‘Coherent policies, center-state coordination necessary for development’

The second quarter (8.4%) GDP growth surprised everyone on a positive note. Do you think we’ll be able to maintain that momentum, and do you think this year could be better than many of us expected?

I like that it will be better than many people expect. All indicators are that it could be better. But a moment of caution for me will be how this new covid version is going to evolve. However, with the amount of scientific evidence available at the moment, we realize that it spreads very rapidly, but all this may not be alarming. But you can’t really trust any such information at this stage. That is why the Prime Minister reiterated the need to use masks and preventive measures. The Center has sent an advisory to the states to ensure that the protocol is followed. That sense of caution or element of uncertainty continues.

Have we managed to largely keep the effects of the pandemic behind us and are we now on a stable growth path?

To a large extent, yes. There can be several heads on which you measure the performance of the economy. But broadly speaking, out of over 40 indicators, 22 are certainly clear indicators of what is happening in the economy. Out of 22, in 19, we have achieved or exceeded pre-pandemic levels. This means that we are now well above pre-pandemic levels in 19 of those 22 high-frequency indicators.

About three of them have problems due to the nature of the sector. Tourism is one. It doesn’t need to be explained. The world has yet to completely go back to where it was in tourism. If 19 out of 22 high frequency indicators are showing that you have not only reached pre-pandemic levels, but probably exceeded it, and that the kind of figures you are seeing in the last 10 months, and The figures you see in PMI. There is consistency in this performance, both in the services and manufacturing sectors. It is one thing to talk about reaching pre-pandemic levels, crossing that level is another and an even better indicator that it is consistent. This continuity is not just for a month or two, but for several months. On development, you can be sure. S&P had said a few days ago that it has retained the growth rate of 9.5 per cent for India this year – the fastest growing economy this year. And we keep improving our numbers until next year.

In October, the International Monetary Fund came out with a paper that estimated the long-term economic growth potential of the Indian economy and said it was at 6%. Is this a fair assessment?

I think, that and a little more, instead of just 6% or 7%. Of course it could be a bit much. This has to be enabled through a number of steps which the government will have to keep taking. With consistent domestic policies, be it taxation or the way we do business, and greater synergy between the Center and the states, the federal system is going to be at the top of the agenda so that the story is truly felt as a Can you We have to be ready for good, strong and well developed development and both center and states should work together.

What steps will enhance the Indian industry’s potential to grow at a faster rate over the long term?

The compliance burden is to be reduced to the level of Panchayats. Being a three-tier system, it is not good if the Indian government tries to clean up or some states try to make it easier, it has to be constantly down to the level of Panchayats.

Local bodies are indeed the recipients of investment in a way and if decision-making is complex, time-consuming and cumbersome at that level, it cannot help. Ease of doing business and reducing compliance burden is one of these. Second, consistency in taxation. I go back to the example you gave about corporate tax cuts. Has it not shown even during the pandemic that it has benefited?

You can see how industries want to expand their capabilities and invest in new areas. That pre-pandemic decision, which no one knew about the pandemic at that time, has actually worked very well to our advantage. In addition, there should be a level of predictability in both direct taxes and indirect taxes. Frequent changes, complications or ‘ifs and buts’ can shut down businesses—their plan can go for a toss. For the economy to reap the benefits of well-planned enterprises, we have to keep these two at the top of our agenda.

Will we be able to meet the disinvestment target this year?

We are moving forward with each and every one of them. The story of Air India will tell you that despite the pandemic, the extent to which the work has been done and it has been approved with complete transparency, this is the way to deal with the rest.

When will the disinvestment of Air India be completed?

Secretary DIPAM has commented on this. Haven’t they said that it will be handed over to the new buyer by 31st December?

You talked about the importance of Centre-State relations. There has been some financial tension between the Center and the states in the last 20 months. Are things better now?

I don’t think there is any tension this year. In 2020, we have discussed after discussion to ensure that the formulation that has come out is acceptable to all (on the issue of GST compensation). After that the method by which money is to be borrowed was also to be adopted and implemented. I am happy to say that this year has ended well. As promised, everyone got the money on time. This year, GST compensation and transfers based on the recommendations of the Finance Commission – tax amounts – have been front-loaded not only on time – but in both cases – in both cases. This was to help the states as infrastructure spending was clearly identified in the (Union) budget also as the right stimulus for the economy and a key driver for the revival. They are given cash in hand, not tied to anything. I don’t see any big worries againGuarding money is not reaching the states

There have been reports of changes in GST rates and extension of slabs. Do you think it is understandable when GST collections are increasing and the whole process is showing stability?

This decision was not taken in the last meeting. This was a decision taken some time back, probably before there were two GST Council meetings. And yet, the thought was, ‘Let’s not implement now.’ Now the intention is not to raise more revenue. The two specific steps you are referring to are not intended to generate revenue. The intention is to plug the amount of refunds that are going. We were giving more refunds, we were giving more input tax credit refunds than what we are charging in both these cases. Therefore it was necessary that this discrepancy of fee reversal be rectified at the earliest. If we didn’t do it right then everything would have looked normal, but the GST Council kept on making payments without earning anything. It doesn’t make any sense. The discrepancy was increasing and needed to be rectified. Even now, we have already said that this (tax rate rationalization in the textile sector) will be implemented from January. It is not being implemented overnight.

What are your thoughts on regulating sovereign cryptocurrencies and private cryptocurrencies?

One luxury that the minister does not have is to answer such questions during the Parliament session. There is certainly a well thought out Bill that is being passed. Once approved by the cabinet, it will surely come up in the Parliament. On the Table of the House, along with the questions to be asked by the members, some answers were given, there too, I reminded the members that I cannot give details. They have to wait for the bill to come. I understand that I will be expected to give the same reply outside the House as well.

Is There A Lot Of Speculation On Cryptocurrencies?

Yes, there is a lot of speculation going on. It is not healthy at all.

Will there be enough safeguards to ensure that people investing in cryptocurrency do not burn their fingers in case they are regulated?

Parliament has to decide on this.

What can we expect from the Union Budget for FY 2013?

In some form or the other, the thrust on infrastructure spending will continue in one form or the other.