According to the minister, one approach is to make larger Plan and developmental allocations. Another approach is to give them concessions on the taxation side. It is not in isolation. “One has to keep in view how the small, medium and micro industries can develop,” he says.
Excerpts from the interview:
Q. What are the three major selling points of your Budget, three major disappointments, and your three concerns?
A. That you people have to judge, not me. You are to decide which are the three. Here I’m neutral. I have made available a product, which is the outcome of our collective efforts. Now, it is for the people and the analysts to judge and decide how they would describe it — what are the plus points and what are the negative points. And then if you identify it, you ask me the question. The first analysis has to be done by you.
Q. What are three big things you could have done and could not do because of constraints?
A. I would not put it that way. The Budget has a theme and that theme is not in isolation. I belong to a party and the party has its own economic agenda. This year’s Budget falls in the fourth year of the 11th Five-Year Plan. The 11th Five-Year Plan has an agenda for the period of four to five years. Within this framework, I worked out my budgetary proposals. For instance, my expectation is that for the first time we will reach the 100 per cent achievement figure, in terms of allocation and expenditure, as was visualised at the beginning of the year. That is Rs 14 lakh crores at the price level of 2006-07 and Rs 16 lakh crores at nominal price. If there is nothing adverse in the coming year, it would be possible for us to reach our target.
I don’t know if you have noticed it, but I have tried to draw a close link with the developmental side when I’ve stepped up the Plan allocation. Agriculture is an example there. On the revenue side, too, I have made a series of concessions on agriculture appliances, equipment, machinery, parts and components which are not manufactured here so that it can become easier to import them for preservation, for pre-cooling, for storing facilities. So that is action on the developmental side followed by action on the revenue side to facilitate the import — or by reducing the excise duty — to make it cheaper so that both things go together.
Q. You talked about the economic agenda of the party around which you have presented the Budget. Was there any constraint to do something, or something you couldn’t do?
A. No. It is not like that. It is a continuous process. And in that process, there is always a gap between what we try to do and our achievements. The next time we try to bridge that gap, but there is no constraint. We fix these plans. No third person has set it for us. I was a part of the Five-Year Plan when it was drafted. Therefore, it is not that something is happening and I have no role or I have no say.
Q. You spoke about allocations. But, politically, is this Budget a saleable proposition for you with your allies? I hear this is the first time in Indian history that the Opposition walked out when a finance minister was making his budgetary proposals.
A. It is for the Opposition to explain why they have taken that step. There were two options (of adjusting petrol and diesel prices) — either through the administered price mechanism or through the budgetary process, through the fiscal process of expanding duty. I have chosen the duty route not only for myself, but for the benefit of the states. When I stepped up the customs duty or excise duty, whatever will be the net realisation, 32 per cent will go to the states. Therefore, it is not that I’m appropriating it totally. But when the (international crude oil) prices go up, you will have to get it reflected. If you do not get it reflected how do you meet it? You’ll have to reflect it by creating a huge deficit, which will have an adverse impact on the economy. There’s no other formula through which you can meet it.
When the international prices were going up — when this five per cent customs duty was removed — prices went as high as $127 per barrel. Thereafter it has come down. Now it is around $70-$75. So I thought this is the time to impose it. We could have done it through the administered price mechanism, but in that case the states would not have got anything. Even if I don’t want to do it, then I would have to go on increasing subsidy. And if we are to go on increasing subsidy, then naturally my deficit will keep on increasing. It will have an adverse impact on inflation. So there is no way you can avoid it. Question is whether we will do it or we’ll allow the economy and the fiscal system to succumb to the pressure. I did not want that the economy of this great country — when it is on the path of recovery — to be in that situation because no action was being taken and allow the gap to remain unabridged.
Q. But do you think the Opposition will come around?
A. That is for the Opposition to decide. They have their own way of thinking, their own way of functioning. There was Opposition to the civil nuclear deal — we had to face it. There was Opposition to so many other things — we had to face it. That is the system of parliamentary politics. What is new in it?
Q. Talking about exemptions, finance ministers in the past were reducing the number of exemptions. This time, I suspect the finance minister was using his discretionary powers to expand the individual exemption list?
A. No, it is not that. As I told you, I want to give a boost to the agriculture sector because that is closely linked to our food security and closely linked to employment generation. That is also closely linked to our rural development. Therefore, one approach is to make larger Plan and developmental allocations. Another approach is to give them concessions on the taxation side. It is not in isolation. One has to keep in view how the small, medium and micro industries can develop. That is the rationality of it. Not the use of discretion.
Q. You made very little provision for extending the Green Revolution to the eastern region. You’ve just provided Rs 400 crore.
A. It is just the beginning. When you start a scheme, you start with the token allocation. Take two examples. When the unique identity authority was set up last year I made a token allocation of Rs 100 crore. And when they have started — and now they are in a position to take off — I have allocated Rs 1,900 crore. The Rajiv Gandhi Awas Yojana Scheme — a slum-free city concept — was introduced last year. If the state gives land to the slum dweller, then we’ll help them build the housing colony. I made a token provision of Rs 150 crore then. Now the scheme is in a position to take off, so I’ve stepped up the allocation to Rs 1,270 crore. It is quite natural in the Budget-making process. What is to be worried about? And for agricultural research and development I’ve stepped up huge weighted deductions. All the R&D institutes, agricultural universities should come out with a plan of what type of seeds, what kind of agricultural activities will be required. Money will not be questioned. As and when the scheme will move on, more and more resources will be made available. It is the beginning. In addition, the allocation for the department of agricultural research has been increased by 31 per cent from the last year. So, this is over and above all that. It is not as if this is the only scheme.
Q. You have prayed to Lord Indra. What happens if Lord Indra fails you?
A. Let them also join me in praying. The answer is simple. (laughs)
Q. Do you have a fall-back plan?
A. No. I don’t have a fall-back or anything. Let them, those who are sceptics, join me in praying to Lord Indra so that there is a good monsoon.
K.A. BADARINATH