"Criticisms are urban India's"
The finance minister met Executive Editor Prabhu Chawla, Senior Editor Sudeep Chakravarti and Special Correspondent Shefali Rekhi for a no-holds barred interview. But tough talk and all, there were enough unanswered questions.

What does your budget try to achieve? What is the vision? It isn’t very clear.
If my speaking for two hours in Lok Sabha has not cleared it, do you think two sentences now will clear it?

The views on the budget are very diverse.
There is bound to be (diverse views). I have said this before, it is the experience of not only mine but of every Finance Minister that when you get down to preparing the Government of India’s budget, you have not only a large number of constituencies, but often conflicting constituencies to tackle. You might end up pleasing some, you might end up pleasing none.

One will have to see from which quarters these criticisms are coming, and often you will find that there is something behind that criticism--one particular demand may not have been met. They will never look at the totality of the budget, they will look at it from their own narrow point of view. It is my duty as Finance Minister to look at the total picture.

You asked me what is the vision of new India. I have said we regard rural India to be central to India’s total development. And that is why in this budget we have put so much of emphasis on the development of agriculture, on the rural development, on that of cottage and small industries. on housing and rural infrastructure. This is one set of priorities about which we are very clear and I am not apologetic in the least whether it pleases somebody or it doesn’t.

Are you following Nehruvian policies then? Nehru said India lives in the villages.
I am not following Nehruvian policies. He might have said that . But if you look at the various plans of Nehru, this is exactly what he didnot do. If f he had done what was needed to be done in those early years of planning, then India would be a different country today. Why is it necessary for me to stand up in the middle of 1998, to say only 37 per cent of our cultivable land has assured irrigation and 63 per cent is still rain fed? And why was it necessary for me to emphasise watershed development programmes. We had taken up watershed development in 1947, immediately after we became independent. Today, we could have been in a much happier position, in terms of productivity of agriculture. Why is it that with the same land China is producing twice the amount of foodgrains that we have?

On this, the party is clear that rural India’s demand will stimulate industry.

The doubt really is about the money getting down to the masses. It’s the delivery system that people worry about most. How will the money reach the poor?
It’s a very good question. Along with making more money available, I have also talked about the delivery system. I am talking about micro-banking when I am talking agout self help groups, because the delivery system will not be dependent on a babu in the bank. It will be the self help groups which will help create it. That is why I am talking of wage employment schemes, and self employment schemes amongst the plethora of schemes that we have at the moment, like the Jawahar Rojgar Yojna, Baccha Rojgar Yojna, God alone knows how many Rojgar schemes.

We are streamling all that and we are saying we will have only self employment and wage employment. So this will enable us to deliver it better. Secondly, there is a plethora of central and centrally sponsored schemes. We will put all of them together and make the money available to the Panchayati Raj institutions which have been set up in large parts of the country. There’s a problem there. We have set up these institutions, (but) given them no powers, no responsibility, no resources. Now they must decide whether the priority in those villages is building a road, or bringing electricity, a dwelling unit or whatever. We will say, the programme is for this purpose. You decide what your priorities are. This is the first major step towards decentralisation of the planning process.

Are you saying now the Panchayats will decide where to spend the money, and not New Delhi?
Sitting here, why should I decide what is the priority there.

Why don’t you extend the argument to Indian industry?
Industry is delicensed.

What is the need for FIPB (Foreign Investment Promotion Board)?
That is only in regard to foreign investment.

Nowhere in the world does it work like this, you can go and invest wherever you want to invest, except in core areas?
That is true.

In fact what foreigners complain about is too much red tape. And they are not too sure if FIPB clearances mean too much, because you still have to get other clearances.
The experience of last years when FIPB was set up shows that FIPB has not really been the bottleneck. Counter guarantees were not given to power projects not because FIPB was in the way. The problem is that the projects get stuck elsewhere. That’s why I am talking of a 90 day clearance schedule, because I am aware that foreign investors are facing the biggest problem in terms of delays.

Will the monitoring officials be empowed to push through clearances. If they are junior officials ...
No they will not be junior officials. The idea that we have is they will be of the rank of deputy secretary, director, joint secretary.

Time limit for clearances is a good point, but does it mean clearances at all levels?
Including the state government. The idea that I have in mind is when you have a criminal case, when you lodge an FIR, then there is an investigating officer who is appointed, that investigating officer is responsible for bringing the culprits to book and taking them to a court of law.

Will the officer be penalised, if he can’t stick to deadline?
Obviously, when I say in my budget speech that is the personal responsibility of the monitoring officer to get clearances in place within 90 days, including whatever needs to be done at the state level, then it is a great responsibility on him.

Do you need the FIPB ?
We will look at this later, the point is at the moment it is not a bottleneck. And there is an area which is automatic, where only a registration with the Reserve Bank is required.

Will you hava a monitoring officer for each project?
For each project where foreign investment exceeds Rs 100 crore.

Will this apply to Indian companies?
Indian companies don’t need clearance.

But they still face bottlenecks, which is why you monitoring officers for a foreign investor.
We will have them for foreign investor because we have still in place a regime where a clearance is still required.

How do you propose to double foreign investment inflows in two years when there are no fresh incentives in this budget?
No fresh incentives were needed. A lot of incentives already exist.

Perhaps opening up more sectors...
We have delicensed coal and lignite, we have delicensed petroleum. We have opened more sectors. The only area that remains is sugar. No other major area.

What about Insurance?
I have said we are opening innsurance in the first phase for the Indian private sector.

If the foreign companies are in partnership with Indian firms, and a minority one at that, will such joint ventures be permitted?
It’s a hypothetical question at the moment. Because we still have to give a chance to the Indian companies. We will bring legislation to the effect in the winter session of Parliament. After that when the regulatory authority is in position and the LIC/GIC acts amended to end the monopoly, then we will invite the Indian companies. If they say, we can’t do any business, then that will be the time to have a fresh look.

What is the government going to do to market its policies, its incentives better?
I was talking about conflicting constituencies. Some of them feel that even if there is a balance, it is not good enough. There must be an imbalance in their favour. I don’t think there is an imbalance. For the first time we have tried to balance the needs of rural India with those of industrial urban India. Now because this balance has sought to be established, an impression is now being created that the needs of industrial urban India has been ignored.

As far as marketing will be concerned, we will be going out. Right now we are involved in the budget session.

Is there some logic behind your import regime? The duty structure has been framed in such a way that you have favoured some and disfavoured others.
The overall philosophy was that we should continue with reduction in import duties. Therefore, I have not increased import duties across the board. There are GATT bound rates, and they are much higher than the prevailing rates. And you are quite right in saying that earlier regimes have given more concessions to imports far below the GATT rates. But there is another point that even at these rates the peak rates in India are higher than the peak rates elsewhere even in East Asian and South Asian countries. So the trend should be to go on reducing import duties to bring them in line with international standards.

I have imposed this 8 per cent duty, this is being propagated as protectionist measure. My point is by reducing the duties to below GATT bound rates, we exposed the Indian industry to dangers which they were not ready to face yet. The deleterious impact has been more felt in certain sectors, where we have tried to raise specific rates of duty. Then there is a demand to reduce the rates in sectors where the Indian industry can be more competitive. That is the philosophy that we have followed.

There was a distortion that often raw material imports faced a higher rate of duty than the finished products, we have made a conscious effort to reduce that distortion. And it will be my endeavour to continue to correct that position.

Critics say that it is protectionist because the duty rate works out to between 11-16 per cent in real terms. Besides, with the rupee losing value against the dollar, imports will become more expensive, so what’s the point in raising duties?
What happens if the rupee appreciates? Don’t we have an experience when the rupee went to 31 from 33? Whatever way the market is behaving today, because of the nuclear tests or whatever, why should I take that as a permanent position and predicate my policies accordingly?

As far as the duty is concerned, in course of time we will be looking at those surcharges.

What is the time frame for the protection period?
Indian industry should be exposed to international competition. There is no philosophical dispute on this point. But at the same time, we need also to ensure that Indian industry is not destroyed before we build a new system.

In other words, competition does not mean destruction?
Competition will not mean destruction. If you learn to swim in 3 months time, and I learn to swim in 6 months time, then I should be given 6 months time. I should not be thrown out at the deep end of the pool to drown. Competition should mean building on the strength that you already have. I don’t know the time frame. The Prime Minister has been quoted as saying 2-5 years. It will depend on the situation then.

People are scared of high prices.
What is this theory based on? We have not raised diesel prices. Petrol price specific to petrol that does not have a cascading effect on other prices. That is well known. If I have raised excise duties somewhere, it will not have a cascading effect on prices in general.

Then, I have reduced a number of duties. On balance, there is more reduction than increase. The only point against me is that at 8 per cent, it will be inflationary. This is urban India’s criticism.

What do you intend to do to shift the pressure on Indian agriculture?
The Budget has a tremendous emphasis on that. We want to help 2 lakh families in India through these self-help groups. This is exactly what I am trying to do to take the pressure away from agriculture. Let them go into some kind of business, let them go into some kind of dhanda. I want to do this through micro-banking: a small shop, a person just picking up vegetables in a village going to the closest town to sell it. Micro-banking will achieve that. This will take away pressure from agriculture. This is the way rural economy will be strengthened. The thela (push-cart) concept of marketing is a revolutionary one in the Indian set up.

What would you call this budget? A bhagidari budget?
This is a practical budget.

By rolling back prices on urea and petrol, the government is buckling under political pressure. What do you have to say to that?
The two have to be separated. On petrol there was a misunderstanding, and as a result a higher price was being charged. When I got to know about it, we corrected it within 24 hours. Whatever we collected in that one day will go to the national highway authority. I am not interested in keeping that money. Rs 400-Rs 500 crore has been collected in that one day. I will pass it on.

Urea is different. We tried to correct the usage pattern of urea. True we have lost Rs 1,000 crore (since this interview was conducted, there has been a complete roll-back in theprice hike, another Rs 1,000 crore has been lost in the budget--eds). But the opposition was from those who themselves raised the price of urea.The Congress party raised it twice in its tenure. the UF once. and now they are the great champions of farmers.

The previous two regimes ran into rough weather with their revenue estimates. What about yours?
I have underestimated my receipts. I have taken credit for only Rs 5,000 crore for disinvestment. I am backed by early action as far as the four undertakings are concerned. Plus, I have taken no credit for Indian Airlines, which we might start disinvesting. Then I have not taken full credit for the Samadhan scheme, I have not taken full credit for the exercise of widening the tax base. On all these accounts I have underestimated my receipts, because I want to be good at the end of the year. I don’t want to weave dreams at the beginning of the year.

There’s no commitment to reduce goverment expenditure.
You will notice that total expenditure reduced as compared to the interim budget. I have cut back on the non-plan side.

But that is essentially because of the 2 year increase in retirement age to bureaucrats.
Yes, savings have helped. I must confess that 8 weeks are not enough to evolve a policy in this regard. It is complicated.

The intention is strong about disinvestment of Public sector undertakings, but as the exercise isn’t time bound, doesn’t it end up being wishy-washy?
It is far more concrete than ever before. The Cabinet will sit and decide on each case. On PSU restructuring, we have (shown) strong will power. We shall give a good deal to the workers and close down units which cannot be revived. We are saying that in non-strategic units we will bring down Government’s share to 26 per cent. In earlier years it might have been vague but that is why you got Rs 900 crore against a target of Rs 7,000 crore (last year).

There is no time frame for reducing to 26 % because it is not the intention of the government to sell at any price, rather to sell at the best possible price.

In your opinion, is Maruti strategic or non-strategic?
I will not give you that opinion. (This quesiton was asked keeping in mind a possible, major policy initiative that either leads to major divestment in favour of equal partner Suzuki Motor Co, or agreeing to rotate management control with Suzuki. The second took place in the week beginning June 8--eds.)

Your budget has no big ideas, big words or big decisions.
That’s why I called it practical. You can go for the big bang theory and then end up banging yourself.

The criticism is that the budget does not take care of sanctions.
The budget will reflect the numbers of the next ten months. If it does not take effect in the next ten months, then I cannot reflect imaginary numbers. America is the only country which has imposed sanctions. And what is the Glenn Amendment say: that American bonds will not be lent to India, But Government of India is not borrowing. How is a well informed person like Manmohan Singh saying this, I don’t know. Even Lord Meghnad Desai is saying, "Until the sanctions start to bite." How will they bite?

The US might prevent transfer of high tech goods, besdies funding.
They didnot give us the supercomputer, and there were no sanctions then. They prevented Soviet Union from giving us the cryogenic engines. That has always been the case.

When you were presenting the budget were you suffering some kind of complex about people like (former finance ministers) Manmohan Singh and P. Chidambaram?
No

Why did you choose to quote Ramdhari Singh Dinkar? Your predecessor used Victor Hugo?
That’s natural. It is very natural that he should talk of Victor Hugo and I should talk of Dinkar. That’s the difference between India and Bharat.

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