Will the Union Budget for 2010-11 stoke inflation by making transport fuel expensive? Will the government be able to meet its target of raising Rs 40,000 crore from disinvestment? A day after he presented the Budget for the coming financial year, Finance Minister Pranab Mukherjee sat down to discuss a wide range of issues with Jyoti Mukul. Edited excerpts:
The biggest concern from the Budget is inflation. Does the government estimate of 0.4 per cent increase in inflation take into account only petroleum products or all items? How does the government plan to tackle inflation?
Taking into account all the increases, inflation will be around 0.4 per cent in WPI (wholesale price index). We have announced a number of measures. Even my colleague, the agriculture minister (Sharad Pawar), while replying to the debate in Parliament and I while intervening in the debate day before yesterday mentioned the measures we are going to take. For instance, you have to step up domestic supply, but it will take some time. So, you have to bridge the gap by imports. Whatever steps were needed we have taken. We have given duty concessions. We have allowed duty-free imports by putting items under OGL (open general licence). To ameliorate the sufferings of the vulnerable sections, at least the persons below the poverty line, we have provided subsidised articles like edible oil with a subsidy of Rs 15 per litre. We are requesting the states to distribute it. In the next couple of months, it will have a moderating influence.
How will you label your tax collection estimates? Are they conservative or buoyant?
It is not my job to assess myself. It is for others to decide. My target is that whatever I have projected, I would like to collect a little more than that. When estimates are made, I am rational. I take into view growth of the economy.
As far as growth is concerned, the third quarter figure of 6 per cent was not good. How do you see growth for the full year?
I am not very disappointed because agriculture’s contribution was negative, which was expected. The full impact of deficient monsoon has been felt in the third quarter. Growth will be better in this (fourth) quarter. When we had 6.1 per cent growth in the first quarter, the contribution of agriculture was more than 2 per cent. When we had 7.9 per cent growth, the contribution of agriculture was less than 1 per cent. And therefore it is quite natural that when the full impact of deficient monsoon was felt in the third quarter, agriculture turned negative.
To reach the Central Statistical Organisation’s estimate of 7.2 per cent growth for the year, fourth quarter growth has to be at least 8.8 per cent. Do you think it is possible?
Definitely; CSO has taken that into account. I do feel that we will be able to reach 7.2 per cent.
You had earlier said that growth will surpass CSO’s 7.2 per cent estimate. Are you not sticking to it now?
I am not sticking or diluting it because these are all estimates. These estimates are revised time to time depending on more dependable data. That is the practice.
By raising the duties on the petroleum sector, you have pre-empted the oil companies from increasing prices on account of higher international crude oil prices. While you are raising an additional Rs 26,100-crore from the petroleum sector, the subsidy you have provided is Rs 3,108 crore for 2010-11. What is there for government-owned oil marketing companies in the budget?
That is being treated differently. It has nothing to do with the budget. Problems of oil companies will be looked into differently. That was not supposed to be in this budget.
But the formation of a committee was announced by you in last year’s budget?
The Kirit Parikh Committee was for a different thing. It was for decontrol and deregulation. It did not make any recommendation on what taxes you should have or not have. That is the domain of the finance minister and not of any committee. Don’t mix up the two. The committee was set up to make recommendations on how the oil sector problems should be looked into. In my budget speech, I have categorically stated that the committee’s recommendations will be looked into by my colleague, the minister in-charge of petroleum and natural gas (Murli Deora).
A substantial portion of your speech was on the banking sector. In your post-budget meeting with the Reserve Bank of India on March 6, what is the message you want to give, especially with regard to the stimulus?
RBI is a regulator created by an Act of Parliament. It is a part of the process. Whatever has been said in the budget, it is after consultation with RBI. The banking division (of the finance ministry) is constantly in touch with RBI
With the last two issues of public sector undertakings not doing well, especially where the retail portion is concerned, how comfortable are you when it comes to raising Rs 40,000 crore during 2010-11 from disinvestment? Will there be stocktaking of how the issues have performed?
Review is an ongoing exercise. It is true that retail response was not according to the expectations but for that some more research is required. Market conditions also have to be studied. This is a programme spread over 365 days. We should not come to any conclusion by seeing one or two cases.
I do not visualise any major problem right now. As and when I reach the bridge, I will think of crossing it. Whatever I wanted has been oversubscribed in all the issues. Now, within that whether it is institutional purchase or retail purchase – that is a different issue. The main objective has become possible because the resources we wanted to generate, we have been able to generate. Oil India, NHPC and even NTPC issues did well.
The poor response was mainly for the Rural Electrification Corporation and NTPC issues. There is a perception that the government pressurised its financial institutions to buy at the last moment?
There is nothing like that.
Are you perturbed by the increase in foreign capital flow into the country?
These things are always under review. But we are not unnecessarily worried about this. We have not reached that stage.
