"We want to make growth inclusive"
A day after presenting the Budget, a combative Finance Minister P Chidambaram spoke with Editor Prabhu Chawla and Business Today Editor Sanjoy Narayan. Excerpts:
Q. Congratulations on your fourth successive budget. The response though has been mixed compared to the dream budget of 1997
| PICTURE SPEAK |
|“TEN YEARS AGO OUR DREAM WAS TO PLUG INDIA TO THE |
WORLD. TODAY THE DREAM IS TO MAKE GROWTH INCLUSIVE.”
A. Whose reaction are you talking about? Are you talking about the reaction of the corporate sector, I was there with them this morning and they have forgotten what they said yesterday and they sand a very different tune today. You must understand that every budget has an economic context and a political context. Ten years ago we had different dreams, to plug India to the world. Today the message was different. We have growth, it is not cyclical and that is a structural shift. We now want to make this growth inclusive. That was one kind of dream; this is one kind of dream.
Q. You have tried to balance sustained high growth and rein in inflation at the same time. How tough was that?
A. This is a new kind of challenge for India. In 2000-2001 for 48 out of
52 weeks inflation was between six and seven per cent. That low growth and high inflation while today we have high growth and inflation of around 6.5 per cent. We believe we can moderate inflation without affecting growth.
Q. You are saying that inflation is going out of control, so who do you think is responsible – the trading community…
A. I'll tell you what is responsible and then you can decide who is responsible…
Q. I want your judgement
A. I'll tell you. I can only tell you what is responsible. Credit growth, global commodity prices which are impacting Indian commodity prices and completely unexpected supply-side constraints all coming at the same time. One year you have sugar, one year wheat, pulses…But this year all have come together
Q. Even Onions…
A. Onions are seasonal, no monetary fiscal policy can deal with onions.
Q. Tell me frankly, is this your budget?
A. Yes it is.
Q. And you are happy with the budget?
A. Of course I am happy with the budget, I will defend it. I defended it this morning, and the channels carried it live in morning.
Q. But some of your allies aren't very pleased.
A. I can't speak for my allies. We have spent more money on agriculture, on education, healthcare, social security, water management…
Q. But there is no 'Big Bang' for the bucks in the budget?
A. I'm sorry, the budget can only provide the bucks. The bang has to come when the bucks are used to deliver the outcomes.
Q. But the education cess is going to impact tax payers…
A. Show me one person who says they won't pay the education cess. I am happy the HRD ministry has spent all the money it was allocated.
Q. You spoke about higher allocations but money doesn't reach beneficiaries.
A. Is that an issue that can be addressed in the Budget speech? It cannot. It is part of the governance system. I said so in my speech quite candidly. This is part of the Governance structure in this country and has to be addressed by systemic changes.
Q. But in the absence of such systems, pushing money down…
A. What do you want me to do?
Q. Rajiv Gandhi said only 15 paise out of a rupee reaches the poor. What is the figure today?
A. I think a lot more value is extracted from every rupee today than when the Late Rajiv Gandhi made that speech.
Q. Say five paisa out of every rupee?
A. I don't know.
Q. You don't have the figures?
A. What do you want me to do? Put the money away in the bank? We can't hold back and say we won't give the money because there is leakage.
Q. Wasn't this a good time to disband the exemption raj?
A. We have done, we have removed several exemptions. We have done it.
Q. What is the big idea of the budget?
A. The message of this budget is – growth is happening, let us become more inclusive. Let the gains be distributed to more sections.
Q. Don't you think individuals should got some tax benefits?
A. I don't think so and I will explain why. If you look at an individual tax payer, we recast the slabs only in 2005-06. So we have two things now, one lakh as a slab and one lakh as a savings basket. Even if you look for adjustment to inflation, the inflation over the last two years has not been ten percent.
Q. But you have been unfair to painters…
A. The art world has welcomed that, for the first time today the art world says that this brings everything out in the open.
Q. I think it was politically incorrect is when you talked about pets…
Q. When there are Indian companies it seems you want imported food for pets
A. I don't want imported food for pets, it is simply part of the schedule. I am surprised that my friend Prabhu Chawla does not share a sense of humour.
Q. The inclusion of ESOPs in FBT has business worried
A. Is ESOP a Fringe Benefit or not?. The question is how will the ESOP be valued and how it will be taxed, we have to wait for the rules to be made on that regard. Undoubtedly ESOP is a Fringe Benefit and must be taxed.
Q. Tell me, I have the feeling that you could have done a bit more if you wanted to…
A. (Laughs) Whatever I wanted to do I have done. I am very happy I have been able to do something for children leaving Class 8 and then dropping out, for the physically challenged and something for groundwater recharge, for HIV/AIDS, polio…We have been able to do something about that this year because we have the money. I could not have done it a couple of years ago.
Q. Would you have been able to do this earlier if the Congress had single-party majority?
A. That is not the way to look at it, I am bound by the NCMP, if the Congress party was alone in majority I would be bound by the Congress party's manifesto. Everything that has been done this budget is consistent with the NCMP.