 "BJP's vision is to create an enabling environment: Ravi shankar Prasad")
Ravi shankar Prasad, deputy leader of the Opposition in the Rajya Sabha, says there has to be some stability in the tax regime, and that if transparent decision-making exists, revenues will increase. He tells Aditi Phadnis what the Bharatiya Janata Party will do with the economy if it comes to power. Edited excerpts:
The Bharatiya Janata Party (BJP) is fuzzy on economic policy and reform. Its parliamentary stance shows no way forward in this aspect.
For the economy to grow the passage of bills is not important - it is the nature and quality of governance which is important. And if the past is a precedent, then with the BJP, the future looks promising.
Yet, when we demitted office, the economy was growing at 8.5 per cent. We never blamed international factors.
And I am not saying this. Please see the first few paragraphs of the Economic Survey 2004-05. The first paragraph says: "The performance of the Indian economy in 2004-05 so far has exceeded expectations formed at the beginning of the year. Buoyed by a rebound in the agriculture and allied sector, and strongly helped by improved performance in industry and services, the economy had registered a growth rate of 8.5 per cent in 2003-04, the highest ever except in 1975-76 and 1988-89. Normally, strong growth is expected after anaemic growth, and vice versa. Following the 'bumper' growth in 2003-04, initial growth projections for 2004-05 were placed in the range of 6.2 per cent to 7.4 per cent."
The Survey also noted improved performance in the manufacturing and services sectors.
This is authentic confirmation that we took the economy from 4.8 per cent growth to 8.5 per cent growth; and the United Progressive Alliance legacy is to bring growth rates down from 8.5 to 4.8 per cent.
What I want to know is: when the rest of the country - especially BJP-ruled states such as Goa, Gujarat, Madhya Pradesh and Chhattisgarh (maybe Congress-ruled states have contributed to this, I have no problem in accepting that) are growing at between 10 and 11 per cent, why is the overall economy performing so badly below par? In Gujarat, agricultural growth for the last three years has been 11 per cent average. In Madhya Pradesh, it has been 18 per cent.
So, the larger point is the only link between good economics and good politics is good governance. When good governance fails, there is decision-making paralysis, there is slow growth.
The BJP's stance is unwelcoming of investment: take foreign direct investment (FDI) in retail. It is not known whether the party stands for liberalisation in other areas like foreign investment in defence and in railways where even Indian private investment is not permitted...
There is no debate in our party that investment, both Indian and foreign, is needed in the infrastructure sector. After all, it was our government that passed reform laws such as the electricity Act of 2003 that delicensed generation, and freely permitted captive generation. The paralysis in the power sector came because of CoalGate and environmental stasis.
From 15 km a day in the Vajpayee era, road building in India has come down to two to three km a day. In November, the minister for roads and highways said in Parliament that in 2013 only one contract was given for highway building. The National Highways Authority of India is mired in Central Bureau of Investigation enquiries.
The telecom sector is yet to recover from the 2G disaster. The real estate sector is dogged by problems of abuse of building permissions, and land acquisition. The son-in law-phenomenon - I don't think I need to say anything more. And how much public money - money of banks - is involved in all these projects that are mired in corruption and court cases, I don't even know.
The roads and highways ministry has had five or six ministers. There has been an equally high turnover of ministers in telecom, power and the mess in the ministry of environment is only now coming to light.
In the mining sector, activity in all the major mining states -whether it is coal or iron ore - has come to a juddering halt. I am not defending the practices of the Karnataka government. But the Union government has been a willing accomplice in the mining ban by courts.
Why did it take eight years for Posco to be given permission? We believe in creating an enabling environment and quick decision-making.
But what does the BJP stand for? Is the BJP Swadeshi Jagaran Manch? Or is it the Gujarat government? Is it for growth? Or is it for equity?
We see no disconnect. Growth can be without equity. But genuine equity can never come without growth. The BJP believes that in India, politics over distribution of bread has gone too far. How the loaves need to grow also needs to be addressed. You need revenues and you need resources to grow.
But your answer to revenues is to restructure the taxation system...
The proposal to do away with income tax and replace it with a transaction tax is just one proposal. If an enabling atmosphere and transparent decision-making exists, revenues will increase. There has to be a stability in the tax regime.
So on the Vodafone issue, your party believes that imposing a retrospective tax on companies that haven't paid any tax at all was wrong?
Whatever the apex court said in its judgment on that issue was correct. We should have accepted the verdict.
On FDI in retail, will your government scrap the proposal? What about FDI in defence, railways?
The issue of FDI in retail may be revisited. The sector employs 20 million people. India's retail sector is typical to our country. In its current form the policy may be revisited. Defence represents an enormous opportunity for the involvement of Indian enterprise, especially in weapons manufacturing. My personal view is FDI should be permitted even in excess of 76 per cent. But my party still has to take a view on this.
What about employment programmes such as National Rural Employment Guarantee Act?
The programme has to be revisited in terms of asset creation and accountability. Our prime ministerial candidate Narendra Modi said: we don't need committees, we need commitment.
There are many other things to be done. For instance, in the coal sector there are coal mines that yield no coal but Rs 40 to 50 crore is spent just to employ the people who work there. Our policy in the past was to take these people and transfer them to coal mines which are productive. Some out of the box thinking is needed.
Our overall vision is to have an enabling environment of trust; delivery of decisions taken; no undue victimisation of those who want to invest in India; removing the impression that crony capitalism flourishes in India; and the slogan: invest properly, earn decently and pay taxes.
The Bharatiya Janata Party (BJP) is fuzzy on economic policy and reform. Its parliamentary stance shows no way forward in this aspect.
For the economy to grow the passage of bills is not important - it is the nature and quality of governance which is important. And if the past is a precedent, then with the BJP, the future looks promising.
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When we came to power in 1998, the economy was growing at four per cent. We lost that government by one vote. In 1999, we returned to power. We then faced international sanctions (after the Pokhran nuclear tests), the Kargil war, the attack on Parliament, the east Asian economic crisis, the Gujarat earthquake, the Odisha supercyclone and the drought of 2002.
Yet, when we demitted office, the economy was growing at 8.5 per cent. We never blamed international factors.
And I am not saying this. Please see the first few paragraphs of the Economic Survey 2004-05. The first paragraph says: "The performance of the Indian economy in 2004-05 so far has exceeded expectations formed at the beginning of the year. Buoyed by a rebound in the agriculture and allied sector, and strongly helped by improved performance in industry and services, the economy had registered a growth rate of 8.5 per cent in 2003-04, the highest ever except in 1975-76 and 1988-89. Normally, strong growth is expected after anaemic growth, and vice versa. Following the 'bumper' growth in 2003-04, initial growth projections for 2004-05 were placed in the range of 6.2 per cent to 7.4 per cent."
The Survey also noted improved performance in the manufacturing and services sectors.
This is authentic confirmation that we took the economy from 4.8 per cent growth to 8.5 per cent growth; and the United Progressive Alliance legacy is to bring growth rates down from 8.5 to 4.8 per cent.
What I want to know is: when the rest of the country - especially BJP-ruled states such as Goa, Gujarat, Madhya Pradesh and Chhattisgarh (maybe Congress-ruled states have contributed to this, I have no problem in accepting that) are growing at between 10 and 11 per cent, why is the overall economy performing so badly below par? In Gujarat, agricultural growth for the last three years has been 11 per cent average. In Madhya Pradesh, it has been 18 per cent.
So, the larger point is the only link between good economics and good politics is good governance. When good governance fails, there is decision-making paralysis, there is slow growth.
The BJP's stance is unwelcoming of investment: take foreign direct investment (FDI) in retail. It is not known whether the party stands for liberalisation in other areas like foreign investment in defence and in railways where even Indian private investment is not permitted...
There is no debate in our party that investment, both Indian and foreign, is needed in the infrastructure sector. After all, it was our government that passed reform laws such as the electricity Act of 2003 that delicensed generation, and freely permitted captive generation. The paralysis in the power sector came because of CoalGate and environmental stasis.
From 15 km a day in the Vajpayee era, road building in India has come down to two to three km a day. In November, the minister for roads and highways said in Parliament that in 2013 only one contract was given for highway building. The National Highways Authority of India is mired in Central Bureau of Investigation enquiries.
The telecom sector is yet to recover from the 2G disaster. The real estate sector is dogged by problems of abuse of building permissions, and land acquisition. The son-in law-phenomenon - I don't think I need to say anything more. And how much public money - money of banks - is involved in all these projects that are mired in corruption and court cases, I don't even know.
The roads and highways ministry has had five or six ministers. There has been an equally high turnover of ministers in telecom, power and the mess in the ministry of environment is only now coming to light.
In the mining sector, activity in all the major mining states -whether it is coal or iron ore - has come to a juddering halt. I am not defending the practices of the Karnataka government. But the Union government has been a willing accomplice in the mining ban by courts.
Why did it take eight years for Posco to be given permission? We believe in creating an enabling environment and quick decision-making.
But what does the BJP stand for? Is the BJP Swadeshi Jagaran Manch? Or is it the Gujarat government? Is it for growth? Or is it for equity?
We see no disconnect. Growth can be without equity. But genuine equity can never come without growth. The BJP believes that in India, politics over distribution of bread has gone too far. How the loaves need to grow also needs to be addressed. You need revenues and you need resources to grow.
But your answer to revenues is to restructure the taxation system...
The proposal to do away with income tax and replace it with a transaction tax is just one proposal. If an enabling atmosphere and transparent decision-making exists, revenues will increase. There has to be a stability in the tax regime.
So on the Vodafone issue, your party believes that imposing a retrospective tax on companies that haven't paid any tax at all was wrong?
Whatever the apex court said in its judgment on that issue was correct. We should have accepted the verdict.
On FDI in retail, will your government scrap the proposal? What about FDI in defence, railways?
The issue of FDI in retail may be revisited. The sector employs 20 million people. India's retail sector is typical to our country. In its current form the policy may be revisited. Defence represents an enormous opportunity for the involvement of Indian enterprise, especially in weapons manufacturing. My personal view is FDI should be permitted even in excess of 76 per cent. But my party still has to take a view on this.
What about employment programmes such as National Rural Employment Guarantee Act?
The programme has to be revisited in terms of asset creation and accountability. Our prime ministerial candidate Narendra Modi said: we don't need committees, we need commitment.
There are many other things to be done. For instance, in the coal sector there are coal mines that yield no coal but Rs 40 to 50 crore is spent just to employ the people who work there. Our policy in the past was to take these people and transfer them to coal mines which are productive. Some out of the box thinking is needed.
Our overall vision is to have an enabling environment of trust; delivery of decisions taken; no undue victimisation of those who want to invest in India; removing the impression that crony capitalism flourishes in India; and the slogan: invest properly, earn decently and pay taxes.