With India’s economic indicators on a sound footing, the government could use the likely additional fiscal space created due to fall in crude oil prices and increase in tax collections for stepping up capital spending this year to spur economic activity, finance secretary Rajiv Mehrishi tells Prasanta Sahu. Mehrishi, who will retire on August 31, says the country’s GDP may have expanded in excess of 7.5% in Q1FY16. Edited excerpts:
The recent downtrend in the markets was due to external shocks. Do you think upcoming positive data could lift them?
Markets are determined by so many factors. It is impossible to say what markets react to. The country’s economic health should be seen on its own merit. The current account deficit, fiscal deficit and inflation have been controlled and indirect tax collection is increasing. These are all signs of health of the economy.
Do you expect Q1FY16 GDP growth to be better than the 7.5% seen in Q4FY15?
The figure (for Q1FY16) seems to be in excess of 7.5%.
Is India behind the curve in cutting policy rates?
What has happened in the past has happened. Monetary policy is the Reserve Bank of India’s domain and the government doesn’t want to interfere.
Will additional measures be required to boost revenue if the disinvestment target is not met?
We have adequate resources to meet the expenditure forecast. With a healthy tax revenue growth, we have a lot of cushion. So, I do not see the need for any further measures. In the first quarter of FY16, the tax collections have increased at a faster pace than projected. I hope the trend continues for the full year.
There could be some savings in fuel subsidies due to the fall in crude oil prices. How will this be used?
We would like to spend it on the creation of capital assets.
Banks say interest rates on small savings need to be brought down for better transmission of monetary policy.
The small savings figure has to be seen in the context of the overall funds which are available for deposits or lending with the banks. Is the percentage so significant that it actually affects the banks’ resources? I don’t think so.
When India will pay the $6.5-billion crude oil payments due to Iran?
Whether they want money slowly or over a period time, we don’t know yet. We have the resources to pay it. Iran has to give us a timeline for that. We are waiting.
How you will sum up your tenure in the ministry of finance and what are your future plans?
It has been extremely educative. I will spend time with my parents in Jaipur and fulfill the hobbies that I have — reading, writing and playing.