Nirmala Sitharaman interview: ‘Important to back asset creation’

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The hour after presenting the Union 2021-22 budget, Minister of Finance Nirmala Sitharaman spoke with H HT Sukumar and Doordarshan’s Ajay Mishra, at some of its main spotlight. He discussed an increase in health allocations during Coronavirus disease; said that the privatization of the Bank was on the agenda because the government wants to operate only a healthy public sector bank that can improve; Indicates that the initial Public Offering of LIC – is expected in this fiscal – it will end and above the announced Disinvestment target of ₹ 1.75 lakh crore; And that new agricultural infrastructure and the development of CESS (AIDC) on fuel and liquor will not increase the burden on consumers, but create an estimated dedication fund ₹ 30,000 crore for agricultural infrastructure.

Nirmala Sitharaman
Nirmala Sitharaman

After the Coronavirus pandemic, everyone is worried about what the budget will be brought. What do you want to achieve with this budget?

With this budget, we want to provide encouragement for public spending through good quality expenses for the creation of assets such as roads, ports, and other infrastructure. This will increase demand for the core industry such as cement, steel, power plant units, and heavy duty machines. That, in turn, will produce work and put money in public hands. We were told that it took five years to spend on infrastructure projects, but it was inaccurate. It takes five years for the project completed. Meanwhile, work is generated immediately. Therefore, the economy will receive immediate encouragement. This specifically applies to infrastructure, the health and agriculture sectors – the three are very important for the interests of Indian countryside.

One of the main things we see in a budget is a priority setting. By 2020, the main goal is welfare. As a result, we see increasing expenses, which are also proven in deficits. You have maintained expenses at increased levels, but you seem to have been oriented to capital expenses. How do you balance this? Are there assumptions in this case that things return to normal and people won’t need such help they need last year?

The balance is expected to be reset mostly by the fact that the money will only be for capital expenditure. When you make Windows for capital expenditure, you are sure what you spend is actually the creation of assets. Therefore, the type of money comes into the hands of people directly, without seeing what will make it – it will create a short-term request, yes – but when passing this route (making assets), it also provides a boost for the sector that will help create Better road, port, other infrastructure facilities. Thus, it has a short and long-term impact. By giving money directly into the hands of people, yes, it helps them, but at the early stages of pandemic, we also see that the money is locked in their account. Anyone will do that. You don’t know in this uncertainty period, do you have to spend the money or save it. So the way we see this, is capital expenses is a sure way to create a good cycle.

It is a brave step to increase capital expenditure. But everyone also sees this budget as a health care budget.

In terms of health care, of course an important institution for the public at the village level, block and Panchayat, will receive the money they need. The Finance Commission has also recommended that funds without bonds related to waste management or water treatment must also be used for health care infrastructure. Every time I talk about health, I am very clear that we need to have a holistic approach. We cannot think of sanitation as a separate problem. This is not just about making a hospital. You can remember, at the beginning of the pandemic, we only have two laboratories to test the covid-19 sample. Samples of the entire country will go there. During a pandemic, we created 200 testing laboratories. Now our goal is that we must have the capacity to test at the block level.

How plans to spend the number of crores ₹ 35,000 allocated for covid vaccines? Is it just for this year?

This allocation is for this year and if needed more money to be spent on it, I am committed to giving it.

In addition to expenditure for health, which is expected, one of the other concerns that people have is Covid Cess. Some say there will be new taxes in super-rich, and there are fears of wealth tax, because income must return. You have directed all this. How difficult to resist temptation, and how well do you think we will overcome the generation of income challenges?

At least for this year which ended March 31, we have clearly demonstrated our point on how to increase the GST collection. We haven’t done anything other than normal. We only make conscious efforts using artificial intelligence and large data to plug in gaps and, as a result, we have seen that compliance improves, fake and fake bills used to get refunds, and bad trials among several people to avoid [payment] has fallen. On the other hand, I also made it clear that the preparation and monetization of the assets of both will take top priority. All empty assets, which cannot help the economy, must be monetized. With two better asset income and monetization collections – we think that we can realistically reach the target we have given to yourself.

As far as tax, I have been clear since the beginning, when the Announcement of Atmanirbhar (Independence) was being made, and many examples of the country (from the stimulus package) were quoted for me, I would quote an example of a country – and I did not take the name here – who spent More than 15% of His GDP as a stimulus package but, in December, said that they could consider an increase in comprehensive taxes throughout the board. That’s the point where I say that we don’t even think along that line. And today we show that never at the council.

Are you not tempted by this?

No, not at all.

One of the things you have done is agricultural infrastructure and the development of CESS (AIDC), which has created a shower. Can you tell me about it?

What is your collection forecast?

Around ₹ 30,000 crore [per year] is what I think.

You have announced that Mandis will be associated with agricultural infrastructure funds. How many will help in the current situation and will it help generate farmer income?

Every year, we aim to earn farmers’ income. At present, farmers raise questions about the laws that have just passed and Agriculture Minister Union Narendra Singh Tomar is ready to answer their questions in detail. But every year, we announce a scheme to help farmers double their income.

Will ₹ 30,000 crores from agri-cess funds more than and above infrastructure funds ₹ 1 lakh crore?

Yes, Crore Lakh ₹ 1 has been discussed during the Announcement of Atmanirbhar.

Are there asset monetization targets this year?

I just said it through disinvestment, we were expecting ₹ 1.75 lakh crore. It might be difficult to immediately after the coronavirus pandemic, for me to put numbers because we really don’t know what the company’s value will be, or what the market will decide is the value of clean assets, or how PSU will do it after the pandemic year. Although many of them [based on sales] land, one difficulty I have to admit is that if the DIPAM (Investment Department and Management of Public Assets) must sell a plot of land, which is somewhere in Salem or Ballia, they will not get a clear picture about what market value sits in Delhi. Arriving with the estimated value of clean assets or estimated land value is a complicated process.

This is a good way to generate income from assets lying. But what are the next step to ensure that it is done?

We gave ourselves the encouragement of Tamit in the Ministry, but we have not declared it. I remember in the July 2019 budget, I have given a large number and because the market is rather warm, I can’t even go with it. I was questioned about that but the reality was that market sentiments also determined how we would succeed in our disinvestment plan.

Numbers for LIC IPO also don’t know yet? Will it be raised on 2021-22?

Not yet. Internally, Lic must prepare their books and systems. The IPO will come out at 2021-22 but we have not yet decided quantum. I have pointed to a professional set to see this.

This will be a significant addition to your income, because this LIC number is not part of the disinvestment number.

Yes, right.

What is your message for the business community?

It is clear that the government is committed to reforming any time needed to achieve this in the parliamentary system. We have said clearly that we will be very not disintegrated, not based on anything, but by having a clear investment policy of public companies [certain]. It is important to announce this openly because this is not a knee-jerk policy, but that has long-term stability. Investors must know what the long-term route is and whether the government will continue to do it. And we will have a clear list of which assets we will leave. Private investors in this country will accept clarity and they will be able to bring foreign partners to participate in this completion.

One of the assumptions we made was 14.4% of nominal growth rates but the economic survey assumed a nominal growth rate of 15.4%. What is divergence caused by – is it a more moderate inflation regime or do you expect a slightly lower growth?

I will place an economic head report, become an academic-free thinker, because it is a little more flamboyant while we are at the Ministry of Finance, naturally and correctly, must be [more] it makes sense in assessing what we can do.

To privatize banks in countries like India, especially with our nationalization history, is a bold step. Do you expect political opposition to this step?

I want to reason. We do not say that we will not have a public public sector at all. Public sector banks will continue – they have an important role to play in this country – and must be feasible. They need to have the power to improve. We need more SBIs in this country, and that is why, in the past two years, we have committed the merger of the bank. However, who said, we also have several public sector banks that do not take, and their health does not increase even though infusion of cash. I will not enter the details of who they are or the nature of the problem they suffer? Is it important to have a large bank, can be managed well, well managed and professionally serving all fields that are not going to be carried out by private banks, or a number of x public sector banks and the amount is sacred?

What thoughts behind the announcement in Mega Textile Park?

Our capacity to export textiles is quite high at one point. But then, it became very weak for unknown reasons. Now, to return to that position, we have announced a textile park.

Although there has been a sequential recovery in many parameters, there has been no increase in work. There are still a large number of people who lost their jobs during a pandemic, and still out of work. What will help them?

I said during Atmanirbhar Bharat [announcement] that businessmen who released their employees during locking for any reason can bring them back and the government for the next two years will pay the provider fund. We also have now announced many training programs working with the United Arab Emirates and Japan, so for work available there, our people can be trained with special skills. We also strive to work with several other countries so that our energy gets the training, including language, to find work in these countries.

 

 

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