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'There is good indication that the economy is bouncing back, but the problem is, we should look at the eight quarters preceding March 2020.'
'The growth had fallen below 3.1% before March 2020.'
'So, the governments must realise that even if you transform the best of green shoots into banyan trees, you see only 3.1% growth.'
Chartered accountant and advocate M R Venkatesh is not one for pulling his punches. His criticism of previous Budgets has been sharp and incisive.
However, Finance Minister Nirmala Sitharaman's third Budget, he feels, is on the right track.
"I have been a big critic of all the Budgets, but this time, I feel there is nothing corrosive in this Budget," Venkatesh tells Shobha Warrier/Rediff.com in the concluding segment of a two-part interview.
The finance minister said about the stimulus packages, 'I spent, spent and spent'. Perhaps an admission that all the stimulus packages failed.
Do you think whatever stimulus packages the Budget has, will help the V-shaped recovery the Economic Survey talked about?
When we had a lockdown in April-May, the concomitant economic collapse was attributed to an act of God.
And when the rebound happened, it is attributed to the finance minister!
I believe that the genius of the hard-working Indian entrepreneurs is behind this sharp recovery.
Yes, stimulus might have helped someone.
For example, the food subsidy part of around Rs 4.5 lakh crores was spent in the current FY on distributing food to 80 crore people who are below the poverty line during the pandemic.
And it ensured that no one died of starvation.
This is exactly what governments should do; they shouldn't be running businesses. They should leave it to the markets.
Do you see green shoots coming and a V-shaped recovery happening?
There is good indication that the economy is bouncing back, but the problem is, we should look at the eight quarters preceding March 2020.
The growth had fallen below 3.1% before March 2020.
So, the governments must realise that even if you transform the best of green shoots into banyan trees, you see only 3.1% growth.
We require something like 12%-15% growth to take us to the $5 trillion target.
But India will have only 5%-6% growth even if the British came to rule us!
The challenge is to take us from 5%-6% to 12%-15%.
My view is, this Budget will not take us to 12%, but it will help the economy fare better.
The finance minister said she had prioritised investment to boost demand, lack of which was one of the biggest complaints before the pandemic itself.
Will this Budget boost demand and create jobs?
For once, they have not talked about MNREGA in a big way.
The Budget was silent about MNREGA which has been the biggest job creator in the last 10 years.
Let's realise that MNREGA cannot be a programme for eternity.
We have to move towards a system where job creation happens by the market, that is, let the entrepreneurs come and create jobs.
There is a limitation for the government to create jobs.
The expression Aatma Nirbhar Bharat was heard many times in the Budget speech. In the name of Aatma Nirbhar Bharat, are we not moving towards protectionism?
Like increasing the customs duty on many components of fridges, ACs etc. This is going to raise the prices of these items.
Yes, Aatma Nirbhar Bharat will have a component of protectionism.
Whether it is good or bad is for us to debate, discuss and digress.
It should not stop with merely increasing customs duty.
It must encourage Indian entrepreneurship. For that, ease of doing business has to come in a big way.
I have coined an index called Impossibility of Doing Business in India, IDBI! IDBI is what is killing us.
And for that one should not only blame the central government, but one needs to consider the role of state governments too.
For example, can you get a high-tension electricity connection for your factory in two days in Tamil Nadu? It is impossible.
In Kerala, they will look at you as if you have done some blasphemy.
Generating jobs is not a priority of most chief ministers.
Yet we hold only the central government responsible for unemployment.
The states have their share too.
Many MoUs signed by the state governments with great fanfare with potential investors do not see the light at the ground level.
And no one blames the states or holds them accountable.
And believe me, all this has nothing to do with Narendra Modi or the central government.
Do you think we missed the manufacturing bus?
We will never be a manufacturing hub unless we do two things; the states also should have the same zeal as the central government in the reforms process, or we rework the 7th Schedule List 1, 2 and 3 of the Constitution and hold only the central government accountable.
And we must create an ecosystem for the same.
There was a time India was one of the major textile and garment exporters. Now, smaller countries like Bangladesh, Vietnam, Cambodia, etc have overtaken India...
As an answer to this, the government has announced seven mega textile parks.
You should understand that no park created Tirupur or Ludhiana; they came up naturally.
Actually, the government doesn't know what the textile industry wants.
The government's job is not to create entrepreneurs or textile parks but it is to facilitate textile entrepreneurs.
IMAGE: M R Venkatesh. Photograph: Sreeram Selvaraj.Compared to Nirmala Sitharaman's last two Budgets, are you happy with this one?
I am happy for one reason that it was a shorter version, and it did not bore us to death.
She has definitely understood that the government does not have to nitpick on micro issues.
My criticism of the Budget is, though we decided that Nehruvian ideas have to die, we have not decided fully what is to be done in its stead.
The government has decided not to do certain things, which is welcome, but it has not decided what to do.
The role of the government is still indeterminate.
This is a national problem, not a BJP problem or a Congress problem or a Communist problem.
And till we determine collectively, the role of the government, amount of taxes, extent of welfare and subsidy will always remain a problem.
Do you think this Budget will take the economy back on track?
We have to distinguish between the Budget day and other days.
The other days are for the implementation of the Budget proposals.
I am broadly in agreement with the proposals, like divestment and monetisation.
But whether this will happen in the next 365 days or two years or three years, is a 5 trillion dollar question.
She has thought through the policies rather well, but whether they will be executed well is a question.
For example, she spoke about the divestment of LIC last year, but it has not been carried out till this year.
There are many announcements in the Budgets, but there is no accountability in these announcements and hence no sanctity to these announcements.
What happens is, after some time, everybody forgets about them.
I have been a big critic of all the Budgets, but this time, I feel there is nothing corrosive in this Budget.
Feature Presentation: Aslam Hunani/Rediff.com