Everything is in public domain: FM on SEBI chief

Let us look at ‘compensation’ and ‘cess’ separately. Compensation cannot continue after June 30, 2022, by law, no one can change that. Paying of the compensation in the first five years after implementation of the GST continued and ended in June 2022. 

But a cess was brought in to pay the compensation, which continues. The cess can continue because we are interested in revenue— but it cannot be for paying compensation. That clarity has to be there. Whether the cess should continue or not is being discussed in the council.

Whether you want it as a cess (or some other tax), whether you want it at that rate as a cess of 28 per cent or whether you want it on those items on which this 28 per cent is levied for the sake of giving compensation, all these are subject of discussion.

There are some States who say we want compensation to continue. Compensation cannot continue. Compensation was brought in for making sure that States did not have apprehensions that after the GST comes in, their revenues will come down so drastically low that they can’t sustain themselves. In order to give the States the confidence (that their revenues will not suffer) the GST compensation was brought in — at a high rate. (Before the GST came in July 2017) No State was growing anywhere near 14 per cent. Tamil Nadu (because I am here right now), before 2017, was growing at a rate of 6.5 in the best of years. If the GST were not to be in at the 14 per cent assured level, Tamil Nadu would have earned something in the range of ₹4,23,000 crore. Whereas because of GST compensation and post that, because of GST, it has got something around ₹5.23 lakh - ₹1 lakh crore more.

That is about compensation cess. On rationalisation, because of Covid and elections, it has been delayed for a long time. Now it is much overdue. Now the committee is looking at rates item by item. Do we need four slabs – 5, 12, 18 and 28 – even that is being discussed.

Flawed argument. The Constitution gives me every right to levy cess. As for the argument that the Centre collects cess but does not share with the States – it doesn’t go through the devolution process, but it goes down to the States – for building schools, for building roads, ports, hospitals. There are the categories under which the cesses are collected. When a cess is collected for an objective, it has to be spent on that objective – I can’t collect a health cess and divert it for building ports.

It is perfectly constitutionally legitimate for Central government to collect cess. It is perfectly legitimate that it doesn’t go through devolution. If the Finance Commission, which is a constitutional body, is not able to bring it into the devolution pool, it is because the Constitution tells them that it (cess) cannot come into the divisible pool. The Finance Commission is not doing any disservice to the States, nor is it doing the Centre a favour.   

There could have been some instances where the CAG may have pointed out that it got corrected. But if you were to look at the end use in terms of the amount, which is gone for education, the amount which is gone for health — I’ve gone through this data several timesto the last decimal point — I have spent much more on education than what was collected as education cess.

There are projects that take more money than is collected through the cess. (Suppose) I need to give ₹100 that I collected from the cess but the project estimate takes it to ₹125. Can I wash my hands off and say sorry boss, I have collected only ₹100, take it? If the school remains without a roof, I will have to build it, so I put ₹25 more than what I collected.

There are projects that take more money than is collected through the cess. (Suppose) I need to give ₹100 that I collected from the cess but the project estimate takes it to ₹125. Can I wash my hands off and say sorry boss, I have collected only ₹100, take it? If the school remains without a roof, I will have to build it, so I put ₹25 more than what I collected.

The CAG does not capture certain things because they violate any rules; it captures them for the sake of keeping the processes clean.  

To whichever extent we assess we need resources, I will collect it. The States taking the moral high ground suddenly, saying ‘you are collecting cess and it is growing’; tell me, how many States have reduced petrol prices after we did so? Tell me, how many States have not raised duty on liquor? Tell me, how many States have not taxed extra on entertainment? Those taxes that have not got subsumed into the GST, have they left them without any increase? So, this constant mocking at the Centre, saying ‘you are increasing taxes’, I want to ask them, hasn’t stamp duty gone up here (Tamil Nadu)? Haven’t electricity tariffs gone up here? To whom does it go – your exchequer only, right? There is nothing wrong, do it. But when you do it, you have a reason, right? To raise revenue. (Likewise) When I do something on the cess, it is immediately ‘Modi Vs the rest’. Okay, I have been increasing the rates — why don’t you be kind?  

Every State (government), at least on matters of revenue, should have some calmness before they comment. Why is it that anything that the Centre does is wrong? 

I think what is being missed out in this discussion are the facts. Take facts onboard and then allege or defend or talk about what is to be done. I think there is just a lot of to’ing and fro’ing, but facts are not coming into the discussion at all. 

A. I think there is absolute transparency, everything is in the public domain. 

See, the decisions we had to take — particularly during Covid and then immediately after that — were not just taken sitting in the Finance Ministry’s rooms. Extensive consultation happened with stakeholders, observers of Indian economy, with the political leadership of various parties etc. And, the Prime Minister did his own consultations as well. Then all this came together. Literally, in those days we were calling up District Collectors — many of us ministers were assigned districts. I was assigned all districts in Tamil Nadu, a few in Andhra. Daily we were calling up of District Collectors to make sure that the essentials were coming. All this consumed a lot of time. But still, aside from this work, we were consulting experts and taking inputs and further comparing the inputs with the inputs the PM himself had collected. So, the decision to take the route of targeted relief, targeted assistance, was a conscious decision taken after due consultations. This also fell very much in line with how the PM manages finances — he is extremely careful about not splurging, or splashing it around to make everybody feel, ‘Oh, the government is spending’. (Our approach was) Be careful, give, but give only where it is due and how much is due.  That is why we announced (the measures) layer by layer, at five different times, and again in October of that year.

Because of the layered approach and because of the tools which we adopted like — like the guarantees that we gave, saying banks should not hesitate (to lend) or at this stage ask for extra collateral from borrowers. And therefore, to that extent we made sure that we would stand-by if there’s any loss. So, when we adopted innovative ways of handling public money, the burden on the public exchequer was far less and the relief was timely. The easy solution that comes out of economic theory, which is ‘print (currency notes) and distribute’, we did not take.

It was a laborious route. A lot of energy had to be spent to see if it was actually implemented. Are the bank managers giving loans or rejecting — like that. So, the effectiveness — I’m consciously using the word ‘effectiveness’ and not ‘success’ — was because of the principle, which the PM strictly follows, that if you plan something, you have to go to the last mile to see it is executed. At that time, an eminent economist in India pointed to what a developed country did – 21 per cent of GDP given away to citizens as cash – and said if this country can do, why can’t you?  

They can come with that proposal to me, but today domain experts are willing to come to India and work with Indian companies. And AI movement is rapid. Many of our universities and institutions, like the IITs and some private universities are taking up lots of initiatives on AI. We have not restricted Department of Science and Technology funds from assisting AI; (which means) the funding is not restricted to the ₹10,000 crore (announced in the Budget). There are funds created by the government for science and related matters. So, there is enough corpus created which is now being used to raise more money from the markets and projects are getting funded out of them. It has not come to the extent of tax concessions yet, but there are lot of funds available. 

If there were to be an equity contribution from the Centre, it would be in the range of ₹7,400 crore. But, in 2018, it was consciously decided by the State (Tamil Nadu) government to have it as a State sector project. If you (TN) have decided this to be a State sector project, then, the duty of the Centre, particularly the Department of Economic Affairs, would be to help the State in getting an international loan. Which is what I am doing now. When I spoke in Coimbatore a few days ago, I said that we have arranged for about ₹27,000 crore from four different international organisations in four different tranches. Now I can update that it is about ₹32,000 crore. There has been continuous engagement of the central government with agencies to get the money. Now, you (Tamil Nadu) have not even used the ₹6,000 crore of money. The State money waiting to be utilised. What is the noise, “Centre has refused to give money”? Refused what? The terms are yours. Where am I refusing to give any money?

Second, at one point in time, there was an understanding between the State and the Centre that in due course if it is possible to take over, we will take it over as a Central sector scheme, but you keep doing the project so that as the money comes, you use it. Now suddenly... and I can understand the States’ inconvenience, when it is a State sector scheme, every borrowing will be to the State’s account. Therefore, it is difficult for States to run such projects. That is why you find most of the Metros in the country are funded by the Centre — funded meaning, the loans are to the Centre’s account. The fact remains that you had asked for a State sector project. Political narrative should be with some sense of responsibility. Today, I find the Opposition’s allegations are wild and without the backing of facts.  

I would like you to take a look at how much of NDRF and SDRF (national and state disaster relief funds) have been spent by States. Just take all the States and see how much of SDRF and NDRF money has been released and how much they have spent. Secondly, how much of SDRF and NDRF money goes for disaster relief is again a formula given by the Finance Commission. The central government cannot tweak it in favour or against any State. In fact, the 14th Finance Commission reported, which was accepted by Prime Minister Modi in the early years of his coming to power, in 2014 — that was when it (devolution to States) went from 32 per cent to 42 per cent — that was the first time when a Finance Commission recommended allocations for States for disaster relief. It (disaster relief) was a separate category — like urban local bodies and municipal corporations. All these categories were brought in by the 14th Finance Commission to create an institutional arrangement for States to receive funds upfront for disaster relief.  

When a disaster happens, the money is to be released based on what has happened on the ground. Two times, a high-level, inter-ministerial committee (inspects the damage and) gives a report. A high-level committee of ministers take a look at it and then money is released. Ninety per cent of the time what the committee says, is released. Sometimes it is tweaked, but tweaked in favour of the States, so that they get slightly more.  So, based on a given standard operating procedure this happens even without a slight alteration for meeting disaster. For preventing disasters, moneys are also arranged from World Bank or ADB or AIIB to make sure that disasters are avoided

Because I’m here in Tamil Nadu. I will ask this. More than ₹9,000 crore was borrowed — we arranged for the loans — and was given for Chennai drainage. Drainage is not sewerage — it is to naturally drain water towards the sea so that the city does not come down. This was after 2015 (when there was a major flooding due to rains.)  (Still) we couldn’t escape Michaung (hurricane). Where is the ₹9,000 crore? ₹9,000 crore came, but Chennai couldn’t escape (Michaung). 

The feedback is, ‘we are paying too much tax, gives us money back’. That is the kind of feedback I am getting – we are paying tax, we are not getting enough back. But it pains me that this narrative also includes, ‘we are paying tax, but the free food is being wasted on people.’ See, middle class requires help, there is no doubt about that. When I say help, I don’t mean it as patronage. Where we need to be flexible, we have been flexible. (Within the middle class) the salaried middle class was kept in mind and that is why within a year of bringing the new tax regime, I increased the standard deduction.  Secondly, benefits to the middle class have been given through many other routes — such as children going abroad, for LRS, student loans, interest subvention for loans, affordable home and so on.  But if you say it is only through tax benefits (the middle class will be happy) and the rest are not taken on board — I hear that and I will see what best I can do.

No. It hasn’t impacted in any way what I’ve been planning for the Budget. It hasn’t affected any of the programmes. The issues that were before me when I was preparing the vote-on-account Budget continue to be before me now. I don’t see any special addition or deletion because of coalition politics. 

Andhra Pradesh and Bihar, like many other States, were included for considerations that were made explicit in the Budget speech itself. To immediately think that if I have not mentioned a State in the Budget, I have ignored them without giving them any money, is a political convenience argument. No State gets ignored. On considerations of flood and building of the capital, I had to mention these two States.