I've to be careful, am answerable to Parliament: FM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman held five press conferences last week to outline her government's Rs 20 trillion stimulus.
Finance Minister Nirmala Sitharaman tells Indivjal Dhasmana & Nivedita Mookerji that the government has made sure that mistakes committed during 2008-2013 are not repeated while announcing the Rs 20-trillion package. In a free-wheeling interview, the FM speaks about the extraordinary times, uncertainty related to the pandemic, industry stress, migrant crisis, and the government response to all this. Edited excerpts:



Critics say you have not offered the kind of income transfer that was expected. How do you respond to that?


My answer to these observations is that it is not that we have not consulted people and industry. Information that the Prime Minister himself collected from stakeholders came back to us, we looked into it, went to the departments concerned and talked to people who are experienced in these fields. We have learnt lessons from 2008 to 2013. We made sure that we don’t repeat the same mistakes. We have to be careful in the interests of the country. And I am not dealing with my personal money, I am dealing with public money. I have a huge responsibility to be careful. There will be a time when I will have to stand in Parliament and say this is what we have done. I have to be answerable for whatever I do. 


You talked about 2008 and 2013. Were you referring to banks giving money to all and sundry?


About that, and many others. With good intentions, you would have started something because the situation demanded it. But you should also know when to assess the situation and retract. You (the UPA government) did not. You just opened the floodgates and kept it open for a long time. At the end of the day, you had taper tantrum, double digit inflation and food inflation hitting the roof.


You promised a Rs 20-trillion package but delivered only one-tenth of it, which is just 1 per cent of the GDP. Wasn’t it a case of over-promising and under-delivering?


Many analysts can say many things and I respect all of them. But I’m doing this. Can I or can I not? Please allow me. If I have not heard any one, then you could have said that I did not even hear you. I heard, and after that I chose to do this. Wait till things develop as we go. There will be a time when I stand up and answer. 

Many sectors, especially travel, are disgruntled that they have not got anything. Is there anything the government plans to do to help these sectors?


I have not gone sector-wise. When I spoke of reforms, I did speak of agriculture. But the approach with which we have gone is to look at businesses, the hit that they have to face because of the pandemic and reach out to them to get some money in their hands so that when they re-start their businesses they have money to buy raw material or bear some fixed costs. That is why I have told banks not to ask for extra collateral and make it automatic for MSMEs. When we have widened the scope of MSMEs, every sector is going to get benefits. When I say MSME, I don’t say only those registered as companies. I have expanded it to everybody – be it limited liability partnerships (LLPs) or partnership firms. So, everyone will have some liquidity coming in. 


When is the next package--stimulus 6.0?


As we go along, whatever needs to be done, we are willing to do. We have to see as we go along, how industry is moving on, how people are responding, how economy is responding. I can’t shut any door. We have to be alive to the problem. 


Was the fear of rating downgrade a concern when you were preparing for the package?


Yes, that matter was discussed. We differentiated between the ratings in the past and now. If ratings were a concern some time in the past, say 2008 or at the time of atomic tests, India was uniquely placed while rest of the world was fairly normal. Therefore, rating was a big issue because it would hit you and not the rest. But now, can the rating agencies put India down with the whole world affected? It has to be a relative exercise.


Will banks be part of the strategic sectors where only four public sector enterprises will be allowed at most?


I will have to wait for the notification, which will tell us about the strategic sectors that we are naming. All the things that were announced will be notified at the earliest because we will have to be ready even before the lockdown is completely lifted. 

Will there be a timeline for privatising public sector enterprises in non-strategic sectors?


No. They will be privatised for sure but there will be no time line for doing so, as thing stands today. 


What’s the sense within the government? When can the lockdown be lifted? When will flights be allowed?


It’s very difficult to say. Trains, flights are one thing, some relaxation has already been given. But really do we know when this pandemic will go away? We don’t know.


Are you not confronting states when you impose conditions on their borrowing limit beyond 3.5 per cent of their respective gross state domestic product?


I’m not imposing the conditions. Those were discussed by even the Finance Commission. What are those conditions? One portable ration card. Is it not something which we want? Then, power distribution. After Modi government came to power in 2014 , the UDAY scheme was brought in with the intention to help every state ensure viability of discoms. Is it still not a problem? Look at the emergency with which I have to infuse Rs 90,000 crore for discoms. I could have spent this on something else. I am asking for that reform. Who is it going to benefit? End consumers – you, me, farmers, small units, businessmen.


Your proposed Act on inter-state trade in agricultural produce has also infuriated the states …


If a farmer in Karnataka thinks he can get better prices in Madhya Pradesh or if a farmer in Bihar produces best of non-basmati rice and wants to export, why can’t that be done? Is that against any state’s interests?  


Do you think the government has been late in addressing the migrant crisis?


Look at the trajectory. At the time of the announcement, the Prime Minister appealed to the people to remain where they were. We tried to make sure they’re given food, shelter and looked after health-wise. When the lockdown was extended, they were nervous about catching the coronavirus infection and worried about their families being unsafe. They started wanting to go. It is fully understandable. It is an emotional trauma. The Centre and states together decided to provide trains. The states can understand it better--they know where the camps are, they know where the shelter is provided. I must say that both the Union Home Ministry and the Railways together assured the states trains within three hours of their asking. Look at the disproportionality in this. By the time, a particular state could have a hundred trains, a few others would have two or three. Not that the number of migrant workers to the latter states were disproportionately less, they were roughly on an equal scale. I am not saying this to fault anybody. I think our systems have not seen a pandemic of this size. As a country, we have to learn lessons from this. There is no finger pointing. 


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Most of the reforms that you announced were announced earlier as well. What makes you confident that you will get through the hassles to carry out these reforms when successive governments had failed in the past?


With Covid-19, we all have realised that we are moving to a different India where all of us will have to facilitate one another. You cannot really have farmers where they are. Why should we restrict our farmers, especially when they repeatedly performed excellently against all odds. They should get the best prices. There cannot be a reason for holding back reforms in agriculture. It has to be a consultative process which has to underline the fact that we will be held responsible by our future generations if we restrict our farmers anymore.

The 1991 reforms were because of the balance of payments (BoP) crisis. Are you hoping to push through these reforms due to the Covid-19 crisis?


I think people will see reason. If 1991 was the BoP crisis, this crisis is even more intense, affecting directly every one of us and putting uncertain times before us. Everyone is equally affected. That magnifies the problem. Therefore, the change that is happening now is because we need a different kind of living style, working style, livelihood style. I think acceptability will be more now without obstructions as compared to say one year ago. 


Are we moving away from Manmohan Singh’s globalisation pitch when we talk of ‘Aatmanirbhar Bharat’ (Self Reliant India)?


The PM has himself made it clear. We will be depending on our own capacities a lot more, but that does not mean we will be more protectionist and more inward looking. We should be part of the global value chain with greater strength.


What are your plans to woo companies moving away from China?


I would rather look at it from the point of view of making India more business-friendly both for domestic investors and for those coming anywhere from outside. It is not just to attract investments but because this industry is required here. Ease of doing business is something we have been working very hard over the years. Unless you create an eco-system where compliance burdens are reduced, uncertainty in policies is reduced and taxation is futuristic as well as progressive, will business come? I need to create the ambience for investments to come in. I will focus on all those.


Isn’t the government sending out confusing signals to global chains such as Amazon this way?


That is something that we have to address. We can’t have uncertainty. We have to be giving them clarity that business can be done. There will be predictability of policies, there will not be burdensome compliance regime and so on.


Are you thinking of a Covid-19 Budget?




So, the numbers given in the Budget would be revisited only at the time of revised estimates in the next Budget?


As things stand, yes. Otherwise, how will I make any estimate? Uncertainty has not reduced a bit.


There are various estimates on the economic growth – five to seven per cent shrinkage this year. Has the finance ministry made any estimates for that?


No, we have not made any estimates. Yes, we are concerned. It is going to be really an exceptionally different year. But, how different and how low, it’s too early to assess. Every part of the world is affected, this is worse than what was experienced during the World War II, I think. 


What will be your broad message to industry at this point?


Tomorrow and the day after, I am interacting with the Confederation of Indian Industry and the Federation of Indian Commerce and Industry through virtual conference. The message is that we are with industry. We know that they are going through very stressful time, like never before. We are here to extend as much help as we can. We understand their problem. We are hearing their problems.


Will the one-year leeway on Insolvency and Bankruptcy Code dilute the process of insolvency?


Keeping IBC intact, it is also our duty to make sure businesses which default during this time are not dragged the next day after lockdown. Every business is going through a crisis. We thought of bringing this relief so that they are not frightened. This is not to undermine IBC. But if a law can be there, and businesses are not helped during a pandemic situation like this, it is insensitive. 


Are the government and the Reserve Bank of India mulling monetising the Centre’s fiscal deficit?


We have not even thought about it at this stage.


Yields have gone up after the government revised its borrowing calendar. Is the government mulling coming out with overseas sovereign bonds to tap the money at lower rates?


Yes, yields have gone up. We can’t be borrowing at these unsustainable rates. Yet, it may be too early to talk about overseas sovereign bonds.




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