Minister of State for Finance Anurag Thakur is confident that even though some Budget targets may seem difficult, they are all achievable. Speaking to Moneycontrol in an exclusive post-budget interview, Thakur said that the divestment target of Rs 1.75 lakh crore for 2021-22 will not only be met, but will be exceeded as well.
He also said that while the medium-term fiscal aims till 2025-26 seem steep, the Modi government has had a proven track record of fiscal discipline. “We are known for fiscal prudence… we have brought the fiscal deficit down from 5.6 per cent in 2013-14 to 3.4 per cent in five years,” Thakur said.
The Member of Parliament from Hamirpur in Himachal Pradesh also said that the government was committed to cleaning up India’s financial system, and a bad bank was the latest step in that direction.
We will start with the main themes of the Budget – pushing infrastructure to create jobs, fiscal expansion, and privatisation. On the last one, we know the history of divestment targets and how often they have been missed. How will the coming year be different?
If you look at the FDI inflows in the past eight months in Indian markets, from April to October, it was close to $ 48 billion. I am hopeful that after the delays due to COVID-19, we will be able to fulfil our plans to privatise companies like Bharat Petroleum, Air India, Concor and others, as well as two public sector banks and one insurance company. I’m very hopeful, that we will not only be able to meet the target of Rs 1.75 lakh crore but will achieve more than that. I personally believe we will exceed the target.
The government talks about infrastructure push to create jobs. Does the government have any number in mind in terms of how many jobs will be created? How would you respond to those who have said that cash handouts were also required?
There is a saying that you can either serve fish on the plate to a person or you can teach them how to catch fish. So, here the government has taken the route of spending money on infrastructure especially. We are going to spend 34.5 per cent more on capital expenditure year-on-year. Whether it is healthcare, roads, rail or even other social sector programmes like Jal Jeevan Mission. It is further going to help people to get more jobs, more money in their hands, and further increase their spending power, which will further push the economy.
Also, if you look at the cash inflow into the hands of farmers through schemes like PM Kisan, or a bigger outlay for MG NREGA, it clearly creates a balance. On one hand, you’re pumping money into capital expenditure and on the other hand, these schemes will give them more cash in hand. Apart from that, there is an increase of nearly 52 per cent in SC/ST schemes across ministries. We aim to strike a balance between capital expenditure and looking after the vulnerable sections of the society.
I will not be in a position to give you a number right now on how many jobs will be created but definitely, there will be a two and a half times multiplier of capital expenditure. So, it is going to have an impact on the ground, because India needs better infrastructure. And this is further going to create jobs.
There has been some concern that Rs 35,000 crore allocated for the vaccination programme is not enough.
Prime Minister made it very clear to fight COVID, India will go all out and so far India has been very successful. One is to come out with two Make in India COVID vaccines and two is supplying it to more than 100 countries in such a short span. It is about making India Aatmanirbhar and also fighting COVID. Initially, last year we had provided Rs 15,000 crore to buy PPE kits, masks, ventilators and other essentials to fight COVID. We have given Rs 50 lakh insurance to the COVID warriors. Now, once the vaccine is out, we have allocated Rs 35,000 crore.
Additionally, the Finance Minister has made it very clear that if additional money will be required, we will be able to provide that. So, I think it’s too early to say anything. Let people judge and make comments. Many made comments in the past that India will see millions of people dying, but that didn’t happen. We handled it well, very sensitively.
From a revised fiscal deficit of 9.5 per cent of GDP in 2020-21, you plan to go down to below 4.5 per cent in 2025-26. Is that too difficult a target?
Let me just say when we took over in 2014, India was rated among the fragile-five economies. From there, for the next five years, we achieved seven percent growth. Even IMF and other such institutions have projected India’s growth close to 11.5 per cent in 2021-22. I am hopeful that we’re going to achieve this or maybe better than this. And as far as the fiscal deficit is concerned, we are known for fiscal prudence we have brought the fiscal deficit down from 5.6 percent in 2013-14 to 3.4 percent in five years. Because of Covid, all economies suffered. Now, we have given a new glide path for fiscal prudence, we will achieve that.
The Finance Minister announced the setting up of a bad bank. Will this be enough when we are talking about more than Rs 2 lakh crore in non-performing assets?
We got a lot of suggestions from various sectors for the need of a bank bad. When we came to power, we carried out an extensive asset quality review in 2015-16. Then we pumped close to Rs 5.5 lakh crore into the banking system as a capital infusion. Even now, we have allocated Rs 20,000 crore for capital infusion. We are very clear that we have to strengthen our banking system. Whether the bad bank is a good idea or bad that has to be seen in the future. But yes, we are going ahead with that.