The latest GDP projections came very late on the evening of January 31. The printing was already done. We did some quick calculations. It appeared that there could be a positive impact on fiscal deficit.
But, we need to look at the data more deeply. For now, let us stick to the budgeted targets.
Is a deviation from the fiscal consolidation road map a concern, given that markets and rating agencies will take note? Moody’s also said it is credit negative.
The fiscal deficit for the current financial year is only going from 3.34 per cent of GDP to 3.36 per cent. That’s no slippage. For the next year also, it’s not too high. Even if we stick to 3.4 per cent, we are on track. Next year (2020-21 or FY21), it will be 3 per cent — that is our target.
We are on glide path for fiscal consolidation. The current glide path requires us to shave off 0.4 per cent in one year. This has been done before. But, once the post-election Budget is finalised, we might have a better idea. In this Budget, expenditure requirements for the farmers’ income-support scheme needed to be accommodated.
If it comes to making an adjustment of 0.4 per cent in FY21, I would like to believe that the government of the day can take a call on that.
For FY20, your total revenue projections are around 14 per cent higher than the Revised Estimates (RE) for FY19. Your goods and services tax (GST) Budget Estimates (BE) are 18 per cent higher than RE for this year. Aren’t these projections too optimistic?
There has been a shortfall in the GST this year for many reasons. But hope the growth we planned for this fiscal year will be reflected in the next one. In January we collected the GST to the tune of Rs 1.03 trillion. If this trend continues, 18 per cent will not be tough despite rate cuts that have already been factored in.
How will you identify the beneficiaries for the farmers’ income-support scheme, as land records are not up to date? Also, experts feel Rs 500 per month is too little…
I am told the agriculture department has done the necessary work. The land records are all available for the small and marginal holdings. They have discussed with the states as well. That’s why the Centre gave its nod and money was allotted for this year itself. The criticism is misplaced as the money is in addition to the support already provided.
What will happen to tillers — the most vulnerable section among farmers?
It is rare that those who don’t have land do cultivation. They are the farm labourers. They are taken care of by the Mahatma Gandhi National Rural Employment Guarantee Act.
Do you have the machinery to identify workers in the unorganised sector with Rs 15,000 monthly income for the pension scheme?
This scheme is on a self-recognition basis. Through Life Insurance Corporation, the Labour Ministry
will set up a portal where these workers can self-declare. No subsequent identification system might be needed.
It is not a dole. It says you contribute for your life saving and the government will match that.
If somebody is prepared to save for his retirement pension, I don’t think there would be such a rush. It is targeted at all the labour force outside the organised sector. I don’t think any person in the organised industry will take this risk to take this additional pension.
My personal preference will be that labourers from the unorganised sector come in hordes to register themselves for pension. We don’t want to exclude anyone, but get everyone on board.
Did the team take a look the universal basic income (UBI) during the Budget-making exercise?
In my judgement, UBI is fundamentally not there for our country.
Why do you say so?
UBI assumes giving money to everyone. Why should it be there for everyone? What you need is to identify the groups or sections who need support. That is exactly what has been done in the Budget. Also, it is not basic income. It is a top-up. In that sense, it is a pioneering scheme.
Would it not have been a better idea to do away with subsidies and give income support to farmers for the purpose of fiscal consolidation?
Even in construct, that should have been additional to what is provided earlier. This is so because farmers’ income is currently not enough for a large section. Theoretically, subsidies to farmers may be transferred to their accounts at some point of time.
That is our estimation. We still don’t have numbers. That is for the RBI board to decide.
Your gross borrowing is Rs 7.1 trillion for FY19. Isn’t it too large?
We raise market borrowings for three main purposes — funding the Budget, repayment and for buyback. We have a larger repayment programme for the next year at over Rs 2.36 trillion. We plan for Rs 50,000 crore of buyback. For the fiscal deficit, we will be raising only Rs 4.2 trillion.