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Budget 2018
Feb 08, 2018 10:27 PM IST | Source: Moneycontrol.com

Budget 2018 ranks high on Economic Affairs Secy Garg's list, here's why

Economic Affairs Secretary Subhash Chandra Garg touched upon the reasons why the Budget 2018 proposals will be beneficial for the India's economic growth.

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Asserting that Finance Minster Arun Jaitley's Budget 2018 "touches the widest possible mass of India", Economic Affairs Secretary Subhash Chandra Garg  has said: "This is the Budget which has reached the maximum people."

He also touched upon the reasons why the Budget 2018 proposals will be beneficial for the India's economic growth.

Verbatim text of the full interview

Q: Solar is one subject where a lot is possible but the Budget has not talked about it, why?

A: I have seen many Budgets in last many years. This is one Budget which is actually touching the widest possible mass of India. It touches farmers, it touches rural India, it touches almost every middle class, pensioners, salaried people, it touches industry, it touches small and medium enterprises, it touches the employers and the employees in this big space where the employment actually is generating.

So, if you were to rate, whether Budget has reached the maximum number of Indians, I think this is the Budget which has reached the maximum people. There is something in the Budget for almost everyone.

Let me take what you put out as possibly the two areas, one is solar and the other one is biomass methane generation. Even there you would have noted that there are specific provisions and proposals. For solar, there is a mention that the farmers do generate excess electricity using solar power in months when they don’t require the power for their own operations. The government and the state governments would work to make sure that such farmers are able to sell their surplus electricity to the grid.

For biomass and the agricultural waste, animal excreta and waste, there is a very specific proposal, which is that under a scheme called Gobardhan Yojana and that scheme envisages now that this vast amount of animal excreta, dung and all, and the agricultural waste, all these wastes to be converted into compost biogas CNG and the like products and mind you, not by the people themselves but by getting the entrepreneurs there and also tying that sale with the purchasers. For example, for bio-CNG the Indian Oil Corporation and others have expressed interest to buyout every kilogram of the gas such produced. So even there, there is a provision.

This is part of a very wider strategy of 170 gigawatt of the power generated through solar and wind. This has been a very big success in the country, where large plants of solar energy are being placed. Today you talk about 500 megawatt and 1000 megawatt as very normal power plant. I recall way back in 1999, I was in Rajasthan and at that time I had put up the first wind energy plant of 200 kilowatt. At that time we were talking about solar power of some kilowatts. Today we talk megawatts and gigawatts.

Now this is also becoming cheaper where decentralised power generation and use in local grids, in your own consumption kind of thing, in your own local community and even at the entrepreneurial level. So, you can put a plant, meet the local village need, including all commercial need, so that all is happening.

Solar and wind, solar especially is a huge priority of the government and is a huge success.

Q: The Budget talks about gold as an asset class but gold does not allow loan against bullion and coins, why?

A: You would have noted, the Budget makes very specific announcements and mentions about gold. Gold as an asset class, gold policy, gold deposit accounts, establishing exchanges for buying, selling of gold regulated by someone. So, there are number of announcements and the underlying objective over there is to develop gold as an asset class.

I am not mentioning the use of gold as jewellery which serves a different purpose. There is lot of preference for Indian to have jewellery which is fine. However even if we exclude that, there is lot of gold which is investment gold. Even the people who use jewellery to invest in, many of them or everyone to some extent intends that part of the gold as an investment. So, the whole objective of this policy as and when it comes out now, would be to make sure that gold as an investment, gold as a financial asset and gold as a tradeable asset becomes a very easy proposition to deal with. So, how do you do that? It requires gold standardisation.

In India, we have gold mixed up with everything. There are two or three standard definitions which have been brought in by the government. We have also come up with a gold testing apparatus. So, some of those things have happened but in a large scale you need to standardise gold. Those standardised gold, basically bullion and coins, those are then used for the investment purposes and that needs to be developed. It also requires wholesale infrastructure – bullion banks, storage vaults, all these need to come up. You have to set up a very good system where you can easily buy and sell gold without losing on both sides of the transaction. If you make the liquidity bigger, then the transactions become easier and the margins on trade becomes smaller, so that is what also you need to bring in.

Also read: Govt to finalise crypto currency report in two months: Economic Affairs Secy

Finally, visualise a very simple, very efficient gold deposit account in which a customer is able to go to the bank and open a gold deposit account by either depositing the gold which you have by obviously converting that into a standard gold first or you put in an equivalent money to buy at today’s price and then you put it there into that account and you are able to take that out at that days price or in the form of real gold whenever you need it.

So, all those things are being conceptualised and being brought up as part of a major policy reform on gold. I hope if we get it right and things become as good as is being conceptualised, then we will see in India true development of gold as an asset class.

Q: In agriculture you have amazing schemes but your MSP works only if the marginal farmer can sell at that price. If he can’t sell, he sells at distress prices, then how does the MSP work?

A: Price is one key component of raising farmers income and that is where this announcement for giving 50 percent over your cost of cultivation and we are going to use the A2 (actual paid out cost) and FL (Imputed value of family labour) basis of cost which includes all the costs which the farmer buyies or takes from and also includes the imputed labour cost. So, taking that cost as the basis, 50 percent is what you assure.

Again you mentioned rabi crop, wheat and rice, those already have – rice is slightly lesser than 50 percent but wheat is over 50 percent already, all other crops are also being sort of proposed to have 50 percent and most of the crops which don’t happen to be kharif crops, which incidentally are mostly grown by non-irrigated smaller and marginal farmers while wheat and rice are more organised bigger farms which are growing these crops.

I would point to you one major incentive, today why there is so much of preference for wheat and rice because these are the crops which have 50 percent margin. Why is there lesser preference for other crops because they don’t have 50 percent margin. So, if you provide this 50 percent margin to every MSP crop and there are 35 of them, then you actually take away the incentive for the farmers to grow only one or two or few type of crops. You give the incentive to him to grow whatever suits best for his land, best for his environment, so it promotes efficiency. It also promotes better cultivation. If that is so, this introduction is not only for improving farmer’s income but it is also to improve the crop diversification and crop efficiency. So, that is the larger intent of this part of the announcement.

Let me come to your second part, how do you ensure? It is true that declaring MSP at 50 percent plus cost is not enough. You declare it and then if you are not in a position to ensure it then there is no point and that has happened in the past. Wheat and rice – Punjab, Haryana, Western UP, Madhya Pradesh did have the procurement system in place and therefore the farmers were able to get it but other farmers were not.

So, what the government is now thinking and doing and there is a specific announcement to that effect, that the NITI has been given the responsibility to come up with the model which will ensure one of the two things, that either the farmers crop is procured so that he gets MSP or he is paid difference between the market price which he got and the MSP price. So, these are the two basic components of it.

The second scheme has been attempted and experimented in Madhya Pradesh under the name called Bhavantar Bhugtan Yojana, Bhavantar means difference of price. So, one of these two. So, those details we are working out. But it would be ensured that farmer either gets his crop procured or gets the difference, this is what is coming up. It is moving closer to a fixed price payment system which Telangana has recently announced. So, the crops which require to move up to 50 percent are essentially kharif crops, those kharif crops will come up now in September, October, November. So, we have 4-6 months’ time to get everything in place to make sure that when the kharif crops comes now the farmers would have the true benefit of this system.

Q: You have done wonderful things in health but where are the doctors?

A: I will have to draw your attention to a non-budgetary item. The government introduced the Medical Education Bill recently in the parliament, that is what is supposed to take care of the supply of doctors.

Q: Students going to rural areas?

A: No, it is again getting private enterprises, getting charitable institutions to establish medical colleges for bringing out more doctors and all. So, that is the way in which you can address. India does have much less doctors per lakh of population.

Q: That is because the licence raj in medical colleges has been extortionate.

A: That is sought to be dismantled through this.

Q: So you will allow for more doctors to be created?

A: Absolutely, it is needed.

India Union Budget 2018: What does Finance Minister Arun Jaitley have up his sleeve? Click here for live Budget 2018 news, views and analyses.
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