‘The idea of empowerment rather than entitlement has gained ground,’ says Nirmala Sitharaman

A day after a well-received Budget, the Union finance minister exuded confidence that the proposals will spur growth and explained to Open why targeted schemes for sections like women, artisans and vulnerable tribal groups will make development much more inclusive.

This was the last Budget before the Lok Sabha polls next year. The Budget avoided poll-related populism. Was this a bold choice?

Why would that be an assumption about a Budget? If I had done it, you would have asked me: Are you being populist because it’s elec­tion time? You can also think that a Budget is a Budget; it should have its scheme of things. And it should ensure that the country grows and that it is inclusive, that it brings advan­tages of development to all citizens. So you would look at it for that.

The Budget reflects a huge effort in detailing. There are broad impulses or policies for growth and there are specific initiatives for those who need them. Can you explain the balance you have struck?

No, but this is a good question. A lot of work has gone into the details of this Budget. You have spotted it rightly. Since 2014, Budget schemes have never been in isolation. Never standalone. Take the example of financial inclusion. You have seen various steps, one after the other, continuing the process of inclusion and taking it to higher levels. In that process, particularly after the pandemic, the effort has been to ensure growth and its momentum. Unless that growth happens, the benefits of development are not going to reach everyone. The government will have to do the heavy lifting, the private sector will then come in. So in that process, while the big ticket is to ensure the basic principle is followed, and you are ensuring a bigger amount each year for the system and economy to absorb by way of capital expenditure, you also need to ensure that pockets where development has not reached are identified.

That is why what was started four years ago as aspirational districts is now being considered for 500 blocks. It is going one step farther to ensure develop­ment saturation happens. Similarly, when we looked at the PVTG (Particu­larly Vulnerable Tribal Groups), we have allocated ₹14,000 crore, which is not a small amount. These are ways in which details were worked out to ensure the developmental indicators we measure are not visible only in obvious areas. They should be measurable in far-flung and remote areas as well.

‘A lot of work has gone into the details of this Budget. Since 2014, Budget schemes have never been in isolation. Take the example of financial inclusion. You have seen various steps, one after the other, continuing the process of inclusion and taking it to higher levels. In that process, particularly after the pandemic, the effort has been to ensure growth and its momentum. Unless that growth happens, the benefits of development are not going to reach everyone‘

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The package that has been devised for Vishwakarma is also intended to achieve similar results, to bring people into the formal economy?

It is one thing to skill young people finishing school or college, it is another to look the other way, at people who, over the centuries—who are com­munities skilled in some craftsmanship—have continued doing what they do without many of us reach­ing them to improve their skills, marketing, and providing neces­sary facilitation. That is why while the term “Vishwakarma” is used in a very generic sense to encompass people who work with hands and tools, there should be no confusion that the scheme is limited to those communities which have been named Vishwakarma. It is going to include them and others who have traditional skills.

Is there something on skilling on demand, in the sense of something like MGNREGA, if you want to upskill?

That’s right. The e-shram portal is something through which this will be facilitated. If there is any­body who during the pandemic was working and went back to the village and now wants to return to the city, then such a person can demand assistance.

When you spoke of schemes not being standalone, were you refer­ring to assistance not being limited to one aspect, like finance, of the beneficiaries? There seems to an effort to close the circle by also accounting for skills, marketing, etc.

The entire scheme of things that an entrepreneur may consider. From the starting point where he needs raw material to instruments needed for upgrades and adding value and then looking at ways to brand and profes­sionally run a business. And after that, finding the best price. All this will be helped by professionals who can sit with these entrepreneurs.

‘While the term ‘vishwakarma’ is used in a very generic sense to encompass people who work with hands and tools, there should be no confusion that the scheme is limited to those communities which have been named vishwakarma. It is going to include them and others who have traditional skills‘

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Are you confident that society is ready to accept the shift in think­ing with the focus on empower­ment rather than only entitle­ment—in the light of various schemes and initiatives over the last nearly 10 years devised by the NDA government?

Perhaps these words are not being used. They [people] are saying we need opportunities; they do see that if they have better skilling then they can earn more. They are also looking at how to do things in their homes [native places] while earlier it was: Look, there are no opportunities here, so I am going elsewhere. Now a person is prepared to consider: Why can’t I do something where I am? Identification of opportunities that lie within one’s immediate neighbourhood is also creating opportunities for people to become entrepreneurs. That is recognised by institutions, banks, and therefore also by agencies and departments of government.

So if you were to read this as people moving from entitlement to em­powerment, then yes.

Even in your tax proposals, you are giving people the option to choose, it is also similar.

Yes, absolutely! That is what I also tell people who say that because of the emphasis on the new tax regime I have disincentivised investment, insur­ance, and so on. My reply is that I don’t think we should judge the assessee. If a person has more money in hand then such a person can figure out where to put it or how to use it. Rather than saying that incentive lies in a particular option. A person can prioritise for his family. How can the government be the better judge? So these changes give confidence to income taxpayers that they have more money post-tax and they know what to do with it.

‘Earlier, people thought: look, there are no opportunities here, so I am going elsewhere. Now a person is prepared to consider: why can’t I do something where I am? Identification of opportunities that lie within one’s immediate neighbourhood is also creating opportunities for people to become entrepreneurs. That is recognised by institutions‘

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Will it be fair to say that the government has taken note of the bur­dens shouldered by taxpayers in the last few years when incomes were hit? Was this something you kept in mind?

There are two reasons. One is that for now, for a considerable number of years, the direct taxa­tions had to be made simpler, more attractive and less burdensome from the point of view of compliance. We started this two years ago. But people felt there were insufficient attrac­tions. Since then we have been looking at ways to make taxation more attractive without the system of exemptions and other things. That is why we have brought in changes to the new tax regime. That is a primary reason we have to bring in a simplified direct taxation system.

The other reason, of course, is the middle class. But we did not at any stage raise taxes. But even then it was felt that not much was being done for the middle class. So, it was felt that when inflation went up—it is now coming down—this section felt “we bore the brunt” as these incomes are determined, they are not flexible. So, theirs was a view that “we did not get any benefits” although an afford­able house, better savings rates for seniors, assistance to MSMES… all this should count. But despite this, the sense was “you have not given us anything”. And the recent spike in inflation that persisted for a while was also there. That is the second reason.

There are certain structural issues. The pension and salaries component is sig­nificant. Now there is also a demand for the old pension scheme. How does one negotiate these issues?

At the moment I am not thinking about it.

‘I don’t think we should judge the assessee. If a person has more money in hand then such a person can figure out where to put it or how to use it. He can prioritise for his family. How can the government be the better judge? So these changes give confidence to income taxpayers that they have more money post-tax and they know what to do with it‘

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There are mentions of the proposed use of digi-lockers for MSMEs and other businesses to store compliance-related documentation that can be shared with regulators. What is the objective?

It was actually introduced two years ago. It is about compliance. How many times will you show records to people, make copies, and deal with authorisa­tion? Also, above all, it’s a question of safekeep. It has multiple uses; once permission is given, it can be used by anyone who has something to do with you. If technology can be enabled to achieve this, without losing confiden­tiality or privacy, then we are building on it. It is also ease of living.

It will also be tamper-proof? Records submitted cannot be altered?

That is right.

We are looking at a digital backbone for many areas now. It seems to be providing great opportunities—to improve gov­ernance and change lives. Can you explain how this has been envisaged?

It brings in an element of transparency. An India-like economy, unlike the developed economies of the West, has always had this problem of absence of transparency. It always had the problem of speculating on what is the actual as different from what is being spoken about. There was no credible information on the number inside and the number outside. Digitalisation has given us the advantage to formalise the economy. The more you expand it, the more inclusion happens, more formali­sation happens. So every possible niche area where you can digitalise, bring that into the formalised areas, it is better for people as well as the country. The Indian economy is a multilayered economy. The more and more you get it, the more it opens up for you. We are using every opportunity to digitalise eco­nomic activities.

‘Digitalisation has given us the advantage to formalise the economy. The more you expand it, the more inclusion happens, more formalisation happens. So every possible niche area where you can digitalise, bring that into the formalised areas, it is better for people as well as the country. The Indian economy is a multilayered economy. The more and more you get it, the more it opens up for you‘

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One of the allegations of the opposition is that the government has reduced social spending and it may not be enough to create jobs. Is it because you anticipate there will be reasonable levels of employ­ment because of the large capex infusion?

This charge has no basis. The allocation on education has not come down. Health allocation has not gone down. On the contrary, it has gone up. It has now gone up to ₹83,000 crore. Allocation for education was ₹1 lakh crore. It is now more. So the question is: Where are you finding the allocation lower in the Budget? And MGNREGA is a demand-based programme.

You have to see the issue in a different perspective. One, the large capex infusion is certain to create unprecedented employment opportunities. Two, programmes like the PM Awas Yojana, which has been allocated ₹79,000 crore that is 66 per cent higher than last year, will hugely contrib­ute to the creation of employment. Who are going to build these houses? Workers in the sector will benefit from this scheme. The opposition will never talk about the massive allocation for the PM Awas Yojana.

‘Programmes like the PM Awas Yojana, which has been allocated ₹79,000 crore that is 66 per cent higher than last year, will hugely contribute to the creation of employment. Who are going to build these houses? Workers in the sector will benefit from this scheme. The opposition will never talk about the massive allocation for the PM Awas Yojana‘

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There are several references in the Budget that can be seen as part of a project or effort to decarbonise.

Decarbonisation is not the only issue that will dominate the climate change debate. There are many aspects. On that entire board, there are several pieces as in a jigsaw. Everything will have to fit—being done at different points of time or at the same time. If you are providing oppor­tunities for electric vehicles (EVs) for public mobility and scrapping polluting vehicles, you need to ensure there are enough charging stations. We will also have to provide funds to the petroleum and natural gas ministry, not to make up for the losses of the oil-marketing companies but to see how the transition from fossil fuel to sustainable renewable energy is going to happen. They have to make their re­fineries adapt to the changes in which fossil fuel elements are removed and renewable is introduced. They will have to provide funds to oil companies to promote biogas, for blending of ethanol. So, these are not standalones. These are part of the jigsaw. GOBARdhan incentivises biogas production in the country.

‘Decarbonisation is not the only issue that will dominate the climate change debate. There are many aspects. If you are providing opportunities for electric vehicles, you need to ensure there are enough charging stations. We will also have to provide funds to the petroleum and natural gas ministry, not to make up for the losses of the oil-marketing companies but to see how the transition from fossil fuel to sustainable renewable energy is going to happen‘

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You have expressed your determination to follow a certain fiscal deficit reduc­tion path. This is happening in a situation full of uncertainties. Is the reduction of subsides and the belief in strong domes­tic demand reasons for your confidence?

There is no doubt that the revenue buoyancy that we have kept at a conservative level gives us the possibility of good revenue—both direct and indirect. The efforts being made to plug loopholes, avoid evasion, and also steps taken to correct course through the use of AI, are all giving me that confidence about revenue. That’s one side. On the other side, we have not reduced any expenditure for any department. Unless a particular department told us that it did not require funds under a particular head, there has been no reduction in allocation. When revenue expenditure remains at reasonable levels, I have the confidence that I can do fiscal consolidation without causing pain to anyone.

The Budget has given a major push to agri-tech. The use of technol­ogy could bring major changes to the way the sector has conducted its affairs so far. Will farmers in states like Punjab, who are resistant to change, give up their opposition?

Leave that debate aside. This latest initiative is aimed at making things accessible to farmers. Did they have the benefit of information about agri activities? Did they have the benefit of choice? Did they have the required access to credit? Is it restricted credit? It is these we are addressing. By giving ₹20 lakh crore for agri credit, we are ensuring that they have enough money in their hands. The digital platform will help the farmer decide where to get better quality seeds, it will open new markets for his or her produce. We want people to move towards natural farming. We are not forcing anyone. The opportunities provided in the sector are certain to bring big benefits to farmers. The Krishi Vigyan Kendras and the Cen­tre of Excellence for Millets will aid the efforts of millet growers in semi-arid conditions. It doesn’t require so much water; the soil need not be very fertile. These semi-arid places today grow most of these valuable grains. Today, millets are the most sought after grain all over the world. Quinoa grown in Latin America has been flooding the market. We are not flooding ragis or other millets in our own markets.

‘There is no doubt that the revenue buoyancy that we have kept at a conservative level gives us the possibility of good revenue—both direct and indirect. We have not reduced any expenditure for any department. When revenue expenditure remains at reasonable levels, I have the confidence that I can do fiscal consolidation without causing pain to anyone‘

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The government has been repeatedly telling the private sector to invest more. Do you think private investments will increase in the days to come?

I certainly think so. It is one thing to comment on industry that we knew in the past and now. There is an argument that there is a reverse of globali­sation and capitalism, and so on. But the fact is that industry is no longer looking at expanding capacities alone. They are not looking at establishing one more plant to increase capacity. They are now transitioning in the ways they produce goods and services. They are transitioning to next-generation technology. They now need people to handle the new technologies. This will raise demand for skilled manpower. Their decision-making is no longer linear. They are all working to be there at Technology 4.0. There has been a major shift in the way industry is responding to the changed times.

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PR Ramesh

PR Ramesh is Managing Editor of Open

Rajeev Deshpande

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