FM Nirmala Sitharaman on reforms: Difficulty is not taking a call but in moving forward

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November 17, 2019 1:49 AM

For instance, if input costs are high, whether it’s electricity, whether you want to buy a piece of land to set up your whole thing, mutation, everything has got a long way to go in terms of becoming easy to do business.

FM, Nirmala Sitharaman, reforms, rcep, modi 2.0, FTA, free trade agreement, Arundhati Bhattacharya, sbi, hdfc bank, economy news, industry newsFinance Minister Nirmala Sitharaman in conversation with The Indian Express National Opinion Editor Vandita Mishra and Executive Editor (National Affairs) P Vaidyanathan Iyer

On whether the govt didn’t join RCEP under pressure
No… it is not suggestive of India looking inwards, that we are shutting the doors. After all, the ASEAN treaty is still active, the FTA with Korea, with Japan, with Singapore, are all on. We are actively engaging with global trading communities and, in fact, one of the things that I had announced was that we will form a group to make sure that we will talk to investors, companies which want to get out of China (or) be there but also look for an opportunity in any other country. So engaging with other countries, trading, linking with global value chain are all intact. We are not shutting any of that but we also cannot conclude an agreement (just) because we will be seen as an outlier. We need to take a call as a country to be part of a group. You can’t just walk into a treaty and leave the industry to face the music afterwards.

On what corporates need to do to stand up to competition
I don’t think I want to say it as a message to the corporate sector but the fact remains that Indian industries’ competitiveness is still subject to a lot of factors, which are extraneous to them. For instance, if input costs are high, whether it’s electricity, whether you want to buy a piece of land to set up your whole thing, mutation, everything has got a long way to go in terms of becoming easy to do business. And if all that has still got to be corrected, it’s also not right, therefore, for me to think industry has got a long way to go. I certainly will apply my mind to say, how can I do things which are going to make their input costs come down.

On why the govt is not taking tough calls on reforms
The difficulty in taking a call is not at the negotiating table. The difficulty is in moving forward with reform-based actions in our country. If I am able to make it possible for industry to be able to apply and get their business going, those are the things in which I am sure we will show that the commitment for reform happens fast and that’s where this mandate given to Modi 2.0 will help. And if we are accused of having not done enough in the last term, you are equally aware as to how many attempts were made, how many times we couldn’t get past a certain number in the House and so on. But now, we have every reason to say we will push forward with those reforms. Let’s say we missed the bus last time but we won’t miss the bus now.

FM, Nirmala Sitharaman, reforms, rcep, modi 2.0, FTA, free trade agreement, Arundhati Bhattacharya, sbi, hdfc bank, economy news, industry news(Left to right) Hemendra Kothari, Chairman, DSP Investment Managers; Deepak Parekh, Chairman, HDFC Ltd with wife Smita Parekh; Arundhati Bhattacharya, Former Chairperson, State Bank of India

On companies using corporate tax cut to deleverage
When we have taken a call on the corporate tax cut, it is not just to bring it down which was a promise given earlier, we fulfilled it. That’s one, but second is post that if the companies are deciding to use it for deleveraging and not really move forward, I’m not sure it is the right time for us to even take that call yet. Companies will look at it in optimally utilising what they got out of it and the company boards decide that. For me, to also presume that everything that they have gained because of the cut in this tax will have to be necessarily reinvested immediately may also not be right. It’s for the boards to prioritise, and I wouldn’t say deleveraging is a wrong thing because if you have to come out of a certain stress situation, why not? But post the stress is when they can take even more, let us say, productive decisions which will have repercussions on all of us in the sense of the market, the sentiments, the dividends, and so on. So I wouldn’t grudge if companies take a call to deleverage. But post that, of course with some time lag, there will be decisions favouring newer investment, expansion, and also passing as dividend.

On whether delinking economics from politics is no longer working
It’s not possible for any political party, particularly which is ruling in a particular state, or let us say in the national government, to delink any subject. It’s not their choice. Now it’s not possible for whichever — be the government, centre or state, to say, ‘Look boys, I don’t want to talk about the economy at all but give me a vote on nationalism’. Is it possible? Is the voter going to be as much indulgent with you to say, ‘Alright, Modiji doesn’t want economy, so we won’t talk about the economy’. I mean who are we trying to convince?

On whether India has to reconfigure its economic design
India’s economy has its own signature. You really cannot undermine the role that the small and medium sector plays in every aspect of the economy. Second, we have a large domestic market. Whether in 2008 or even before that, if India faced fluctuations of the global economy and took the shocks, it was because you had a fallback on the domestic market. Third, whether we want to subscribe to this view that computerisation takes away jobs, it creates newer jobs too. Therefore, I am not worried about computerisation or technology coming in our lives, many from our Indian industry are happily adopting that. The change is happening, there is a lot of churn and that has an effect on the economy.

On whether trust in the financial sector is an issue today
This is a very critical question in the light of what is happening in the Punjab & Maharashtra Co-operative Bank and, in fact, in the ministry, together with the RBI representative, the deputy governor level, has had more than three meetings. I am not coming up with a complete solution now itself, but I am telling you that we are moving towards better supervision, better regulation, and understanding of, let us say, take the example of co-operatives which run banks. I’m not indicating that everything is going to be touched, shaken up, or everything is going to be disrupted. I am only saying if co-operatives have had this, we are still looking at ways in which we can ensure the confidence that the public has in banks should be governed with that kind of a confidence too.

FM, Nirmala Sitharaman, reforms, rcep, modi 2.0, FTA, free trade agreement, Arundhati Bhattacharya, sbi, hdfc bank, economy news, industry newsGeorge Varghese, Group CEO, The Indian Express, presents a portrait illustrated by CR Sasikumar, Illustrator, Financial Express, to Nirmala Sitharaman

On the collapse of IL&FS and Jet Airways
…I don’t want one more institution falling off the cliff… I am saying that the entire government machinery is concerned as to why we won’t be able to sense this earlier so that when you try to redress the solution, it is not already on the cliff. It should be well before it…We should be able to, with honour, restore a company and allow it to function like always. We are working in various different capacities with various different ministries, regulatory bodies to see how best we can be more efficient, well in time, about assessing these so that we are not always firefighting.

On the dismantling of institutions and MNREGA
A centralised Planning Commission, which was dispensing to the states as to what they have to do, giving one-size-fits all kind of solutions, was disbanded. To think that the NITI Aayog has come in its place is not right. NITI Aayog is a think tank. Second, yes, MNREGA was criticised, yes, it was said that it is like a dole because it never created assets. It was very Keynesian — dig a hole, put the mud back into the hole, take the money because we don’t want rural unemployment. But what we have done is to make sure that every MNREGA activity has an asset creation component to it. So if you are implementing it better, if you are making sure that each time such an engagement happens there is an asset creation or value addition to an existing asset, it’s not the same MNREGA.

On states wanting to hire locals in an era of migration
I don’t know how it’s going to play out but I’m not sure if it’s sustainable. For example, in many South Indian states, in the agricultural fields, there are no locals available. So when governments take positions like these, I’m not sure how is it going to play out. So then you’ll have to seek exemption. You can’t stop economic activity.

On closing the Finance Ministry to journalists
I’m thinking about it and I’m asking, what have I done? Accredited journalists, please come. You’re meeting me, meeting her, meeting him, just send them an SMS or a WhatsApp, a mail, a call to say I am coming. I was at the World Bank, the International Monetary Fund, all of them have the same thing, the media is requested to seek an appointment.

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