Budget 2022 seeks to establish steadiness and predictability, says FM

What was the salient aspect of this year’s budget for you?

We planned last year’s budget to make up for the impact of the pandemic. We increased infrastructure spending, and established a resilient road to revival through public expenditure through inland waterways, roads and airports. We believed that this was the right road. But the second wave of the pandemic hit us right after last year’s budget, which had a devastating impact and was not in anyone’s assessment. If you see last year’s budget and this announcement together, you will realize that both are crucial. Last year, we made a number of policy announcements such as widespread privatization of sectors for the first time. We made an honest admission that in several areas, the government should play a smaller role, but those businesses should remain active and not shut down. That is why we needed to bring in equity capital through privatization. These policies were also announced in the last budget. There were no discrepancies here, and this transparency brought a new layer of authenticity to the budget. All such aspects have been continued in this year’s budget as well.

I jovially stated that in cricket, the opening batsman scores big. Then, at the closing, the batters should hit as many sixes as possible. However, in the middle, it is important to keep playing steadily, and there should not be any topsy-turvy movement in this phase. There should be a policy of steadiness and predictability in this phase, which is what this budget brings.

We have not made any changes to taxation, and on top of this, have made futuristic plans for the next 25 years.

In the run-up to the budget, you’d introduced a moniker that this is a once-in-a-hundred-year budget. This year, given your T20 analogy, how’d you characterize this year’s budget?

When I made that statement, I’d said that a once-in-a-hundred-year pandemic has hit us, and we’re preparing for it in this budget. But, it was misinterpreted from there—the budget was being prepared in a once-in-a-while situation.

This is a budget for continuity, for sustaining the stimulus that has been given. We want to honestly undertake public investments in asset creation, public infrastructure expenditure, and only through this, we feel that there will be a crowding-in of private investments. So, the virtuous cycle can happen only with the government leading the way, and we have unhesitatingly come forward. Otherwise, within one year, capital expenditure going up from ₹5.5 trillion to ₹7.5 trillion is not small. Within this amount, we have given ₹1 trillion to the states as a 50-year, interest-free grant. This is over and above the borrowing limits given to them and, therefore, it’s not a reduction in what they have. On the contrary, it’s much more than what has been given to them through the Finance Commission.

You’ve talked about how public investment should catalyze private investment. But, we’ve known for the last 10 years or more that this hasn’t been happening. Is this where India Inc. will discover its mojo?

I can already see signals in that direction. I think there are many other compulsion points and reasons why India Inc. will have to come forward. We are leading from the front and spending, and want to have private investment crowding in. But, this is also a time across the world, there is a lot of churn in the way the manufacturing or services sectors have formulated their business models. Such models are changing. There is a lot of artificial intelligence (AI) coming in, and robotics is taking off. In a country like India where demographic dividend exists, and you have a reasonable number of graduates and trained manpower for upskilling, there has to be a good blend of robotics and AI, as well as employing people. This is the time when the industry should reset.

You’ve said that PM-Kisan Yojana will remain, for which you’ve made provisions. Minimum support prices (MSP) will also remain.

MSP will not just remain, but today we are seeing more procurements than ever before. In the past four or five years, MSP has continuously paid the highest to farmers in terms of rate, quantum procurement and direct benefit transfers.

Earlier, India used to have a problem of never having enough resources. The growth strategy in this budget is capital investment. A back of the envelope calculation suggests that at least ₹20 trillion of resources are available, which means that you need about ₹60 trillion of budgets in mind. At this stage, we do not have such shovel-ready projects. Do you think this poses a constraint on growth?

I don’t think so. After the introduction of the National Infrastructure Pipeline, which was in end-2019 and early-2020, we have been adding a lot of projects to that list. Many states have come with well-designed projects which are going to move forward. Over and above this, there is also a keenness among states to compete for renewable energy-related projects. There are many states coming up with very doable projects.

Also, when sovereign funds come to India, they are looking for projects that are scalable. They don’t want to invest in 10 projects, but would rather invest in two. We’ve also given them a lot of fiscal benefits. The emphasis that PLI has brought in, businesses have understood that it is for incentivizing production at scale.Therefore, I see the approach to large projects, which have multiplier level impacts on immediate job creations, and keeping that sector alive for the next 15-20 years. There is a lot of interest in states. The success of PLI in the last one year will tell you that doable projects are very quickly coming in from all sectors.

There are certain new things in the budget and a lot of focus is on digital technology. Can you share details as to what is going to happen in the next one to two years in terms of the digital economy?

You know that during the last corona time, the masses have proved a lot can be done through digital. Adapting to digital payment systems is a classic example. So, there is this interest and capability in the citizens, which if we fully utilize, will benefit everyone. I believe we will get a lot of benefit in the way to formalization. And the citizens, considering its benefits, want to walk this path. With optical fibre reaching places, people are understanding the benefits of it. The weavers and artisans are benefiting from it, as they are getting access to the market through digital modes, even when they were not able to market otherwise. Our informal sector is very strong but to make it formal will benefit everyone.

Can we get a clarification on the crypto tax? You are basically recognizing crypto as an asset class and denying it as a currency. Isn’t it?

I am not doing any of that. There is a process of consultation, which is going on about crypto, that’s the first thing. Before the consultation is completed, I won’t be able to do anything on regulating them or formalizing a framework for regulation.

Second, everything that is crypto cannot be a currency. What is a currency? A currency is something which is issued by authorities—with government or central bank consent. If they issue something which is digital only then it can be currency. What happens in the world of crypto otherwise is that they are creating many asset types and also using the distributed ledger technology. All of them are not necessarily currency. Now we have made provision for the RBI to issue digital currency and that will be based on a certain value of gold or money or government assets. It will be asset-backed. It will be sovereign-backed in a way. So that is what is a currency. We don’t know how we are going to regulate the rest of them yet because consultation is going on.

Are you anticipating a pleasant upside in the next fiscal with the contact economy coming back, now that the vaccine drive is close to ending?

Yes, but equally, I’ve made a provision for helping the hospitality and contact-intensive sectors. I’ve just mentioned it as hospitality and related sectors, because I have not defined them. We’ve made a provision of ₹50,000 crore of sovereign guaranteed loans to be given, which is what we did with the ECGLS, which was a successful way of helping the MSMEs. Similarly, we want to treat (have a treatment given for) hospitality. For that additionally, ₹50,000 crore has been given.

What is your message for the middle class, which has also suffered in this pandemic?

I fully recognize that every section of the society has suffered, the middle class has definitely suffered. But when we talk about the middle class, I understand, you understand, all of us understand and each of us also perceive that there is an element of middle class in us also and therefore we understand the element of suffering. But yet, we also belong to some other group.

For instance, if you or your brother or your son start a startup, and he gets benefits, isn’t that middle class? If his children are going abroad and if I give them all the facilities to transfer money, for their education abroad and also give them a passport which is going to be futuristic and ensure that when they come back they can have a skilling programme, and I also make sure that high-class universities are set up in India, is that not addressing the middle-class? And similarly, don’t we think that farmers are middle class? Will they not get benefits? Will we think that a person running an MSME is not middle class?

A part of this interview has been translated from Hindi. The full interview is available on Doordarshan.