Union Budget 2017-18: Honest bankers have nothing to fear, says Piyush Goyal

Goyal also lauded the"growth-oriented’’ Budget for ensuring that almost nobody was stressed with any additional taxes.

Below is the verbatim transcript of Piyush Goyal’s interview to Shereen Bhan on CNBC-TV18.Q: There has been lots of commentary that has come in through the day. I want to pick up on a tweet that has come in from Harsh Goenka. He says in the dangal of conflicting priorities, the kaabil finance minister has not made it worse for the raees and he has rewarded the poor as well, the country will rock on. So, on that Bollywood note let me kick-start by asking you the priorities have been very clearly articulated by the finance minister in this Budget. This is a Budget for 2019, is it not or at least in the course for 2019? A: I must share with you one experience that I have had and that will tell you what this Budget is all about. On one policy decision, once, many of us in the cabinet felt that we should postpone that decision for political considerations and the honorable Prime Minister had very categorically directed that no, this government will take decisions in national interest and public interest. No decision will be benchmarked to politics or elections or timing and I must say the honorable finance minister in all these three years has been very consistent, he has ensured macroeconomic stability, he has ensured that fiscal prudence is respected while at the same time making sure that Budgets are focused towards the poor, towards the marginalised sections of society, towards farmers, women, youth, the sections of society that really deserve it the most just as Pandit Deendayal Upadhyay had articulated. The first right on the nation’s resources are of the last man at the bottom of the pyramid. I think the finance minister, Arun Jaitley has ensured that the poorest of poor gain the most while the middle class, the farmers, everybody stands to benefit and almost nobody is stressed with any additional taxes. So much is going to be spend for rural development, for agricultural sector, for infrastructure creation, almost universally this is a growth oriented Budget, this can kick-start job generation, this can kick-start ideation, new ideas, startup India standup India, I think truly a phenomenal effort.Q: Let me talk about the capital expenditure that you just touched upon, 24 percent is the increase that the Finance Minister has allocated roads, highways, infrastructure so on and so forth do you believe though that is going to now be able to draw in private investment because that continues to be off the table?A: The private investment was suffering from the lag effect of several years of policy paralysis indecisiveness, lots of corruptions scandals coming out and lack of demand. When we narrated government in 2014, you will recall what kind of a state projects were in the country. Almost every sector projects was stressed or stalled. Q: There hasn’t been any significant improvement on those parameters even today?A: Almost every parameter, take for example the road sector. In the road sector there was so many projects that was stalled which have been sorted out and restarted. In the power sector, we had so many projects which had different stages of development, in the first two years we were able to commission 45,000 megawatts of projects all of them where already running late which were able to complete by sorting out their environmental, financial, land issues. So, in some sense this is a process that has a time of its own. It is not something that can be done with the magic wand.Q: Do you believe we are at that point now where we will see a pickup as far as private investment is concerned? A: I think we will because ultimately private investment is looking for opportunity where they will make money, where there is demand, and as more and more of the current demand is getting fulfilled or is taking care of the current capacities and we see industrial growth coming in, I think companies will start looking at the next three or four years ahead and start preparing their investment. Q: One of the big themes in this Budget has been the focus on public sector enterprises, the possibility of mega mergers, the finance minister spoke specifically about the oil and gas sector but he said it is not restricted only to the oil and gas sector. You look after three different ministries, are we looking at any kind of restructuring consolidation across some of the ministries that you operate in? A: We are always looking at ideas to make things better. For example, take a simple case of bioethanol. Now, bioethanol is a business where my ministry does the policymaking and the petroleum ministry does the consumption. Now over the years -- last two years’ experience we find that this is not the best way to do it. So, we have both requested the department which looks after the allocation of business, to consider moving the entire thing to the petroleum ministry, they are the consuming ministry, can make policies tailored to suit. Q: But that is more from an operational point of view, I was talking about corporate entities within your ministry, within for instance in the power sector for instance is there a need for consolidation?A: At one point of time when I had just become a minister, very earlier on, in in fact the same venue, in the international habitat center where we are today, in one of my review meetings of the hydel power projects, I had just floated the idea that why don’t we consider merging some of these companies and make a larger hydel behemoth. I remember at that time, I had put a committee in place also to study all of them. They came up with certain recommendations, but we had certain complications that some projects were joint ventures with certain states, one with Jammu Kashmir, one with Uttar Pradesh, so we will have to resolve some of these issues but I am open to the idea. Q: Let me now talk to you about a couple of ideas that the Budget has not really taken forward but the Finance Minister acknowledging that it is on the table - the bad bank. Chief Economic Advisor has spoken about a public asset rehabilitation agency. The NITI Aayog is pushing for this, the FM says it is an idea on the table. How soon can we see this take off because there is now a clear acknowledgement from the government that the solutions to address the NPA problem have not been fruitful so far?A: The solutions as they stand at least we have been able to honestly assess what the situation is. I would like to mention to you that all of these loans which are under stress or getting bad are loans that were sanctioned at a point of time much before this government came in. These are all inherited legacy. The only thing is instead of camouflaging that as has been done for years and decades before this government came in which you are very well aware of, this government bit the bullet, was willing to take the bull by the horns. We made the banks recognise what is good, what is bad, what is ugly. We forced promoters to sell their assets and pay back to the banks.Q: Is that process going to continue, the stale or stressed assets because there is a fear that given what we have seen happened in the IDBI Bank - Kingfisher matter that this business of banks considering even the possibility of taking a haircut to get rid of stressed assets will perhaps be hit? A: I don’t think so, please understand that honest bankers, honest financial sector participants have nothing fear. The question of one particular case being under investigation does not deter the banking sector as a whole. It is about your integrity and your confidence in your integrity. I personally don’t see any problem in the banking sector, we have some very good bankers, very competent bankers in the system and I am sure they have the confidence about their own integrity and can take bold decisions. The process of bank consolidation, the process of restructuring of bad loans, the process of wherever a decision needs to be taken has to be taken is well underway. We now also have an oversight committee which will see the decisions taken by the bankers and provide protection to them.Q: But a bad bank likely in this financial year?A: I would think so it is a good idea, I personally I am for it and I do believe it will give a lot of comfort to the bankers who will be out of one major management issue and will be able to lend in a much more organised manner.Q: The way to capitalise the bad banks, the CEA’s idea is us the excess capital from the RBI and that could perhaps be the way to capitalise this bad bank or this public asset rehabilitation agency. Is that something that is being considered? Will that be an idea that will be acceptable?A: You must respect that the CEA’s role is one to come up with new and innovative ideas. We had Mr Bill Gates, before that we had Mr Tharman from Singapore, both spoke about transformation of India resting on new ideas. Ideation is something that this government welcomes. So Mr Arvind Subramanian has thrown out of his hat a few new ideas. We respect him and we believe all of his ideas will be taken up for consideration and the best way forward in consultation, after all RBI is an autonomous body, we will consult with them and we come up with a better solution.Q: We have the credit policy around the corner. What is the expectation now that the government has? The Finance Minister, during the course of the speech kept talking about a reduction in interest rates and how that is going to drive credit offtake. What is the expectation? What would you like to see?A: We would like the Reserve Bank policy committee to recognise the fact that this is one government which has not strayed from fiscal prudence. We have kept inflation under reins. It is under 4 percent CPI, under 3 percent WPI. We have ensured the fiscal consolidation part. 3.5 percent in a very difficult year has been maintained, will be maintained. 3.2 percent next year and then 3 percent the year after. Current account deficit is down to a record 0.3 percent. Revenue deficit, it is a very critical figure, down to 1.9 percent. You can see the track record of this government. You can see the sincerity of effort and purpose in every action of this government, the thrust it is giving to growth. And when you balance all these fiscal parameters with the need for growth, I am sure the monetary policy committee will take the right decision.Q: Let me ask you about some of the other ideas that are being talked about at this point in time. The need for a universal basic income scheme. Once again, the government has not taken it forward in the Budget. It cannot be an additional scheme, it will have to take the government to actually wipe the subsidy slate clean and then introduce the universal basic income scheme. Do you have the political appetite to take that forward.A: That is one question you cannot ask of a government led by Prime Minister, Narendra Modi. If any government has political appetite to reform, transform and serve the poor of India, it is this government of Prime Minister, Modi. And I think there is more criticism of his ability to take bold decisions.Q: Do you think that could be an idea for the next year?A: You must bear in mind that the economic survey just came yesterday. As I said, the economic survey and the CEA is expected to float new ideas. The NITI Aayog is expected to come up with innovation and innovative thoughts. We respect these ideas, we will take it on board, we will throw it for larger public debate, maybe we will have some debates on your channel on this subject, we will have some ideas coming from the people at large. But I would only request you to correct or phrase your logic. It is not as if we are going to wipe the slate clean or something. The idea is of trusting the people of India to choose how to spend wisely. Instead of small pockets of subsidies in different pockets giving it to people, the idea that he has floated is that we combine all of that, help the people get larger chunks of money because it also eliminates the chances of leakages and corruption. The famous Rajiv Gandhi quote of Rs 0.84 is stolen out of every Rs 1 sent out of Delhi. Fortunately, the government led by Mr Modi has been able to bring down a lot of that corruption and leakage through direct benefit transfer, through National Rural Employment Guarantee Act (NREGA) funds being geo-tagged to create physical assets and put in public domain. We have been able to significantly bring down leakages and waste in the system and corruption in the system. This is also an idea which we will address in the days to come.Q: The one disappointment coming in from your home-turf of Mumbai is that the expectation of a cut as far as corporate taxes has not been given into by the government.A: How can you say that at all?Q: This was part of your roadmap. That is only for companies with a turnover of Rs 50 crore.A: Since when did 96 percent become only and 4 percent become the universe? You must appreciate what the honourable Finance Minister promised was that he will do away with exemptions and gradually bring down the rate to 25 percent for businesses. Now, when we looked at the details and found that 96 percent of tax payers of the limited companies which pay tax are in the bracket with a turnover of up to Rs 50 crore and when we look at their taxes, we find that they are already paying 30 percent, whereas the larger companies who enjoy a lot of the exemptions and other benefits, when you see their effective tax, they are already at 25 percent. So, the idea was that we remove those exemptions and bring them down to 25. These exemptions will take 7-8 years as he articulated today to phase out and gradually those rates will come down. But these smaller tax payers with turnover of up to Rs 50 crore, at least they, who are already paying 30 percent, deserved a better deal.And as the exemptions phase out their benefits through the exemptions, I am sure they will also be eligible. So, we will keep monitoring as the exemptions fall by the way side and their effective tax rates keep increasing, we will ensure that that remains at or below 25 percent.One small point before I go. This big attack that this government has taken against corruption and black money, a lot of steps, particularly on political party funding for instance, taken in this Budget, the huge measures to promote the digital economy to bring down the informal sector which does not pay taxes. The huge effort being made to reach out to the middle class through affordable housing, to the poor of India through larger allocation of funds for rural development, to the agriculture and allied sectors, you will find in this Budget a holistic approach where every section of society and every section of job creation or growth has gained from the Budget. Transformation and reform is the buzz word and yet, there is no stress on anybody for larger taxes.