We are ready to present Budget even 4 weeks in advance: Shaktikanta Das

Interview of Economic Affairs Secretary Shaktikanta Das

At a time when the government is planning the most comprehensive overhaul of the Budget in recent times, Economic Affairs Secretary Shaktikanta Das is playing a pivotal role. In a conversation with Dilasha Seth and Arup Roychoudhury, he says the government would be prepared to present the Budget up to four weeks in advance. The veteran policymaker also says that the fiscal deficit target for the year will be achieved despite the Pay Commission burden and the disinvestment and that spectrum auction targets will be met. Edited excerpts:

The government is poised for one of the biggest transformations in Budget making process after Wednesday’s Cabinet decision. Could you take us through it?

One major decision was announced in the Budget regarding Plan and non-Plan expenditure. The other is the merger of Railway Budget with the General Budget. For 92 years, we have had a separate Railway Budget, even though there was no statutory or constitutional requirement. It was started at a time when railways’ revenues were almost similar to the revenues of government of India. The intention was that the surplus of railways will contribute to general revenues. But that has lost relevance now. The railways has been brought to the centre stage of our fiscal policy. There are many infrastructure sectors such as highways that have grown significantly while being part of the General Budget. Now, railways will get the focus it deserves. We can now go for a better, more comprehensive planning for multi-modal transport. This will ensure better synergy between railways, highways and inland waterways for passengers and freight.
Read our full coverage on Union Budget 2016

Will there be an impact on fiscal situation because of merging of the Budgets? Will you reduce the gross budgetary support now that railways will not pay dividend?

There will not be an impact on the Centre’s fiscal position, as the only thing we are foregoing is the dividend. There will be no capital at charge. Since dividend was earlier paid on capital at charge, it will be eliminated. Now, it will be a part of the government’s general pool of deployment. The gross dividend the railways pays is Rs 9,000-10,000 crore, of which Rs 4,000-5,000 crore is adjusted for various subsidies. There is also dividend subsidy that the government gives to railways. So, the net dividend is Rs 4,000-5,000 crore, which is easily manageable in a scheme of Rs 20 lakh crore and will not impact the fiscal position of the government. The gross budgetary support arrangement will continue.

What about the railways’ financial power? Will some ground be ceded to the finance ministry?

The financial powers that are given to GMs will continue. It is well regulated. Too many restrictions will cause delay in the implementation. It is a huge, commercial organisation. I don’t think any ground will be ceded. Earlier as well, the Railway Budget used to come to the finance minister for approval before presentation. As far as other forms of financial powers are concerned, they will continue. Like any other big ministry, they will prepare their Budget Estimates and bring them to the finance ministry.

Will the finance minister decide fare proposals?

I can’t pre-judge the issue. It may or may not be. All commercial decisions will continue to be taken by railways as they are being taken today. All major decisions involving public interface, fare and all, are taken as part of the larger government. They anyway don’t take such decisions in isolation.

The finance minister said while the government is in favour of advancing the Budget, a final call will be taken based on the state election schedule. What sort of timeline do you have in mind?

In principle, the government has decided to advance it. We are keeping ourselves ready to present the Budget considering an advancement of two weeks, three weeks or four weeks. Even if it is advanced by four weeks, we will be ready for it.

How is the government placed in terms of Budget preparations and the data needed?

The matter has been under consideration for quite some time and internally we were working towards the advancement of the Budget date. The preparatory steps were taken and the Budget circular will be issued very soon. I have already signed it and the revised estimate meetings will start from the middle of October. As far as data are concerned, currently, we get the advanced estimates on February 7. Based on that, we calculate the nominal growth and fiscal deficit for next year.

Now, we will get them one month in advance. Naturally, those data will be prepared on the basis of input data of one less month. But, we have discussed the matter with the Central Statistical Office (CSO) and the variation between the two will be very insignificant. In the unlikely event of variation, the necessary adjustments, if required, can be done at the time of the finance minister’s reply to the Finance Bill.

The CSO is also constituting a working group to ensure that next year onwards, data collection becomes more robust. Therefore, we are finding a durable solution.

Will the goods and services tax (GST) be a part of the Finance Bill? Is the target date of April 1 achievable?

The revenue department prepares revenue estimates based on the nominal gross domestic product (GDP) and this year it is all the more necessary because the government has taken a firm decision that GST shall be introduced from April 1.

You have to have the Finance Bill also passed before that so that GST implementation is not affected. As far as the target date is concerned, it is possible and the revenue department is working overtime with the states.

Looking at the larger fiscal situation, what are your expectations from disinvestment and spectrum auction targets for the year?

The divestment target is Rs 56,500 crore. Of that, Rs 21,000 crore has already happened through buyback. That amount will flow into government coffers by September 30. For the balance, there is a road map, including strategic disinvestment. Disinvestment targets will be achieved. As far as telecom auctions are concerned, the auction dates are notified. We have to see what the response is, then only we can decide. But given the feedback that we have, the target that we have projected should be possible to achieve.  There is an arrear component which is linked to court cases. We feel the government has a strong case. So, those matters are also being pursued. We were expecting Rs 55,000-56,000 crore through the auction. Licence fee that we get in a year is Rs 20,000-22,000 crore, then we are expecting Rs 20,000-25,000 crore through arrears.

April-July fiscal deficit was almost 70 per cent. The seventh central pay commission (CPC) burden did not kick in until August. How confident are you of maintaining the target without resorting to spending cuts?

At this point, we are quite confident that the fiscal deficit target will be maintained. Last year, we did not cut any Plan expenditure. In fact, we increased it as compared to Budget estimates. This year, we hope to do the same. We know how much has gone out because of 7th CPC. We thought we would have to resort to some cash management bills for the CPC. But, we found out that we don’t require that as well.

The FRBM  (fiscal responsibility and Budget management) committee is expected to submit its report by October 31. Will you implement some of its recommendations in the Budget? They may recommend combining of state and central deficit targets.

Incorporating their suggestions will be our endeavour. We don’t know what their recommendations will be. But, the aim is to implement their suggestions into our Budget process.