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Wrong to say DeMo, GST & bank mergers not working; but there are teething troubles: FM

ET Now|
Updated: Dec 17, 2019, 08.45 AM IST
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BCCL
Nirmala Sitharaman-1200

Highlights

  • FM on attaining $5-tr economy, GST, failure of reforms and more.
  • The prospects of improving the GST collections are likely to go up.
  • The last point on consumption is putting money in the hands of people.


I would not say reforms like DeMonetisation, GST and bank mergers have not worked. Teething troubles cannot be taken as a conclusion for saying it is not working, says Nirmala Sitharaman, Finance Minister. Excerpts from an interview with Navika Kumar of TimesNow at the Times Network’a India Economic Conclave.

What are you doing about the avowed target to emerge as a $5-trillion economy?
I am constantly in touch with all the industry and also various sectors which are seeking our intervention.I expect we will be on track for the $5-trillion economy.

The GDP numbers are somewhere around 4.5%. If we have to achieve $5 trillion by 2024, it means in the remaining four years we need to grow at around 14.5%. Is that doable in the present economic scenario?
I am not going to be engaging in numbers, not because I want to escape giving an answer but clearly this time, I am positioning India in the background of challenges which are being felt. I need to attend to the challenges and re-address any difficulties. I am looking at it in that way rather than looking at what would it be for the next year.

Coming specifically to your question, I am not going to place our numbers today as opposed to what it should be. I have to keep focussing my attention to moving towards achieving the target.

You have announced several measures in the recent past to kick start the economy -- be it the cut in corporate taxes, addressing the problems in the real estate segment, the home buyers segment and the completion of units that are hanging in between. Do you have the fiscal room to take any other measures given that GST collections have been worry?
I am working with different states, each one of whom have made a lot of effort to boost GST collections from their ends. In the collective interest of cooperative federalism, many of the states are pushing it from their end too. Along with them and also with the efforts of the centre and all the revenue department officials, who I am closely following with regards to various steps that they are taking, I am able to see that the prospects of improving the GST collections are likely to go up.

I hope that would address the immediate question about GST revenues and I shall continue to do that is one side of the question that you had asked. But on the other hand, I am also making sure that there are stimuli aiming at improving consumption and having money in the hands of the people. We are pushing hard on very many of these programmes. The flagship programmes which have a bearing on the rural economy -- be it PM Kisan Samman Yojana or MGNREGA, we are ensuring that money goes quickly to those schemes and are pushed forward to the people who should be benefitting from them.

Other than that in respect of the stimulus that I have offered, public investment in infrastructure is something which I have taken very seriously. I am making sure that I frontload as much as possible, the amount which is dedicated for infrastructure building from the public treasuries.

I have made sure that the pipeline of projects is ready and we are making sure that sooner some of them will be receiving the funds for it and that is within the first six months of this government. The last point on consumption is putting money in the hands of people and ensuring that money should reach people who have rendered services.

I am sitting with the expenditure secretary and making sure that if the government owes any money for goods and services, particularly from the MSME and also the PSUs which have to pay money to these MSMEs for the services that they have received -- is given a clear push, so that we do not sit on others’ money.

I must put on record that secretary expenditure, earlier Shri Murmu who is now with the J&K, had put in effort to release up to Rs 61,000 crore which were due to the MSMEs from government departments. Now I am making sure no other amount is left behind and public sector enterprises also clear up their bills. These are some specific efforts but this is an ongoing process.

You target for GST collections was Rs 6,63,000 crore and in the current financial year, in the first eight months we have clocked only 50% of those collections. As far as the compensation cess is concerned, Rs 1,10,000 crore was the target and we are sitting at about Rs 64,500 crore. The GST council meet is just two days from now. Would you be looking at some radical steps? Market is anticipating that the 5% and 12% slabs may go up to 8% and 18%. Would you like to say something on which direction the GST council meeting is going to take?
As regards the GST slabs and rates, I do not think we have had enough discussion even within the ministry yet on the slabs and the rates. This discussion is everywhere else, rather than in my office. I do not think I am even talking about raising or rationalising the slabs at all at this stage. But eventually, sometime, the GST Council would want to talk about it. But I have not readied myself for this particular meeting on this particular issue.

Secondly, the thing about the compensation cess is that the number that you gave is factually right. I also admit that the payments which had to go on the compensation head has not been given for the two-month slot. Before I go into that, the connection and the fall in the number of connections or not really growing, should have several reasons to it.

We have given extension for filing of returns in some districts, which were flood affected and when I say some districts, you might say in a large country like this, do some districts matter? No. Some districts which have a huge potential have been affected because of the floods and we had to extend the dates that is one reason.

Second, in certain sectors, there have been challenges and as a result of which, consumption would have come down and this is a consumption based tax. Naturally, the collection would be affected because of that. There are several reasons, all of which have brought in one consequence that the growth in collection is not as much as we wanted it to be.

If I am addressing issues based on the inputs that I am getting from the various sectors, is that denying that challenges exist?

-Nirmal Sitharaman


What would you say to states especially those ruled by Opposition parties which have said that it is embarrassing for states to continue to ask the centre to pay up the dues for the states and this is a matter of their right It was promised when GST was first rolled in by your government in the last tenure. They are seeing this as reneging of the centre’s promise to the states?
I fully appreciate that point and I do not disagree with them if they say that it is embarrassing. Yes, it will be embarrassing and I do not want them to feel embarrassed because it is not their fault, but nor is it personally my fault. I would rather give them yesterday than today and there are obviously reasons and I have elaborated on all this earlier. I am not denying it is their tight but I am also making clear I am not reneging on that, stats will be given.

There are three big reforms that your government undertook over the last five and a half years -- DeMonetisation, GST and merger of banks. Several public sector banks are being merged under one head. But not any of these reforms are giving the dividends in terms of growth expansion of the Indian economy. Would you say that these reforms have gone wrong?
I do not agree at all on the conclusion that you have made that these reforms have not worked. These are major reforms because they have an impact on several layers within the economy. If demonetisation had to suck out certain amount of money, which were not tax paid, it did achieve that. It also made sure that the economy gets far more formalised.

These do have an impact when industries small, big and medium will have to adjust to the restructured work ethic, work culture and the work business model, in which they have to start functioning in a formalised set up. Many of them were informal and that was fine earlier but now there are a lot more reasons to be formal. By becoming formal, they have a lot more benefits to derive like the way they get input credits in GST, if they are on the scheme. If they are not, even then, they can pay rather far lesser tax than otherwise. So the benefits of getting formal are there for everybody to see. It is not right to conclude that these have not worked at all but of course yes there are teething problems.

There are ways in which benefits can be derived if it is tweaked to everybody’s advantage. The tweaking is also multifarious because if one section wants to tweak some fields, we have to see it does not adversely affect others. So, we have to constantly keep balancing the inputs and accordingly change the system to help everybody.

The teething troubles cannot be taken as a conclusion for saying it is not working. Problems do come up as all of us are getting into a formal system, into a technology driven system. I can understand the difficulties but I would not reject moving forward with the system which is in place and which benefits all of us.

Factory output growth is down to 3.8% in October, below 4.3% in September and much below the 8.4% in October last year. The consumer durables consumption has been on a lower trajectory as well. Are any green shoots visible from your interactions or are we in for the long haul?
I did answer this question once earlier too. I am not going to spend time saying as to when it is going to be reversed. I am at it. As long as anybody wants the government to intervene, we shall intervene and we shall keep going till every sector feels right. We are on track now, we are moving forward. My focus will be purely attending to everybody rather than calculate as to from when I can sit and watch the whole thing.

There is a lot of buzz about the slowdown in the economy and the fact that some studies say that employment rates are coming down. The ratings agency CARE says that unemployment growth has got arrested. How do you look at the employment numbers? What is the real unemployment growth rate?
A lot of work is going on. The National Statistical Commission and also the Ministry Of Statistics and Program Implementation are doing a lot of consultation talk and also getting inputs for the various numbers that the government produces whether GDP, whether it is the CPI, WPI, whether it is also looking at employment.

Data is something which the government has been looking at for a couple of last months and making sure that any misgivings about the data will be addressed so that the data from the government irrespective of which way they reflect, is going to be credible for people to accept and therefore to be fair to that ministry, a lot of work is going on on that front.

As regards the specific question on unemployment data, the government of India’s data collection on employment, particularly relating to the informal sector, has not been comprehensive. That is not because nobody wanted it, but data collection is focussed more on the formal sectors. Within the formal sector also, only a certain percentage was collected as data.

If in India, a large section depends on non-formal or informal, unorganised sectors, data on that is not comprehensively collected. Therefore, when we talk of unemployment and employment, we are talking with very sketchy figures. It is an area in which it may not be adequate for me to have before me and comment but again, the extent of employment in the informal sector that India’s flagship programmes -- be it Mudra, whether it is aiming to have JAM trinity being brought on is something which we have to speak about.

We have to take note of data coming from the banks, how many people have received Mudra loans, what category of Mudra loan and so on. Again, that may not be adequate, but the fact remains that Mudra has been one of the main sources of employment generation in the informal sector.

Your critics sometimes say this that the government is in denial mode. The government always seems to be suggesting that everything is alright, but that is not the feeling people get on the ground. Where is the disconnect?
If I am addressing issues based on the inputs that I am getting from the various sectors, is that denying that challenges exist? If I am not answering a question the way in which somebody wants me to answer and if I have no disputes or contradictions, am I in denial?

I have my way of not just talking but also addressing the challenges faced by the economy. This is a country which allows everyone of us to speak, give our opinions and I hear the opinions with great regard and respect.

The question of reforms is an unfinished agenda -- be it demonetisation, GST, merger of banks. We are going to go ahead with land and labour reforms. Are we even thinking about bringing down the government’s holding in public sector banks below the 50% level?
Yes, my pre-budget consultations are on and I had to excuse myself from one of them to attend this programme. So the reform momentum will continue. In fact, the government has very clearly committed itself to reforms. Reform in the labour area is already happening, 44 different labour laws have now been turned into four different codes. Those will now be simplified so that compliance is made easier.

That is about the labour and also looking at various ways in which new industry requires their recruitments to happen and in order to make sure that the labour does not suffer because of these kind of changes. All kinds of labour who are being recruited -- temporary, seasonal -- are all being brought to be at par with regular workers.

There is a lot of change and reforms happening in the labour area and for which extensive consultations were held by the concerned ministry. I must put it on record that the Labour Ministry has met up with a lot of people and taken their feedback. As regards land, it is a question of both the state governments and the centre working together.

In land related activities like agriculture, there are a lot of reforms including pushing for electronic market access for the farmer, giving him additional income and also as announced in the Budget, 10,000 farmer producer organisations will be formed, artisans will be given the benefit. So yes, a lot of work is happening but I would want to underline issues related to GST. Both the centre as well as the states will have to work together.

How do you respond to criticism when it comes from Mr Rahul Gandhi who in a speech in Ramlila Maidan just about 48 hours ago said that your government was a government that only looked at a few industrialists, the Adanis and he also mentioned Anil Ambani. Mr P Chidambaram the former finance minister says that the Citizenship Amendment Bill, Article 370 abrogation, all these are issues that have created turmoil in the society and have taken away the attention from a flagging economy. How do you respond to these political attacks?
On the charges of supporting a few industry leaders and not the common man, one simple line of answer that I can give is the people took a call in May 2019 and if that allegation had any merit in it, do you think that they would have voted in the way in which they voted for Prime Minister Modi all over again with increasing numbers? For a party to come back without a break for the second term with a larger majority, is that possible in a country like India? So the allegations that Shri Rahul Gandhi has put never had any resonance with the people of India.

That was political answer enough for him to realise that his baseless allegations do not find any space with the common Indian and also about the way in which criticism and allegations that we are splitting the country and other things are being levelled as regards the Citizenship Amendment Act passed in Parliament and on article 370.

It is surprising that the Congress Party behaves as though they have heard of it only now. They have been part of our manifesto. We have done our election campaign on it. We have mobilised the public to vote for us on it. People have heard us speak about it, not just in the last election but even the one before and for several years before that too. They are part of our manifesto. We are duty bound to implement them and to suddenly whip up emotions saying you are doing this, just shows their frustration. What they should have done keeping the interest of this country in mind they have never done and they are also talking down on the economy.

I would like to remind them what was the state of the economy when they left in 2014, what was the level of corruption this country had got fed up with and what was the impact of that corrupt crony capitalism with which Congress ran this country. The twin balance sheet problem, the fragile five problems were all things which we have faced up in the last five years and as a result, today the economy is looking at ways in which it can come out of that stress and we are infusing, not just confidence but equity where it is needed, assistance where it is needed and trying to get everybody on their toes back again. We do not support corruption.

We do not run a corrupt government. We have never kept inflation sky rocketing. Inflation has been kept well under 4. Macroeconomic fundamentals are strong. FPI is at its highest. Foreign exchange reserve is at its highest. Macroeconomic fundamentals being like this. Those who lecture us on our economy should please speak out as to why did they leave it in such precarious condition. They left behind a rotten, corrupt, crony ridden system behind, having spoilt the fundamentals of this country. They should do a bit of introspection rather than talking down to others.

We are seeing violent protests outside Jamia Millia. How do you see universities becoming the centre of opposition to your government?
At that age, all of us go through a very high level of idealism and protests do happen. Protests happened during Mrs Indira Gandhi’s time, protests had happened after that, after several governments with different political dispensations which had come and gone. So, protests in the universities are nothing new.

That said I also would want to differentiate between protests which sometimes go out of hands of the university students unions themselves and sometimes when protests of that nature get support from mainstream political parties who align themselves with Maoists and also separatist elements and they extend support for India breaking groups. That is worrying and that is why I go back to speaking about how misguided the Congress party is which was a part of the freedom movement. After all, Congress as a party was only a movement in which people of all shades of colours were associated during the freedom movement and Mahatma Gandhi had said that now that the movement has achieved Indian independence, it is better to disband the Congress. That was his words. It converted itself to a political party alright and post that its agenda was not nation building, it became being subservient to a single family.

Today they are participating in fringe group students movements which are part of university agitational face and participating with separatists, encouraging such forces which are talking about breaking India.

For political parties, it is important that we do not encourage forces which are against the countries. Student protest is one but it is a totally different thing to have jihadis or Maoists or separatist movements getting into it. We have to be wary of that kind of development.

Is that what is happening in Jamia?
I would not know what happened in Jamia last night.

Is this social turmoil taking away from the economic fight and the climb up to the $5 trillion economy?
I do not think the challenges of the economy and the government’s responses to them are going to be diluted. I shall be personally together with the prime minister working towards engaging with every sector and making sure that their requirements are fulfilled, their challenges are met. However, I am equally confident that the Home Minister Shri Amit Shah and the prime minister are clearly seized of the way in which the society will have to be in harmony and they are explaining very well, even in the parliament, answering every member of parliament and their questions. They are even today addressing in various parts of the country with the leaders who want to talk to them about issues, if at all, anything concerning the Citizenship Act.

I am fully confident that this issue or that are equally being attended to so there is no undermining the economy and its agenda. There is no undermining India’s unity and its harmony which is important.

I would take this opportunity to assure you that every step is being taken so India’s economy goes forward and benefits all of us.

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