The budget assumes growth of 7.5% next year and builds on the 10-point vision presented earlier, economic affairs secretary Subhash Chandra Garg told Vinay Pandey. He expects the full budget in July will be a continuation of the exercise aimed at creating a $10 trillion economy. Edited excerpts:
The speedy decline in inflation had built up rate-cut expectations in the coming policy. However, there is a view that the budget has dented those hopes, given the fiscal deficit is roughly there. So, it doesn’t add any draft in that sense where there would be a material impact on inflation because of the budget. So, the Reserve Bank and the MPC (monetary policy committee) will take its own decision on the data. But this doesn’t seem to change anything adversely to my mind.
Are you going with the working growth assumption of 7.5% for next year?
We have taken nominal growth of 11.5%, 7.5% real and 4% inflation, so we are sticking to it. (For the) current year, the CSO (Central Statistics Office) number suggested (is) 12.2% nominal growth, which was higher than our estimate at 11.5% .
Key reforms like the public-private participation (PPP) policy, monetising public assets… these were ideas that were being discussed. But we haven’t seen much progress, especially on PPP policy, where private investment is something that’s of concern. What happened there?
PPP policy was not an announcement in the current year but there was monetisation of public assets. DIPAM (Department of Investment and Public Asset Management) has done work on it. I understand they have already prepared a note to approach the cabinet about this, so we should be able to see it soon.
What about the PPP policy?
PPP is a difficult subject considering the experience and it would require careful consideration. I think when the new government is there, we should be able to present a much more thought-out PPP policy and whatever changes may be justified. But otherwise, India’s PPP programme is going on reasonably well, even now in the roads sector, in metro and many other sectors but of course there is some need. This budget talks about creating infrastructure for 2030. A $10 trillion economy’s infrastructure is what is being talked about. So, we will have to pay a lot of attention on how we construct the infrastructure and much of that would have to be in the private and the PPP mode.
The budget has assumed dividend and profit of Rs 1.36 lakh crore. Does it envisage a hefty dividend from the RBI? Is this in the usual course or are you expecting something via review of the capital framework?
Nothing is assumed on the basis of the review of the economic capital framework because that report is not available. We have estimated only based on what is the current trend the RBI surplus would be. As you know the surplus is required to be transferred to the government in the form of dividend after providing for the necessary reserves and all. So that is what is being reflected.
On stamp duty, how far does the budget proposal go in addressing the issues on financial instruments?
I think this is a very far-reaching and enormously simplifying measure which has been brought out. Today, stamp duty is levied by different states, only the rate is decided by the Centre. Somebody levies on X document, somebody on the Y document, somebody through the stock sales, somebody through other arrangements. So, there is lot of chaos. The mechanism is very simple — something on the lines of the securities transaction tax (STT), in fact simpler than that .
Some are describing this as a poll budget. Do you think this is a directional budget?
I think it builds very well on the five budgets which had been presented by this government. It identifies where the stress is, which section needs support and what kind of long-term measures are required. The speech gives a great account of what has been done in 4.5 years plus and then where we are going. It also lays down a vision for the next 10 years. So, hopefully, in July would be a continuation, building on that vision and creating an India of a $10 trillion economy that will transform life and everything.
Source : PTI