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TARUN TEJPAL CASE SUSHIL KUMAR COVID’S RURAL SURGE

THE TRIAL ISN’T OVER THE DANGAL JUNGLE THE HIDDEN CRISIS
www.indiatoday.in JUNE 14, 2021 `75

THE
ECONOMY
IS A BIG
CHALLENGE
BUT WE
ARE UP
TO IT
EXCLUSIVE INTERVIEW
NIRMALA SITHARAMAN
Union Finance Minister

PLUS TOP ECONOMISTS’

BLUEPRINT FOR REVIVAL
 cover story i n t e r v i e w

nirmala sitharaman

“ The
economy
is a big
challenge
but we are
up to it”
The Indian economy could again be in the ICU after
the second wave of Covid, but Union Finance Minister
Nirmala Sitharaman sounds confident that
the government has it under control. In an exclusive
interview to Group Editorial Director Raj Chengappa
and Business Today Editor Rajeev Dubey, she outlines
the revival plan. Excerpts:
Photographs by Bandeep Singh

j u n e 14 , 2 02 1 india today 19
cover story i n t e r v i e w
nirmala sitharaman
How does it feel being the
Q
finance minister when all the
major economic indices,
including the GDP, are down?
Don’t you feel depressed
looking at the numbers?
A. I take it as a big challenge that
calls for a lot of focus and attention
to make sure that we are able to, every now and then, come up
with steps that will help people. I don’t want to say numbers
do not worry me, but I also have to think of the sufferings
of people on the ground and the tragedy that has struck so
many families. So, that is something lying heavy in my heart.
I have to respond in such a way that it is addressed even if not
completely resolved.
Q. The Modi government has got plenty of flak for
its handling of the second Covid wave.
A. I won’t blame anybody. The immensity of the problem, the
speed with which the second wave attacked us, people have ob-
viously gone through a very deep, tragic experience. It is natural
for the government to be questioned. We have to quickly extend
help to the people and ensure that the system is improved.
Q. Despite the relatively encouraging Q4 results,
India’s GDP contracted 7.3 per cent overall in FY21.
What is your assessment of the macro-economic
impact of the lockdown in various states during
the second Covid wave? How sure are you of ush-
ering in the economic growth India needs to get
out of the rut we are in?
A. First, it is too early to assess the impact of the second wave.
It’s different from last time; it is now being managed by the
states with lockdowns of varying intensity. The scale and in-
tensity of the second wave are sharply different from the first
one. Secondly, the Aatmanirbhar packages we announced—
some of them just before the Union budget—have shown re-
sults. The budget was prepared at a time when we were faced
with an economy affected by Covid but were not aware of the
impending second wave. So, it’s a budget tailored to meet the
outcome of a pandemic. The budget itself addresses it: the im-
mense increase in infrastructure spending, similarly capital
expenditure on health infrastructure.
Q. What makes you confident that despite the
impact of the second Covid wave on the economy,
Budget 2021 will be up to the task?
A. It’s an intensely prepared budget with a lot of inputs from
stakeholders, and the priorities placed right. The budget,
if seen through the year in true letter and spirit, will be up
to addressing many of the problems relating to, and arising
20 india today J U N E 14, 2 02 1
We have
made big Q. The Covid waves have caused mas-
provisions for sive job losses—some experts estimate
it to be over 20 million. The other major
infrastructure, setback is that after decades of decline,
which has numbers related to poverty have gone up
and there’s talk of new poor being cre-
had a bearing ated. Are you proposing any stimulus or
cash bailouts for them?
on jobs, and A. As I said, the budget was prepared in the con-
for public text of recovering post Covid without being aware
of the second wave. We have made big provisions
expenditure in for infrastructure, which has had a bearing on
health, which jobs, and for public expenditure in health, which
will make a big impact on the health indices. For
will make a farmers, apart from benefits from the PM Kisan
big impact on Samman Nidhi scheme, we have made wheat and
paddy procurements like never before at MSP
health indices (minimum support price) this year, through DBT
(direct benefit transfer). That means money go-
ing into the hands of farmers, which will have an
immediate impact on the rural economy. Also, we
are again extending the scheme for people to able
to draw from their EPFO (Employees’ Provident
Fund Organisation) accounts and ensuring that
children orphaned during the pandemic are given
a substantial amount as corpus for their future.
from, Covid. Alongside, we will keep interacting with Q. Experts say it’s time to give cash in hand to
the states and industry to see if there’s need for me to both the urban and rural poor. What is the gov-
Budget 2021, if do anything more in the course of the budget itself. It is ernment’s approach on this?
important to recognise that the GDP suffered a big con- A. You are insisting on knowing if this government
seen through traction in the first quarter [of FY21]. No other country’s wants to do what the Opposition has suggested—some
the year in true GDP, I am told, contracted 23 per cent. But I am im-
mensely thankful to the prime minister because he kept
sort of cash transfer to the people.
letter and spirit, holding consultations with stakeholders and sitting with Q. Not just the Opposition, even experts have
will be up to us and working things out. We came up with five differ-
ent [stimulus] packages. By the fourth quarter itself, we
recommended this.
A. We do intensive studies to see what can be worked out
addressing many made up for the negative growth. Moving to a positive and then take a call on how to provide further stimulus.
number couldn’t have been possible without the people If you are pointedly telling me that people have told you
of the problems accessing these packages. Above all, the people trusted cash transfers should be done, my answer is that I am
relating to, and the prime minister and his way of leading from the front. hearing a lot of people give a lot of different suggestions.
arising from, Q. GDP growth was on the decline even before Q. Some experts have also advocated printing
Covid. We’ll also Covid struck. So, is there a systemic or struc-
tural issue, beyond Covid, that needs to be
money to generate resources.
A. If you are offering that idea to me, I will take it.
keep interacting addressed?
A. Let’s take a long-term view while talking of issues
with states and like GDP. Look at how the GDP has gone up and down,
Q. What about the disinvestment programme?
A. The disinvestment programme is on track. We are
industry to see especially since 1991 after the opening up of the Indian committed to everything we said in the budget.
economy. If you want to pitch it just to 2018 and 2019,
if anything more consider the fact that we belonged to the ‘fragile five’ Q. So, there is no pullback on the bold new deal
needs to be done club of economies, which we inherited in 2014. To some
extent, GDP growth is cyclical. It has never been up and
you presented in the budget, including privati-
sation and asset monetisation?
up. I wish it was. A. Absolutely, you can ask me about Air India, BPCL—
J U N E 14, 2 02 1 india today 21
cover story i n t e r v i e w

nirmala sitharaman

The disinvestment pro-

gramme is on track and we
you can read out the entire list approved by the cabinet are committed to everything
and I will tell you it’s on track.
we said in the budget. Ask me
Q. And there is no reneging on privatisation about Air India, BPCL—read
despite pressure from organisations like the
Swadeshi Jagran Manch? the entire list approved by
A. It is absolutely on track. It was all laid down in the
budget and approved in Parliament, and I stand by it. It
the cabinet… it’s on track
is our budget.

Q. A recent FICCI survey indicates business

confidence has nosedived. Among their sug-
gestions is income-tax relief for the middle
class and reduction in indirect taxes for busi-
nesses. Your views?
A. I find this concern for the ‘middle class’ repeatedly
brought up. Don’t the middle class among farmers ben-
efit through government procurement? Haven’t middle
class homebuyers got relief through the SWAMIH
(Special Window for Completion of Construction
of Affordable and Mid-Income Housing Projects)
programme? Likewise, there’s the Emergency Credit
Guarantee Liquidity Scheme (ECGLS) for the MSME
sector, through which 20 per cent of their outstanding
credit is given as loan, without any security, for which
the government stands guarantee. Now, that 20 per
cent has been increased to 40 per cent. Aren’t there
middle-class people running them?
Q. Are you concerned that there could a
serious impact of Covid-19 spreading to rural
People have seen areas in the second wave?
A. Even this year, rural India is working, which is why
what the prime you have production of various crops and preparations
minister said about for sowing the next crop. The mandis are very active. The
prime minister had earlier told [chief ministers] to take
doing away with tax care Covid does not reach rural areas. The concern that it
frontline workers and those above 60 years. The Centre
bought these vaccines and distributed them free. In
April, we opened up vaccination for the 45-plus seg-
ment, again for free in government hospitals. Even
these doses were procured and sent by the Centre.
Since January, there were calls as to why the Centre
should do it, and that it should be left to the states. I
am not holding them responsible, but it was a credible,
repeated, loud voice. So, the policy was made in such
a way that we take 50 per cent of the vaccines avail-
able and keep them going free, and the states take the
remaining 50 per cent and do what they want with it.
And in this, if a small quantum has to be left for the big
hospitals, which can afford to buy and administer it to
their patients, that should be opened up—that’s exactly

Q. Government capital expenditure, espe-

cially on infrastructure, seems to be the only
engine working right now because exports,
private investment and consumption have
their constraints. How does one get the other
engines to fire too?
A. I would like everyone to get out of this ‘four engines’
blazing concept. Yes, the four engines of growth have
to work. Attributing all to one engine at the cost of the
other three is no longer valid. You may say they need to
work faster, be more energised, but to think that three
have collapsed and only one is running may not be
correct. Post September 2019, nobody knew what was
going to come. Corporate tax had been reduced and I
was accused by many of favouring the big corporates.
There was talk that they saved a lot, were offloading
their debts but not spreading their benefits. I have no
problem with them offloading their debts or earning
profits to use it the way their shareholders have ap-
proved. But it is also true that post that move, you find
many more of them going into detailed planning for
expansion, looking for FDI for joint ventures. Look at
terrorism. There is a
sense that we mean
business and are not
here to harass people
the mergers and acquisitions that are happening, look
at the number of middle-class Indians wanting to enter
the stock market because they find transparent, well-
managed companies to invest their money in, rather
than the low-risk bank savings.
In terms of consumption, look at the rural Indian
consumption figures before the budget and now. It must
have slowed down a bit in early April, but tractor and
agriculture equipment sales and FMCG (fast moving
consumer goods) sales are there. I am not saying that
everything is hunky-dory, but we cannot think that it is
completely off.
would spread to rural areas was already there and, there-
fore, precautions were voiced and we are following them.
Q. Will you be revisiting the budget numbers
owing to the second wave?
A. Not at all. We are only in the second month of
the budget.
Q. Most experts say that the majority of the
population needs to be vaccinated quickly
in order to avoid another pandemic shock.
But the central government has come in for
flak, even from the Supreme Court, over the
vaccine policy, including the delay in placing
orders for sufficient doses and the confusion
caused by states also being asked to pur-
chase vaccines to meet their needs.
A. Since October last year, negotiations were on with
the vaccine manufacturers. The prime minister himself
went to the factories of vaccine-makers in Gandhi-
nagar, Pune and Hyderabad and encouraged them.
The inventory they held helped in a big way to launch
the vaccination drive on January 16 and inoculate all
what was done. This was a change brought about after
loud and clear voices from the state governments.
Q. What about placing orders early enough as
countries like the US did?
A. As regards not placing orders early, how could we
have given vaccines by January 16 unless the entire
backlog or stocks with the vaccine producers came in?
What they are producing is what is being obtained,
and that too is simultaneously being ramped up. We
are finding newer, idle capacities which can be used to
enhance production capacity, and because of which we
get more vaccines in June and even more in July. We
are also importing vaccines, such as Sputnik V, for
domestic production.
Q. Even for the universal immunisation pro-
gramme, it was the Centre that purchased
vaccines and distributed to the states. So,
why the change? The charge now is that with
states competing to procure vaccines,
manufacturers can jack up prices.
A. Good logic, but should you be asking that to me or to

22 india today J U N E 14, 2 02 1 J U N E 14, 2 02 1 india today 23

cover story i n t e r v i e w
nirmala sitharaman
the people who said, why should the Centre buy?
Q. Why did you listen to them?
A. Had I not, you would have asked me questions on
federalism. It is not for me to judge, especially when the
states asked for it and we heard them out and yielded.
Q. Why doesn’t the Centre take it over again
and end the confusion?
A. You have told me and I take it as a suggestion.
Q. The government is also facing criticism for
rising inflation, particularly the fuel prices. Is
there an option of cutting fuel prices?
A. On inflation in the prices of pulses, edible oils and
other essential commodities, a group of ministers have
been regularly going into the reasons and discussing
allowing imports while ensuring that our farmers don’t
suffer because of a crash in prices. They also make sure
there are no supply chain constraints or hoarding. On
fuel, the Indian prices are fixed almost on par with
global ones. As regards taxes, the central government
does not do it at ad valorem; it is a fixed rate irrespective
of the price of oil. What states get is ad valorem; with
every increase in the price of oil, they get more revenue.
So, the issue of fuel price is layered between the Centre
and the states. Above all, we have to remember that
the central government does not determine the prices;
these are determined by market forces.
Q. You infused enormous liquidity into the
economy, but that has also caused inflation.
What are your options in a ‘devil and the deep
blue sea’ situation where the economy needs
liquidity but inflation is raging?
A. Liquidity is necessary at a time when businesses
are trying to come out of difficulty. The RBI (Reserve
Bank of India) manages liquidity. I keep exchanging
views with them. DEA (Department of Economic Af-
fairs) works closely with me. We are in close coordi-
nation with the RBI so that sudden sucking out of
liquidity does not affect fledgling businesses. Banks
have been given enough leeway so that they can lend
as and when businesses approach them. The bank
situation and bank books have all definitely improved
so they are in a position to make provisions for these.
Lending is also happening with sovereign guarantee.
Banks know they are not worse off and have to extend
loans as per ECGLS, which we have now opened up for
more segments.
Q. In terms of ease of doing business, there
24 india today J U N E 14, 2 02 1
On inflation in the
prices of pulses,
edible oils and oth-
er essential com-
modities, a GoM
has been going into
the reasons and
discussing imports
while ensuring
farmers don’t suf-
fer because of a
crash in prices
were complaints about ‘tax terrorism’, apart CBI, ED and banks and conveyed that we have to be
from the ED (Enforcement Directorate), CBI a lot more professional about dealing with taxpayers.
(Central Bureau of Investigation) and CVC Banks have also realised that genuine commercial deci-
(Central Vigilance Commission) creating an sions will have to be appreciated and if something has
atmosphere of fear among entrepreneurs. gone wrong, it is for the customer and the bank to sort
How have you changed that perception? it out. So, this has not only helped in revenue generation
A. We have repeatedly held meetings with the CVC, but also in building a clear picture of what this govern-
ment intends to do.
Also, as committed by the prime minister, we have
brought in faceless assessment and faceless appeal for
taxpayers, and all because we have adopted technol-
ogy fully. Even when you go for an appeal, you do
There were calls not know who your assessing officer will be. In this
budget, we have made a significant change by ruling
since January to leave that no income-tax assessment record can be opened
[vaccine procurement beyond six years. People have seen that what the prime
minster said in terms of doing away with tax terrorism
and distribution] to has actually happened in so many ways. I think there
the states; there were is a general sense that we mean business and are not
here to harass people.
questions on why the
Q. Is the spike in GST (Goods and Services
Centre should do it… I’m Tax) collections because people are scared
not holding [the states] of raids and are voluntarily paying up?
A. It is true that our officers are using artificial intel-
responsible, but it was a ligence to look at data and seeing where the evasions
repeated, loud voice are happening. We are now able to not only spot where
the problem lies but also trail the connections. At one
go, you can point to a shell company that has done some
evasion or gamed the system. From there on, the leads
are automatically generated through technology and
you are able to trace seemingly unconnected people.
This has made people realise that they cannot remain
untraced and it has helped raise more revenue.
Q. Do you think Covid has caused a dent in
the spirit of federalism, especially the tussle
over GST?
A. What tussle? I would like the media to be better
informed about a federal body like the GST Council.
When finance ministers of states—some of them chief
ministers holding the portfolio—meet, there will be
discussions, rebuttals and arguments, but that is the
forum for that. Is that a tussle or a dent in federalism?
The GST Council is the body for discussion under a
federal template. When we said a Group of Ministers
will decide on the tax exemptions for Covid treatment
items, is that an amicable way of arriving at a solution
or adversarial? To the credit of every member of the
GST Council, they are being absolutely statesmanlike in
their behaviour.
Q. Has there been a swarm of NPAs after
ECGLS and the incentives and deferments
that have been allowed? Are banks and the
finance ministry concerned?
A. No, if you look at the steps we have taken. We
formulated the ARC (Asset Reconstruction Company)
model in such a way that NPAs (non-performing assets)
will be shifted to a holding company, which, after due
diligence, will invite asset investment funds to bid for it
and take it. So the way we have planned it is that banks
are sure that those NPAs which have been around for
quite some time—not Covid related—will find their way
out and they will get their due share at first go, in some
part, and at the final stage when it is getting sold out.
The rest of it will come to the bank.
Now, during 2020, we suspended those sections in
the IBC (Insolvency and Bankruptcy Code), so no one
can take people for insolvency because of Covid-relat-
ed failures. It has helped and now, we are clear that
with IBC, ECGLS and the additional support being
given, many of them will be able to survive and move
towards better days. There is a continuous monitoring
of the stress levels of commercial operations by banks.
I am also asking the ministry of corporate affairs to
deal with companies and understand the stress level
that they are finding in the markets. So, through the
corporate affairs ministry and banks, ministries are
doing real-time monitoring. With that, we are able to
address that problem and prevent people from falling
off the cliff. n
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