Nirmala Sitharaman Exclusive Interview Highlights: FM discusses budget, sheds light on disinvestment, systemic reforms, and more

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Finance Minister noted the dual impact of AI and ongoing global economic slowdown on skilled jobs and hiring. “The kind of job requirements that are expected of new recruits are also changing. So the people with old skillsets are now expected to have additional newer skillsets for entering into a certain area which till now did not exist,” Sitharaman said. Read here

FM Sitharaman stated that the government is open to the idea of disinvesting its equity stake in prominent PSUs like SBI and ONGC. Sitharaman expressed willingness to hold a minority stake, potentially less than 50 percent, in key strategic public sector companies.

Sitharaman highlighted the gradual release of government shares by DIPAM into the market, allowing private ownership to acquire them.

Read more here

FM Sitharaman expressed her concern that the Congress, as a national party, has aligned itself with an anti-Hindu party in Tamil Nadu. Read more here

The Finance Minister refrained from addressing the specific challenges faced by Paytm but expressed optimism about the fintech sector overall.

While avoiding comments on any particular company, Sitharaman acknowledged India's significant contributions to the fintech industry. She praised the youth's role in the sector and affirmed the government's enthusiasm to collaborate and support new-age firms in their growth. Read more here

Finance Minister Nirmala Sitharaman urged global ratings agencies to assess India's reforms comprehensively and emphasized the sustained macroeconomic stability. When questioned about potential upgrades due to impressive fiscal consolidation in 2024-25, Sitharaman expressed hope that ratings agencies would fulfill their responsibilities. She underscored India's commitment to ongoing systemic reforms, highlighting the positive outcomes despite challenges. Read here

Finance Minister Nirmala Sitharaman assures market stability in the capital gains tax regime, emphasizing Prime Minister Narendra Modi's preference for policy stability over quick changes. Sitharaman highlights PM Modi's inclination towards allowing policies to settle and play out, citing his track record of prioritizing stability and consistency in governance.

Read more here

The FM has not dismissed the possibility of providing tax benefits to salaried taxpayers in the full-year Budget for July 2024, assuming the Narendra Modi-led government is voted back to power.

When asked about the potential for a reduction in tax rates for the salaried class in the July Budget, Sitharaman refrained from making any definitive statements, stating, "I am not saying anything right now."

Read here

Despite facing challenges, FM Sitharaman emphasizes the positive impact of ongoing reforms, including pre-COVID Goods and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC), and the professionalization of public sector banks. Sitharaman also stressed the well-maintained macroeconomic stability and urged rating agencies to adopt a comprehensive approach in their assessments, considering multiple factors rather than focusing on isolated aspects. Read here

FM says:

- These are professional agencies and they take a lot of time to take decisions.

- Many of the current ED cases belong to the UPA era

- Room full of cash have been found during surveys and searches

- What explains tons of cash found

- Video shows in the bathroom, in the bedroom, in lockers tons of cash being kept

- Era is changing. People don’t like corrupt leaders

Finance Minister Nirmala Sitharaman states that the Reserve Bank of India (RBI) will determine the course of interest rates, prioritizing economic growth challenges. Read more here

Finance Minister highlights gaps in current economic indicators, stating that the impacts of digitization and connectivity on the rural economy may not be accurately reflected. The Minister suggests the need for newer indicators to provide a more comprehensive understanding, citing FMCG data as one aspect. The measurement of improved connectivity and digitization in rural areas is emphasized as essential for a thorough assessment.

Read more here

Finance Minister reveals the Centre's plan to present a white paper in Parliament soon. The white paper will scrutinize the repercussions of economic mismanagement in the previous regime, the FM said. Sitharaman emphasizes the lost decade and the widespread issues across various economic sectors during that period. Read here

Finance Minister expresses optimism about meeting the 2024-25 Budget estimate of Rs 11.11 lakh crore for capital expenditure. She states her confidence in the utilization of the increased budget, emphasizing high utilization in the amounts allocated to states. Read here

Finance Minister Nirmala Sitharaman affirms that the government's focus on reforms will continue and has yielded positive outcomes. Read here

The BJP government, led by PM Narendra Modi, expresses confidence in balancing inflation and robust growth. The Finance Minister responding to queries about the realistic 7 percent GDP forecast, highlighted the Chief Economic Advisor's rationale supporting the achievability of this target.

Read here

Finance Minister Nirmala Sitharaman asserts that discussions about government programs on the ground exemplify "secularism in action." She affirms the Centre's impartiality, emphasizing that projects extend benefits to all deserving individuals, without discrimination based on community differences. Read more here

It is difficult to talk about number of seats, we want to work for the people and hope to have their blessings in Tamil Nadu: FM

FM says:

- Repeated attack on Hindus in TN has been felt for a long time

- I don’t talk too soon and nor do I speak too indiscreetly

- My grief is a national party like the Congress has been decimated in TN and till today they are not capable of winning an election on their own

- BJP is of course a beginner in Tamil Nadu

- Congress does not condemn the anti-Hindu voice of DMK party

- Congress party in TN supports separatist, anti-Hindu and anti-Hindu activities

FM says:

- Would appreciate the RBI to work with stakeholders

- RBI has been steady and will continue to be steady is my hope

- RBI has been steady keeping growth in mind

FM says:

- Fintech is an area on which all of us are very enthusiastic

- Would not want to talk about one company

- India's contribution has been globally recognised

- Fintech is an area we will want to work with and would like to encourage

- I am not commenting on Paytm

Did not put out the white paper earlier as we did not want people to lose faith in government and institutions. So PM first restored the economy, which is why a white paper was not put out earlier: FM

FM says:

PM restored the faith and then we decided on putting the white paper

Policy stability is what the PM lays emphasis on

PM is never in favour of quick twists and turns

The biggest strength under PM is stability in policy: FM

Every area of the economy was ridden by problems from banks to minerals. This paper will talk about the economic mismanagement under UPA: FM

White paper to focus on the impact of the mismanagement of the economy during the previous regime. The white paper will talk about all the steps that were immoral and what kind of positive impact the right steps could have had on the economy then: FM

Managing Inflation is an ongoing job, it is not with a deadline, it has to to keep happening: FM

The committee (MPC) largely has been successful otherwise we would not have been closer to the policy rate: FM

No import in the last minute can help us if suddenly one particular crop is lost: FM

Direct taxation reforms are in. Direct taxation is something we want to ease for taxpayers: FM

College recruitments, IIM like campuses are important but jobs created in middle and lower order are not being counted at all: FM

We need to bring in data on India's employment both in formal and informal areas to see it on a wider base: FM

The kind of job requirements expected from new recruits also changing so they need additional skill set to enter a new area which earlier they did not need: FM

Indicators with which we are looking at the rural economy may vary, newer indicators may tell us a different story. FMCG data is one indicator. But better connectivity, and digitisation (in rural areas) are yet to be measured: FM

We are only focusing on indicators pertaining to the formal economy on employment: FM

We are seeing savings coming through in fixed deposits and middle class is looking at savings through stock markets, says FM

You are also seeing middle class looking at savings through stock markets, DEMAT accounts: FM

I am not sure I will be able to describe what is happening in the rural economy. Let us recognise there is a lot of shift in employment, let us recognise migration is now looking at redefining itself: FM

The indicators with which we are looking at rural economy may vary: FM

The interest in sunrise sector really obvious now: FM

Investments in newer areas have a longer gestation period: FM

Achieving 9.2 lakh crore on capex within 12 months is good enough: FM

FM says working to make sure that the valuations are improved upon

If you look at public sector listed companies and their valuation, you see their vibrancy now, says FM

When reforms are talked about, we normally talk about the three levels where it has be done with the same vigour – Centre, states, and local bodies. Working with states has already started happening. At the local body level, we need to have greater interchange of ideas and working together. That will continue now: FM

FM says, 'Periodically, it is our business to bring to the notice of ratings agencies that India despite the odds is doing systemic reforms'

FM says Ratings' agencies should look at all things comprehensively rather than looking at one thing

FM says:

- This government is actually serving the common people in letter and spirit, and that is recognised by the people

- When a beneficiary on the ground truly gets a benefit, they believe what the government says

- PM Modi's vision serving the common people in letter and spirit

- People on ground are talking about programs, this is secularism in action

Several programs launched are reaching the ground, power of word of mouth very strong, beneficiaires understand intent of the government: FM

Budget did not have any sops announced, we treated it like a true vote on account, says FM

Finance Secretary TV Somanathan: Decision on disinvestments will not to be taken by short-term fiscal priorities but it will be taken based on maximising the value of our investments

Somanathan: There is a change in how we view the link between fiscal management and public asset management. We used to rely on public asset management as a source of financing our budget. We are now looking at it differently. We are deemphasising disinvestment as a source of fiscal resources

Somanathan: The government’s overall policy on privatisation remains important

Finance Secretary TV Somanathan: There is no disinvestment target. This is a conscious change where we now look at disinvestment as one element in a strategy for managing the government’s assets

Somanathan: Focussing on a particular disinvestment target, as the DIPAM secretary said, creates an expectation of a necessity to sell shares by some fixed, arbitrary financial year end. And this affects the valuation of shares and does not give us the best value that we can get

Finance Secretary TV Somanathan says: This Budget has spoken repeatedly about making India a developed country by 2047. We are focussed on running that marathon, and that requires a fiscally fit India. Therefore, we have focussed on deploying fiscal resources optimally in the pursuit of that long-term goal

Finance Secretary: Budget is a judicious mix of fiscal impulse and fiscal consolidation. This is what we think is the right balance for the times

Somanathan: With or without private capital expenditure, I think we have enough to sustain today’s growth rate

Finance Secretary TV Somanathan: Real GDP growth of 6.5 percent is not low. A growth of 6.5 percent itself will be high. We live in a different world, where trade is constrained and geopolitical situations are difficult

TV Somanathan: With what we have presented in the Budget, I am very confident that we will achieve one of the world’s highest rates of growth

Finance Secretary TV Somanathan says: I think fiscal stimulus being withdrawn is a counter cyclical necessity. The error that many economies have made is to inject a stimulus when it is necessary and then not to withdraw it when it is no longer as necessary as it was. This means you do not have the firepower for the next round of something that may happen

Somanathan: It is a matter of basic economic prudence to withdraw a stimulus when the conditions that led to the stimulus no longer exists to the same degree

Somanathan: Stimulus was started at a time when growth was negative, not when we are talking of whether growth will be 6.5 percent or 7 percent.

The interim Budget introduces a substantial boost to the rooftop solar segment through the Pradhan Mantri Suryodaya Yojana. This initiative is designed to furnish up to 300 units of free electricity monthly to 10 million households, facilitated by a Rs 10,000 crore allocation. Finance Secretary TV Somanathan underscored the government's commitment to fostering rooftop solar energy during a post-budget press conference.

Expected outcomes include significant annual savings ranging from Rs 15,000 to Rs 18,000 for households, achieved through the provision of free solar electricity and surplus energy sales. Finance Minister Nirmala Sitharaman highlighted that this initiative would further bolster support for electric vehicle charging infrastructure.

The interim Budget establishes the groundwork for India's pursuit of its 'Viksit Bharat' vision by 2047, aiming for a developed India on the centenary of its independence. With a revised fiscal deficit target of 5.1 percent and an increased focus on capital expenditure (capex), it positions India confidently on the global economic stage.

The pledge to tax stability and a higher tax-to-GDP ratio sets the stage for robust growth while maintaining fiscal responsibility. The emphasis on elevated capex is expected to drive overall economic growth, creating a positive impact throughout the economy. A reduction in government borrowing opens up more opportunities for private entities, enabling them to secure funds at lower costs.

Finance Minister Nirmala Sitharaman has announced that the government will encourage vaccination for girls aged 9 to 14 to prevent cervical cancer, the second most prevalent cancer among women in India. The Budget emphasises this initiative, addressing the slow uptake of vaccines due to factors like lack of awareness and high costs.

The Union health ministry is in talks with the Serum Institute of India (SII), which has developed Cervavac, India's first quadrivalent HPV vaccine, in collaboration with the Department of Biotechnology.

At present, India relies on foreign manufacturers for the HPV vaccine, which costs between Rs 2,000 and Rs 3,500 per dose. The indigenously developed vaccine is expected to be available at a significantly lower cost, making it more accessible to a broader population and contributing to the prevention of cervical cancer.

In the Interim Budget, the government has set a modest target of Rs 50,000 crore from the disinvestment of state-run public sector units (PSUs) for the fiscal year 2024-25. This follows a revision in the target for the current fiscal year, reduced from Rs 51,000 crore to Rs 30,000 crore in the revised estimates.

Interestingly, the interim Budget avoids explicit mention of disinvestment or privatisation in the budget documents. Instead, the budgetary receipts for 2024-25 categorise the figure under miscellaneous capital receipts. This marks a departure, as it is notably the first time that disinvestment or privatisation has not been explicitly mentioned in the budget documents.

The Department of Investment and Public Asset Management (DIPAM), responsible for overseeing the disinvestment of PSUs, has faced challenges in meeting the targets for the current fiscal year, having raised only Rs 12,504 crore. Additionally, Rs 44,060 crore has been raised as dividends from PSUs.

Finance Minister Nirmala Sitharaman emphasises that the Budget aims to convey the government's 10-year track record of reforms and development without succumbing to populism.

Key Takeaways:

Development Focus: The Budget is aligned with PM Modi's vision outlined during his address from the Red Fort. The government has detailed a roadmap for transforming India into a developed country by 2047.

Targeted Development: The focus is on four key segments for addressing developmental issues—women, farmers, the poor, and youth. Aspirations of these groups will be fulfilled, leading to their progress and contributing to the overall advancement of the country.

Public and Private Investment: While public investment continues, there is a noticeable increase in private sector investments in infrastructure projects. This scaling up of private investments is seen as a positive step for the country's progress.

Innovation and Progress: The Budget has laid the groundwork for promoting innovation in the country. Specific schemes and plans have been announced, with detailed plans to be revealed in the upcoming July Budget.

Minimisation of Populism: Sitharaman highlighted that the Budget is characterised by minimal populism, with a clear focus on presenting pragmatic policies and initiatives for sustained economic development.

In the interim Budget 2024, a significant highlight emerges: Finance Minister Nirmala Sitharaman's allocation of Rs 11 lakh crore for capital spending in the upcoming fiscal year, reflecting an 11.1 percent increase compared to the current year's budget estimate. Presenting her sixth Budget, FM Sitharaman chose the auspicious number 'one' for allocating funds, specifically for infrastructure development such as roads and railways.

While the proposed growth rate may appear modest compared to the FM's previous targets of 25 percent in FY23 and 35 percent in FY24, she underscored the significance of the increase given the larger base. Under her leadership, the Centre's capital expenditure (capex) has surged 3.3 times, rising from Rs 3.4 lakh crore in 2019-20.

The FM argued that the boost in capex aligns with indications of increased private sector investment. She emphasised the government's role in capital investment as a catalyst for stimulating the economy, encouraging private sector participation during times when it might be otherwise subdued.

According to Nilesh Shah, Group President & MD at Kotak Mahindra Asset Management Company, the government has shown credible restraint in announcing big-ticket rural or social welfare schemes despite the pre-election vote-on-account budget. Sticking to the path of fiscal prudence, the government continues to allocate heavily towards infrastructure build-up while working on inclusive growth.

He further states that the highlight of the vote on account was sticking to the path of fiscal prudence with a target deficit set at 5.1 percent for 2024-25 with lower year-on-year market borrowing. Read the detailed view, here

The budget presented by Finance Minister Nirmala Sitharaman displayed confidence, continuation and communication of a vision. The confidence was evident from the fact that there were no short-term populist measures to please the masses. Often, such measures put an extra burden on the fisc and lead to disappointment in the markets. Indirectly, the government displayed confidence in getting re-elected in the upcoming elections.

Read in detail, here

Union minister Ashwini Vaishnaw hailed the outlay of Rs 1-lakh crore for research and innovation announced in the interim budget on February 1. The announcement to boost scientific research has won the hearts of the country's scientific community.

Speaking at a press conference after the announcement of the interim budget, Vaishnaw said, “The Rs 1 lakh crore corpus fund for developing new technologies will change the country. India is now a talent nation, the corpus fund will make India a product nation.”

Shares of Housing & Urban Development Corporation Ltd (HUDCO) and NBCC India jumped up to 16 percent each on February 2, a day after Finance Minister Nirmala Sitharaman in her Budget 2024 speech promised two crore houses to be developed over the next five years under the PM Awas Yojana (PMAY) Grameen.

"Despite the challenges due to Covid, implementation of PM Awas Yojana (Grameen) continued and we are close to achieving the target of three crore houses. Two crore more houses will be taken up in the next five years to meet the requirement arising from an increase in the number of families," the FM said.

The Finance Minister encouraged states and large cities to take up Metro lines via the transit-oriented development route in the interim union Budget 2024-25. As of September 2023, more than 6,000 projects worth over Rs 1.1 lakh crore were completed.

The decrease in budgetary allocation for these core schemes of the central government may impact the development of urban infrastructure. However, the government is prioritising sustainable and efficient urban development through the encouragement of transit-oriented development and investment in urban infrastructure for the future.

It was noted that the budget for the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and the Smart Cities Mission, both core schemes of the central government, decreased by approximately 21 percent.

The revised estimates for AMRUT and Smart Cities Mission in 2023-24 were Rs 13,200 crore, and it has now gone down to Rs 10,400 crore in the interim budget. The budget estimates for both schemes in 2023-24 were even higher at Rs 16,000 crore.

Sandeep Tandon, Founder of the Quant Group said that traditional themes will continue. On the stocks or themes to bet on, he told Moneycontrol that the main hunting ground for the decade belongs to value as a thesis, which has potential. "We are very constructive on PSUs and see deep value, but only larger names and not smaller names," he said.

"We see value in cement too, and even in stocks linked to precious metals, base metals, ferrous and non-ferrous. So cement, PSUs, and to some extent, construction, and EPC companies also look good. Capital goods might peak out now in the near term, but looking good from the long-term perspective. So, I will remain focussed on energy, power, PSUs, metal and cement as a theme. These are the larger themes which I would like to stick to," Sandeep said.

MK Ventures' co-founder Madhusudan Kela noted that the government’s intent to curtail fiscal deficit this year and also give two-year guidance that it will be 4.5 percent is very heartening from not just the market but the country's perspective. "The move is positive for the market as it will lead to a reasonable amount of borrowing and liquidity being left for banks and private sector companies to look for their capital requirements," he told Moneycontrol.

According to ace investor Shankar Sharma, it is a stock market-driven government, and the interim Budget 2024 was simply a continuation of the presently prevalent policies. The market has not reacted extensively towards the election Budget because the important announcements had already been factored in, he said.

“I do not think that the market has factored in any slippages on the capex front, especially because the fiscal deficit number is quite aggressive," he told Moneycontrol.

Capex has to be reduced to meet the fiscal deficit target of 4.5 percent in FY26. Capex cannot continue at this breakneck speed. "And when capex spend is dialled down in the upcoming years, largecaps will take the biggest hit. That's why I say that India remains a smallcap market," Sharma said.

Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance further states that the allocation of interest-free loans to states to promote tourism and the development of tourism in Lakshadweep are steps in the right direction to boost the tourism sector. The emphasis on air connectivity through the successful Udan Scheme and the expansion of routes under it will further enhance regional connectivity. The fiscal announcements, including a significant capex outlay and a revised fiscal deficit target, demonstrate the government's commitment to infrastructure development. The focus on the decongestion of high-density rail corridors and the conversion of train bogies into high-speed ones will contribute to the modernization of our rail network.

Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance writes that the Union Budget for the year 2024 reflects the government's approach towards achieving balanced economic growth and inclusive development. The decision to maintain tax rates for both direct and indirect taxes, and extend tax breaks for startups, is a positive move for businesses and entrepreneurs. Furthermore, the focus on improving taxpayer services and expanding the tax base shows a commitment to simplifying tax compliance.

DIPAM Secretary Tuhin Kanta Pandey has stated that there is no fixed target for disinvestment in FY25. Finance Minister Nirmala Sitharaman has mentioned in her message to credit rating agencies that they are not only aligning with the earlier given fiscal consolidation path, but they are also improving it. Regarding the target to reduce the Centre's debt-to-GDP ratio to 40%, Finance Secretary TV Somanathan has said that its relevance, which was set before the COVID-19 period, now needs to be examined.Do not have a fixed target for disinvestment in FY25, said DIPAM Secretary Tuhin Kanta Pandey. We are not only aligning with the fiscal consolidation path given earlier, but we are also bettering it, Finance Minister Nirmala Sitharaman said in her message to credit rating agencies
The relevance of the target to reduce the Centre’s debt-to-GDP ratio to 40% was set before COVID-19 period and now has to be examined, Finance Secretary TV Somanathan said.

India has witnessed three consecutive years of 7% GDP growth and is currently the fastest-growing economy among G20 nations. GDP stands for Government, Development, and Performance. The country has successfully delivered on the development front and managed the economy efficiently.

Despite facing difficult times, the government is managing to reduce the fiscal deficit. The Finance Minister has emphasized that the government will continue to invest in capital expenditure, which is crucial. The India, Middle East, and European Corridor (IMEC) project will be carried forward despite the disruptions in the Red Sea. The Revenue Secretary, Sanjay Malhotra, has stated that withdrawing 1.1 crore pending small direct tax demands for certain years will cost the exchequer less than Rs 3,500 crore. The Finance Minister has clarified that the lower tax rate will not be extended to new manufacturing units that come into operation after March 2024.

In her post-Budget presser on February 1, Finance Minister Nirmala Sitharaman emphasised 5 crucial points, known as 'Disha Nirdashak'. These points include implementing social justice as an effective governance model, focusing on the welfare of the poor, youth, women, and farmers, prioritizing infrastructure development, utilizing technology to enhance productivity, and establishing a high-power committee to tackle demographic challenges.

On February 1, Union Finance Minister Nirmala Sitharaman presented the Interim Budget 2024, which was her sixth Budget ahead of the general elections later this year. The budget mainly focused on youth and women empowerment while also maintaining fiscal consolidation and continuing capex. FM Sitharaman reduced the FY25 fiscal deficit target to 5.1% of the GDP. There were no changes made to the direct tax and indirect tax rates.

Welcome to Moneycontrol's LIVE post-Budget blog. For a detailed analysis of the Budget, we present to you an exclusive interview with FM Nirmala Sitharaman. Join us on the Moneycontrol LIVE blog and get insights beyond the usual rhetoric as the FM discusses the road ahead with Rahul Joshi, Group Editor of Network18 Group. The interview will take place today at 4 PM, so stay tuned!