Economic Affairs Secretary Shaktikanta Das dismisses talks that the government has been very optimistic in its Budget projections, post demonetisation. “The Budget has projected a positive outlook without compromising on expenditure,” he said. In an interview to BusinessLine , after the presentation of the Budget on Wednesday, Das said all the projections have been carefully made. “There was a lot of apprehension and anxiety in the market post demonetisation and there was a lot of speculation. The Budget addressed issues across sectors and gave a very strong message through the fiscal numbers, macro-economic parameters and series of reform measures,” he said. Excerpts:

Has the Budget been very optimistic in its growth projections?

For 2017-18, we have adopted nominal GDP growth of 11.75 per cent. After taking out the deflator, we are within the growth range of the Economic Survey of 6.75-7.5 per cent. Our expectation is that growth will be upwards of 7 per cent next fiscal.

What is the next step on the FRBM committee report?

The government will examine the report and take a decision. The Budget took note of some of its recommendations such as making debt the principal anchor of fiscal policy. From the debt of 60 per cent for the general government by 2023, the committee derived the fiscal deficit number and recommended it at three per cent for the next three years. Our target of 3.2 per cent for 2017-18 is in line with the recommendation.

They have also suggested that the government of India debt should be 40 per cent within the next six years. Today, we are at about 44.6 per cent and it is a reduction of about five percentage points. Keeping this in mind, we are trying to reduce our net borrowings next fiscal. This will leave liquidity in the system for banks to lend at cheaper rates to various sectors.

What is the way forward to address bad loans issues of banks? Is the bad bank proposal still under consideration?

The Reserve Bank of India has announced several schemes to address the problem and now it is for the banks to use them. The Budget has proposed listing of asset reconstruction companies (ARCs) and securitisation companies. Once they are listed and traded, they will have more investors. The capability of ARCs to take up more assets for rehabilitation and bringing in more investment will increase. At the moment, there is no proposal on setting up a bad bank.

Is the allocation for PSU bank recapitalisation adequate?

We have allocated ₹10,000 crore as provided under Indradhanush. If there is additional requirement, we will provide. But, I don’t think the need will arise as in the hold to maturity, the valuation of bonds has increased a lot as the yields have come down.

You have budgeted a nominal increase in the subsidy bill (Food and Fertiliser). Will Universal Basic Income replace subsidy?

We should be able to manage with the subsidy target this year. A pilot on direct benefit transfers of fertiliser subsidy is already under way. Our approach for food and fertiliser subsidies is to use DBT, make the disbursement more targeted and cut down the leakage.

UBI is an idea put in the public domain for discussion by the Economic Survey. Subsidy requires a lot of careful consideration within the government and we can’t afford to have both. So the question is how do we deal with the existing subsidies and what do we do with State government subsidies. There is also a question of affordability.

The Finance Minister spoke about proposed law to confiscate assets of offenders fleeing the country. Can you elaborate on it?

We plan to amend the existing legislations or draft a new law. There have been big-time offenders who have just escaped; they don’t cooperate with the investigative agencies or writ of the courts. It is difficult to secure their presence in the country. Their properties and assets in the country would be secured and confiscated till they submit to the concerned authorities. Confiscating overseas assets can be a very cumbersome procedure.

Does the disinvestment target of ₹72,500 crore in the Budget also include stake sales in SUUTI?

Normally, we use SUUTI only when there is a shortfall. For 2017-18, there is a long list of companies identified for strategic disinvestments by the NITI Aayog, there is a list of companies for minority stake sales identified by the government and then there are also the general insurance companies that will be listed. The government will also list three railway PSU — IRCTC, IRFC and IRCON, all of which have very good valuations.

What about the decision to merge public sector oil companies into a behemoth?

It is work under progress. The idea is to create a big company which will be able to leverage more, be globally competitive, invest more, acquire more assets within India and overseas and also do front end and back end value chain integration.

What is the timeline for the proposed integration of spot and derivative markets?

An expert committee will be set up and the government will wait for its report. Similarly, we are moving towards greater interaction in other spheres also. Budget has also proposed integration of brokers and other stakeholders in the commodities and the securities market.

What led to the decision on electoral bonds?

The Finance Minister has clarified on it in great detail. It is an effort to clean up political funding and discourage anonymous cash donations. Often companies or big donors want to donate by cheque but are worried that their identities will be revealed. Also, if they donate more to one political party and less to the other one, the latter may feel offended.

Here, the bond will be a bearer bond and will protect the donor’s identity. It can be utilised in a particular period of time, else it will lapse.

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