care hospitals are crucial, we are also building critical care and testing labs at the district levels too. This way, we will have the capacity to deal with more unexpected pandemics.
The World Health Organization has repeatedly stressed the importance of clean water, sanitation, and clean environment as a pre-requisite to achieving universal health, and this is what the Union Budget has incorporated. Within health, the Budget has made special mention of sanitation, clean water supply, clean air, and a special allocation for not only the COVID-19 vaccine but also the pneumococcal vaccine, which will save lives of 50,000 children every year.
The PM has also waxed eloquent on self-reliance and vouched that the Budget is dedicated to AatmaNirbharata. However, there are allegations that increased limits for Foreign Direct Investment in insurance and other key sectors defeat the purpose. How do you see this?
The Prime Minister has certainly stressed upon AatmaNirbharta as fitting strategy for India’s economic and non-economic policies. AatmaNirbharta, he said, also prepares the country for a tough competition in the global supply chain. And, today it is the need of the hour that India should play a big role in the global supply chain. Realising this, many provisions were made in the several Aatmanirbhar Bharat packages, as well as in Budget 2021-22. They are aimed at increasing the efficiency of all our sectors and also ensuring quality.
AatmaNirbhar Bharat, as visualised by the Prime Minister, will stand on five pillars: economy, infrastructure, our technology-driven system, our vibrant demography, and demand.
However, AatmaNirbharta does not mean seclusion or cutting one’s self off from the world. India is a major driver of global growth and a strong and stable participant in the world economy.
Higher limits of FDI in the insurance sector will allow foreign companies to invest in India and bolster our already strong insurance sector. Further, greater choice of insurance products and cheaper insurance due to the increased competition will only be for the benefit of the public, and help it become more atmanirbhar.
Privatisation of bank is likely to run into rough weather given the political opposition to the move. Even trade unions are against the move. How do you plan to take it forward?
The Opposition’s objection to the Budget’s stress on privatisation is a lazy allegation. All the previous governments have done disinvestment, and the current regime has formulated a clear policy on which companies are to be divested. The idea behind bank privatisation is similar to the overall idea behind the Government’s overall disinvestment and asset sale policy. When you go on infusing equity in banks for growth or for making provisions, you realise that it may sometimes be like a black hole.
Many of the banks have already lost 80-85% of their asset value due to provisioning for bad debt. If that is the kind of haircut banks have to take, how long is it possible to go on infusing cash into them?
This is, after all, the taxpayers’ money. How long can I go on putting money on something that fails to perform? The country needs about 20 institutions of the size of SBI. The Government has already merged a number of banks to take advantage of their relative strengths to create synergy and larger, more competitive institutions. From 27 banks, the total number of public sector banks now stand at 12 stronger banks.
However, not all of the required institutions need to come from the public sector. The private sector should be allowed and encouraged to come forward to shoulder more responsibility.
Apart from merging the banks, the Government also instituted a number of banking governance reforms to increase efficiency, introduced theEASE 3.0 reforms for smart, tech-enabled banking for ease of credit delivery.
Although green shoots are visible in the economy, job market is yet to see a revival post the pandemic. How do you plan to create jobs for teeming millions?
Ever since the lockdown was lifted, the employment situation in the country has steadily been improving. The latest CMIE data shows that unemployment in January 2021 was among the lowest it has been in a year.
The Government has long understood that, in order to boost employment in the country, it would have to focus on infrastructure creation. This has been a key focus area in the Union Budget.
With this Budget, the government wanted to give a boost to public expenditure through good quality expenditure for asset creation such as roads, ports, and other infrastructure.
This would increase demand in core industries such as cement, steel, power generation units, and heavy duty machinery. That, in turn, would generate employment and put money in the hands of the public. It takes about five years for the project to get completed. In the meantime, jobs are generated immediately. Because of this, the economy will receive an immediate boost.
Further, schemes like Stand-Up India and Start-Up India were launched to help marginalised sections of society set up their own businesses and also promote entrepreneurship in India. The objective of the Stand-Up India scheme is to help provide bank loans to at least one Scheduled Caste or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise.
On the other hand, the Start-Up India Scheme was designed to simplify processes for start-ups, handhold them through their early stages, provide them funding support and also incubate them.
Overall, the stellar improvement India has seen in ease of doing business has and will go a long way in encouraging companies to invest in India and thereby provide more employment opportunities for India’s youth.
Introduction of Agricultural Infrastructure and Development Cess has kicked up a row? What do you have to say about it?
Let’s assume that there is a commodity in which we had put a 12 per cent Basic Customs Duty (BCD). What we have done is to bring down the customs duty on that product to, say, seven per cent. Along with that, I’ve added, let us say, a three per cent AIDC. This means that the consumer, importer or customer is going to pay 10 per cent only, where earlier he was paying 12 per cent. To him, it is an overall reduction.
The duty is brought down substantially and by adding the cess, a certain amount is dedicated for agricultural infrastructure. At the end of the day, if anything, this will retain the price, if not bring it down, but it cannot increase the ultimate burden on the importer who is paying BCD. It’s a similar case with petrol and diesel. There is a component in the additional excise duty which the Government of India imposes, and that’s meant for the Central Government. It is on this that we’ve brought the additional excess duty down and added the cess to it.
It is also important to state that the proceeds of the Agricultural Infrastructure and Development Cess will go to the States since they will be used, as the name suggests, towards the development of agriculture in the country and also improving agricultural infrastructure. This means large parts of the funds will go to the States for the development of mandis and other agriculture infrastructure.
Considering the targets of implementing NEP, the education sector requires a lot of investment. The post-COVID-19 scenario demands a lot of investment in digital infrastructure for education. Overall, there seems to be constraints in allocating more funds for education. How is the Government planning to mitigate this challenge?
More than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy. They shall emerge as exemplar schools in their respective regions.
The Government will be implementing a number of initiatives as part of the National Education Policy, which has been well-received. Toys are both an expression of entertainment and learning. A unique indigenous toy-based learning – pedagogy for all levels of school education will be developed. This will transform classroom transactions from mundane and rote learning to an engaging and joyful experience.
A National Digital Educational Architecture (NDEAR) will be set up within the context of a Digital First Mindset where the Digital Architecture will not only support teaching and learning activities but also educational planning, governance and administrative activities of the Centre and the States/ Union Territories. It will provide a diverse education eco-system architecture for development of digital infrastructure, a federated but inter operable system that will ensure autonomy of all stakeholders, especially in States and UTs.
Students have so far been evaluated on unidimensional parameters. There will be a complete shift from using assessments to not only judge the cognitive levels of the learner but using it as an opportunity to identify the unique strengths and the potential of the child. To this effect, a holistic progress card is envisaged to provide students with valuable information on their strengths, areas of interest, needed areas of focus and thereby helping them in making optimal career choices.
To enable increased access of resources, online modules covering the entire gamut of adult education will be introduced. During the year, despite the COVID-19 pandemic, we have trained more than 30 lakh elementary school teachers digitally, covering the whole gamut of education. Taking this further, in 2021-22, we will enable the training of 56 lakh school teachers through the National Initiative for School Heads and Teachers for Holistic Advancement (NISTHA).
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