We stuck to an honest Budget despite temptations: Piyush Goyal

Fresh from his debut Budget, Finance Minister Piyush Goyal says he had a "very very sound sleep" last night. He makes a straight pitch: the government will have to move out of the model of investment and allow the private sector to invest more. He spoke to ETNow. Edited excerpts:If I may ask you a more big picture, a more candid question, it suggests that you had elections on your mind while making this Budget?When we introduced Ayushman Bharat so that Indians get free healthcare at one go, there was no election on our head. When Prime Minister Narendra Modi announced in 2014 that he wants to give a life of dignity to our sisters, our mothers, the women of India, give them toilets, there was no election on our horizon. We scaled up creating nearly 9-10 crore new toilets building them in such a short span of time, twice the number built in 65 years.You have not appreciated that this is one government that for five years has continuously worked for a better quality of life for citizens of India, for every section of society irrespective of elections. Elections will come and go. Prime Minister Modi’s focus is on good governance, his focus is on delivery of his programmes, he is not looking at incremental action, he is looking at exponential transformation of the people's life and this is just one more step in that series.The reason why I asked you that question is that there is one person’s view who really matters to me in the budget and that is Swaminathan Aiyar and he gives you a 6/10 and he says this is an election year Budget. This is an election Budget and if Budgets could win you elections, this one is going to be because the targeted constituency is very clear. You are looking at the farmer, you are looking at the vocal middle class and which is why I say, did you have elections on mind?You have again probably forgotten the good work done for over a period of four and a half years. After all, it is not as if today we have done something targeting one audience, we have consistently for five years and as the prime minister says sab ka saath sabka vikas is our basic very ethos of our government. Over the last four and a half years, there is no section of society which have not got a better deal and a better quality of life. You look at any section and even in this Budget, it is not that only one or the other section has been looked after, it is the farmers, it is the unorganised labour, you seem to have missed, it is a very very big thing for an unorganised labour person to get pension after he retires at 60 and may not be able to have the same income earning capacity. It is those who are involved in fisheries and animal husbandry, it is the middle class that we have ensured gets more purchasing power also, adding to consumption and growth. Look at what this government has tried to do, it has consistently tried to take the benefit of progress and development to the last man at the bottom of the pyramid, to the remotest corner of India, develop eastern India and north-east India so that India comes at par and we do not have unequal development. It is a very systematic way to grow the country.Your political detractors believe that you are focussing on fisheries, you are focussing on animal husbandry, you are focussing on the middle class. Why could this not have been done in the last four years?But we have been doing continuously, where has this focus not been there? After all, for the first time in history, we gave MSP to all the 22 crops, it was never done before why did they not do it if they were so concerned. We procure more material under MSP than ever before, probably what we have procured in one year, it would have not been procured in five years of the UPA time. Why did they not give soil health cards to all the farmers? Why did they not complete all these irrigation projects, why is it that we landed up inheriting so many projects all over the country undone, half done, many cases not even started and thousands of crores stolen from the system. Look at Maharashtra Rs 70,000 crore I am told was spent on irrigation, not an acre of land was irrigated.Let us talk about the agriculture push...You are making a very unfortunate mistake.But you are saying nothing was done in the last...I have never said that. I am asking you a simple question that why were only one out of three women having a toilet in their homes 65 years after Independence. If they were doling out some benefit, we are doing work to reach the benefits of growth, take the benefits of development to every single section of the society, to every citizen of India irrespective of cast, creed, religion, region and language.We are making sure everybody in the country, the ethos sab ka saath sab ka vikas is reflected in each one of our programmes.Let us come to the sum and substance of your Budget and one of the big things in your Budget...For me, the biggest sum and substance is what I could do for the farmers, for me the biggest sum and substance is what I could do for the unorganised workers.The sum and substance of your Budget is the package for farmers, now many people will turn around. Actually, the markets were very worried, people were very worried that you could be fiscally irresponsible, to be fair you have not been, you have acted within the remits of what fiscal prudence could have advised you to do. But what you have done is Rs 6,000 a year, is that going to be enough to alleviate the pain?Well I think this has to be looked at in the right perspective. This is not something like a dole that is being given out, it is a respect, it is a samman nidhi, it is a respect for the farmers our annadatas who have given food security for India. It is a respect for those small and marginal farmers, their land holdings are half acre, one acre, two acres, at best five acres. Now they are farmers who deserve some benefits. Now we have made this a sustainable programme. Let us say over the next 10 years, we will be giving Rs 7,50,000 crore to the farming community, to rural India through this scheme. Now if you look back for the last 10 years, when the Congress was in government, what did they do for farmers, they neither procured any material on MSP, other than that one loan waiver which they announced in 2008 providing zero funds. They provided zero funds in 2009 Budget and left it for the next government to pay those bills... In 10 years whereas the farmer got a small benefit, CAG has raised 100 queries of all sorts of misdemeanour, political patronage and leakage of money. What we have done is to ensure that equitably all these 12-12.5 crore small landholding farmers will get Rs 6,000, we do not want them to feel that this is a dole, this is a respect that the nation is giving them.What about the landless farmers, what about rural labour that has no land. Do they qualify, do they not qualify and you said in your press conference that you will ask records from states, have records been digitised, is this going to be long drawn process then?No, I think initially they will have to send the local talathis or the local officers to the villages, get the list certified by the local gram panchayat and publicise it. There is no misdemeanour and everybody sees those lists and they are transparent and link it with the Aadhaar number or the bank accounts so that we can directly transfer money and it does not have to go through the old 85-15 formula that an earlier prime minister of the Congress had said that out of every rupee, 85 paise goes to middlemen and corruption and only 15 reaches the true beneficiary. We are going to ensure it reaches the true beneficiary, we are going to ensure it reaches at each of the crops that they are required to do. We are looking at moving towards a three-crop pattern going forward and the problem is that there is no record of the landless labour as of now. As things evolve and emerge if we are able to identify and create mechanism, we can look at it a later stage. Every time you do something for a section of society, it does not mean one should start saying oh this is done, now what about this. Obviously for five years, we have been doing so many things and in a series this is one more step forward, it does not mean the world comes to an end, we are going to continue to do this for many many years.Let me talk to you about the fiscal maths because our constituents are obsessed with it. You did not breach 3.3 per cent to get at 4-4.5 per cent like people were fearing but people are a little concerned on the glide path on fiscal consolidation. Yes, you will end the year at 3.4 per cent.It looks like because of the revised GDP numbers. It could be 3.2 per cent. The formalisation of the economy is getting captured more accurately. Earlier, the CSO never had this level of formal economy.Fiscal consolidation, 3.4 per cent next year and this is political class at large, we were supposed to get to 3 per cent. Where is the fiscal glide path?That you should ask them who took fiscal deficit to 6.5 per cent.You have been in government for the five years?They took it up to 6.5 per cent, we inherited fiscal deficit of 4.5 per cent, we did not take it up, we took it down. Our glide path has consistently been better and better. Even now if you see the budget figures it is 3.36 per cent. Frankly if it was any other government, they would have adjusted Rs 2,000 crore or Rs 3,000 crore, Rs 5,000 crore and made it 3.3 per cent. But Prime Minister Modi is firm, Jaitley and Modi said whatever has come from bottom up, we reflect that in the Budget, whatever the percentage. It was very tempting to adjust a small amount and make it 3.3 per cent, but we stuck to an honest Budget. Similarly, next year if you are adding Rs 75,000 core it is about 0.3 per cent. It only shows considering that, we had to ensure some respect for the farmers we brought out this scheme, we are happy to move it from 3.1 per cent to 3.4 per cent. We have maintained full fiscal prudence as planned for the rest of the budget. And we were confident and clear that given the large scale formalisation of the economy, with the tax base and tax collection increasing so rapidly, we certainly need to give back to the middle class. We need to give back to the farmers some portion of the additional benefit we are getting.As a middle class taxpayer, I am not complaining whatever little remuneration will come our way, but some people have pointed out that this going to stoke consumption and not investment and this could be inflationary in nature, are we once again are going to the tried and tested model of reviving economy through stoking consumption, what would you say to that?Well, somebody must be a very uneducated economist if at all he said that. Plenty of them are saying that?There might be a plenty of them out there, but we have seen what happened to the country over so many years and we have seen what rustic common sense and experience can perform in terms of us simple mortals giving good delivery of good government and honest government to this nation. But having said that, if you look at the entire story, we have kept inflation down, inflation is at an average for five years 4.6 per cent, never before in independent India has inflation consistently for five years been low. In fact, we inherited 10.1 per cent and took it down to 4.4-4.6 per cent. You have been also very lucky with oil prices?Well I think oil, by the way, for your information impacts inflation figure by 0.3% or thereabouts.But core inflation is still very sticky.And that is because our farmers have produced much more and which is why we are giving them this respect, this amount. What is important to note is that we have fiscally consolidated the economy and given a premium to honesty, brought respect to people who are honest and that is what is seeing the economy grow much faster. As for your worry that consumption will stoke growth, I personally feel some amount of consumption is the right of every middle class family, of every poor family. And that is what we have tried to do. Of course, the main Budget is yet to come and most of the tax proposals will come in that. The purpose why we took the decision on those with income up to Rs 5 lakh particularly was that these are the people who would otherwise be paying tax deducted at source in April, May, June, July and then would have to go and get their tax refunds. We wanted to give the benefit to the smaller, the lower middle class and the neo middle class.By the way it is Rs 5 lakh that is the taxable income, investment will still be encouraged because up to Rs 1.5 lakh investment, Rs 2 lakh interest on housing loan, mediclaim, interest on education loan all those deductions, standard deduction increased from Rs 40,000 to Rs 50,000. All of this put together means probably 90 per cent of them would be out of the tax bracket. There will be a very small set of people. I will be paying taxes. You are a rich man?Well, I do not mean it that way. I am sure you also would not mind if that tax is going to give a woman a toilet, if it is going to give somebody electricity...All of us need to play some part in nation building?Absolutely, and I profusely thank the honest taxpayers of India. I profusely thank all the GST payers, it is only because of you and all these taxpayers that we are able to deliver.Capital expenditure as a proportion of the total expenditure is down next year, obviously you have been fiscally prudent and you were perhaps looking and waiting and watching out how the uncertainty pans out globally. The private sector is not investing. If the government is not going to invest, then who is going to invest and what happens to the economic situation?If the government keeps investing, the private sector will have very little elbow room and I think our government has always believed in reducing the government’s role in business. You may have heard those 10 dimensions that I talked about, one of them was reducing the interference of government in operations and businesses. Gradually the government will have to move out of the model of investment and we will have to allow private sector and encourage them to invest more. We have strengthened all the banking system, I do not need to repeat that you are all very familiar with the story that we inherited on the banking side, now we have seen three banks come out of PCA restrictions, the way we are recapitalising, the way we have brought good governance to banks, I am confident that this process will keep getting better and better. And obviously investments will come as the existing capacities get utilised. We will continue to see big ticket investments.Are you being a little overly optimistic on some of the revenue streams, you are looking at RBI and PSU banks dividends at Rs 82,900 crore next year and divestment figures at Rs 90,000 crore?Well I think none of them is things which we have not achieved in the past. If you look at divestment, we have disinvestment or Rs 1 lakh crore last year. This year, we are well on target for 80,000 crore, all plans are made out and you are well aware that 45-50-55 per cent comes in the last quarter only, every time every year. Similarly, in terms of revenue because of the formalisation, we have seen 18 per cent growth in direct taxes last year, we expect similar or more growth in the direct taxes this year and it will continue. Similarly, on GST, the growth has been quite honourable. The fact is we as well as the GST Council has passed on so many benefits to people of India. By the way the entire benefit given through GST indirectly or directly falls on us, on the central government because we have forgone the service tax and made it a part of the divisible pool which it was not earlier. Service tax was totally our revenue, this is one government which had the courage of conviction that our states can spend well. We accepted the 14th Finance Commission recommendation, gave 42 per cent instead of 32 per cent to the states, we have forgone our entire service tax put it into the kitty, we have forgone the money we got from coal cess and put it into the kitty. Let nobody be in any doubt that it is the central government which has in fact ensured the success of GST which has in fact given large amounts of its revenues into the pool so that we could assure 14 per cent CAGR growth for the states. In effect this year it is 50 per cent growth from three years back, this type of growth states never had in their state revenues earlier.The gross borrowing is up by Rs 2 lakh crore, you have been a big votary that India needs a looser monetary policy regime, how do you believe the Budget alters that, do you believe this is a Budget which will compel the Monetary Policy Committee to look at a looser monetary policy framework?Well I think we should leave them to do their job, they know best and we have full trust and faith that they will do what is good for the country.Your first Budget, could you sleep well at night?Very well, in fact a very deep and a very very happy sleep. Whose views matter the most in this budget and what did the prime minister tell you after you had presented yours?In any government, it is always the leader and in our case, Prime Minister Narendra Modi is a leader who leads from the front and the best part about his leadership is he has seen it all, he has experienced what living in a village is, what living in difficult times is, what living with difficult means is, he has himself worked at a very young age, he has gone to government schools, he has had an experience of how class discrimination and how village life has caused probably so many of the evils that we see in society today. To my mind, it is his compassion towards the lesser fortunate sections of society and his passion to do good for them, that is reflected in this Budget.What is the best compliment that you got as finance minister in his debut Budget today?Well, my wife is very difficult to be pleased.She is happy?She seemed to be quite. Happy is a little bit of an understatement.

from Economic Times http://bit.ly/2D1xhEH