The state elections are fought on local issues while national elections are fought on different issues, says finance minister Arun Jaitley. In an interview to ET’s Deepshikha Sikarwar, Jaitley also said infrastructure creation and investing big in rural infrastructure and modern farming techniques will be the priority areas for the government in the coming years. Edited excerpts:
There has been a lot of discussion about regulators lacking accountability. Do you see a case for revisiting legal framework to make them more accountable?
In most regulatory frameworks, when regulators decide in most areas, there is an appeal tribunal. IRDA, Sebi, TRAI, CCI, electricity regulator all have an appeal tribunal. And then their judgements are appealable to the Supreme Court. So, I think that’s an arrangement we need not go into. There would only be some exceptions where the decisions are final and, therefore, it becomes obligatory on such a regulator to be consistently in consultation at a very wide level with stakeholders, which include the government (and) the market players in the field, so that all relevant inputs come.
What happens in case a regulator does not act on inputs from stakeholders?
Then the chances of the regulator erring could go up, which is a matter of concern. Economic decision-making has to be on sound principles and can’t be merely a theoretical exercise without taking the empirical evidence from the market or sectors into consideration.
There is a view that the government lacks relevant representation on several RBI committees…
I don’t want to speak about this issue because consultations are going on at various forums.
RBI in its latest statement has said there is no issue of liquidity. Do you agree?
Overall liquidity may not be a matter of concern, but there may be sectors which lack liquidity. Therefore, this sectoral stress will have to be addressed.
Some of the biggest reforms such as goods and services tax and Insolvency and Bankruptcy Code have happened under your watch. What’s next on the agenda?
I can speak of two areas. The highest priority has to be given, with resources increasing each year, firstly on infrastructure creation to make it world competitive, and secondly to make the largest amount of investments in the rural areas, because ultimately the drip effect alone won’t remove rural poverty. You will have to put in a lot of resources in terms of rural infrastructure (and) modern techniques in farming in order to bring up a lot of people in that area.
Would that be the broad thrust of your upcoming interim budget?
I am not going to comment on the budget. These would be the priority areas for the next several years. Additionally, if there is a political consensus you will have to look at the unreformed sectors of the economy. I am not indicating which the unreformed sectors of the economy are, because I do not want to spark a controversy. But there are several which a mature political society needs to look at.
Do you think there will be enough political will to take up these issues?
I think there will be. Let us, for instance, take road transport service for the common man. It’s an unreformed sector. Globally, people have looked at it.
Five states have gone to polls. Should these assembly elections be seen as a semi-final to 2019 general elections?
Every election in India is referred to as semifinal. But my own view is that these state assembly elections are predominantly on state issues because in two of the three states we have been in power for very long and in Rajasthan we have been in power alternately. So, several factors come into play. The agenda for the Lok Sabha elections is significantly different. It is not state-level issues. The way election is going, as the debate is building up, there will be only two issues. Congress will tom-tom the cause of a wide coalition, which I have referred to as the coalition of rivals. We will say that we have a track record of five years of the government led by Narendra Modi, which is a cohesive government. Therefore, eventually as the debate picks up it’ll become a debate between a tried and tested and a successful prime minister in Modi, which I think will become the key issue of the election — do we want him again, or do we want to experiment with such an unstable incoherent kind of a coalition, which has repeatedly failed?
Do you think the government has done enough to make the case for a re-election?
I think we have. We have run a decisive…honest government. We have run a government which has brought in a large number of reforms in various sectors. Particularly, we have brought in market-related reforms, which have helped the economy to grow at a reasonable pace. We have taken steps to bring in more revenues in the system. We have rendered a huge amount of service to the poor and the under-privileged. Congress only gave slogans to the poor, we have transferred resources.
The economy under your government will average 7.5% growth. However, there is criticism of it not creating enough jobs…
If there was no job creation in the country, why do we not see the kind of social unrest which would have been there? We have run for the last four and half, five years. There has been no major agitation in India. Agitations take place only if there is a socioeconomic discontent or if there is an allegation of corruption. The fact that we have not had this itself is an evidence because when the economy grows, various sectors grow and they inherently create jobs. Additionally, when we revived the construction sector, when we are reviving the textiles sector, these are high job creation sectors. Manufacturing in the last two quarters has itself done better. Most importantly, at a decentralised level, because a large part is still an informal economy, schemes like Mudra have helped in generating very large number of employment.
There have been talks of judicial overreach. Do you see it as an impediment to reforms?
I don’t think courts have really stood in the way of economic reforms. There is no such economic reform which courts have struck down. I think what is now required is pre-1991judgements in a number of cases, which were delivered when most sectors saw a public sector monopoly, may now have to be revisited as the public sector lives in a competitive environment.
The Supreme Court’s Aadhaar verdict led to certain issues. Will the government bring a legislation to address these?
The consideration is at a very advanced stage. The Supreme Court, while upholding Aadhaar as a good concept, in relation to use of Aadhaar laid down certain guidelines, which-…protect liberty and they should be welcomed. For use by non-governmental agencies they laid down three conditions. I think it is incumbent upon us to follow the judgement and in some areas if those three conditions are satisfied then will have to give a statutory protection to the same.
Crude has entered a comfortable zone. The government had cut duties on petrol and diesel. Will you revisit these duties now?
These are steps we do not announce in advance. On an average in a city like Delhi price of the petrol had gone up to .`84-85 a litre and has come down to .`71. We had twice cut excise duty – in October 2017 and in November 2018. I have no regrets, because if the economy is strong, then to give some relief when prices are high is incumbent. We may not be able to afford it every time.
On fiscal side, there are concerns that you may not be able to meet deficit target…
I tend to disagree. I am reasonably confident we will meet the target. I have just had a review meeting on Thursday and I am much more comfortable after the review.
GST mop-up has not been up to the mark…
We are falling short on GST, but we are moving ahead on direct taxes. One of the reasons is, this is the second year of GST, so the target which has been set both for the central government and the state government is that with 2015-16 as the base year. This year we have to give three multipliers of 14%, which is compounded every year, which will come to 55% growth. To achieve 55% growth in two years is not an easy target. But, you have six states that have already achieved this. Then there are another 8-9 states that are in the handshaking distance of achieving this. I think in terms of GST it’s a fairly good collection.
Is there a case of revisiting rate structure?
I have already announced that as the collections go up that is inevitable. Collections are moving up. You are now in the vicinity of Rs 1,00,000 crore. And, therefore if every year collections move up, we bring certain rates down. The first object is to get rid of the 28% bracket as soon as we can afford. We have substantially got rid of it.