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'When people have money in their hands, they make their judgment about whether they want to spend it entirely or spend some out of it.'
"I expect this would show both in terms of consumption spending and also in terms of savings," Finance Minister Nirmala Sitharaman tells PTI Editor in Chief Vijay Joshi.
The second of a multi-part interview.
Our growth, at least the GDP growth rate for this year is projected to be 6.4 and for next year maximum will be 6.8.
We want to achieve 8% to become Viksit Bharat by 2047.
Do you think, the new tax regime will increase consumption?
How much will it help in contributing to that GDP growth?
I wouldn't want to predict something, but certainly this tax proposal will ensure that people have more money in their hands.
When people have money in their hands, they make their judgment about whether they want to spend it entirely or spend some out of it, and also make sure that they save something else, some amount from it.
I expect this would show both in terms of consumption spending and also in terms of savings, which can be through very many different instruments, both will be influenced.
But I won't want to directly say this is the only way we are looking at growing up to 8 per cent.
These are steps which will have implications for the near term and the medium term.
So many other things also will have to simultaneously happen, which we are clearly indicating in the Budget Part A, through which India will open up so many more avenues for its growth trajectory.
Their collaterals and their secondary effects will certainly ensure that we move towards that.
In addition to the increased consumption, what are the other factors that are needed to reach the 8% growth?
There will be a lot of secondary effects from those proposals, in part A, which will themselves trigger a path towards growth.
And also, the way in which we've looked at customs, tariff rationalisation, import of essential goods coming down ... are all indicators towards propelling greater growth.
Your revenue projections are pretty optimistic, and at the same time, you are also sacrificing Rs 1.3 lakh crore through tax cuts.
Where are those revenues going to come from? How optimistic are you that you will be able to meet those projections?
I thought I was accused of always being conservative in my estimates, and I've every time said our numbers are realistic because we do a lot of work and understand that we are definitely not exaggerating our targets.
At the same time, we do not want to be underestimated, and for domain experts later on to say, you've underestimated today.
You're performing this much is not great. We have always shown realistic numbers.
On infrastructure spending, it's a little disappointing that you have not allocated as much as was the expectation. Could you have done better in capex?
If we are looking at the numbers because we've got used to a 16 to 17 per cent increase every year from 2020, and saying you have not increased it by that number... I would equally want to ask you to please look at the way in which the quality of spending has happened, particularly capital expenditure and I must appreciate the states which received the 50-year interest-free share of the money which went from our side as capital expenditure for them.
They have also shown very great interest in capital expenditure and the quality of expenditure, therefore has been very good.
At the same time last year, when we touched Rs 11.11 lakh crore and this year building on it, it is about Rs 10.1 lakh crore over the RE which is far more realistic.
2024 has had the difficulty of elections happening... difficulty, I say, from the point of capital expenditure.
Elections are very much a necessity. During the election year, which we've just completed, the capital expenditure did go a bit slow.
Otherwise, my RE would have also been closer to BE number again.
The POpposition is saying that this Budget was entirely for Bihar and in an indirect way for Delhi, both of which are going to the elections.
What do you have to say to the Opposition?
I think, for want of criticism, they seem to be picking up. I'm sorry to be so blunt.
I've said this even last time when they alleged me of announcing only for allied partners, Andhra and Bihar were the only two names.
Nobody has had anything else coming. I think these are lame and lazy, quick ways to look at the Budget.
Every state gets its share of all the central schemes ... gets their due grants-in-aid, which are decided by the Finance Commission.
Every state gets a part of the due for the expressways, freight corridors, railways, airports and some big ticket seaports, which are also getting built.
Each year, I don't announce them, but they have been funded by us for over several years.
Major port projects are never completed within one year so that money stops the next year when I don't name them? No, it still goes to them.
So it's all right for them to have to comment if something is fine, but I'd rather want them to go through the details of it and engage constructively.
There is even an outlandish suggestion by some leaders in the South who have said that maybe they should produce more children so that they can get more contributions from the Centre because they are unfairly being targeted because their population is lower compared to the northern states.
Is that a valid observation at all?
My response to that is that it is for the states to engage with the Finance Commission to express their concerns about the parameters based on which the tax devolution principles are laid down by them.
And if they think over a decade, they've had a distinctly different paradigm happening there, it is for them to highlight those issues to the Finance Commission.
After all, the Government of India takes the Finance Commission's recommendations, particularly on the core suggestions, and follows them.
And then voice concerns, as though this Government of India has decided is not a healthy strategy.
So you would say that this suggestion that they should produce more children is ridiculous...
No. I'm not even commenting on it because whatever their point of view is, it is based on what they think the Finance Commission is coming up with.
It is for them to highlight to the Finance Commission whatever the principle be, or whatever the factor be.