'Nirmalaji has taken a huge gamble on growth'

'Nirmalaji must consider herself a very lucky finance minister, partly because of the government's response to covid and partly because we as a nation have done very well as an economy, post pandemic.'

"We are one of the most stable economies of the world. After 2007, I see an economic sweet spot at the macro-economic level. She has brilliantly leveraged all these and has taken some bold decisions," M R Venkatesh, below, chartered accountant, advocate and political commentator, tells Rediff.com's Shobha Warrier. The first of a two-part interview:

You tweeted that the 2023 Budget was a dream one! Quite surprising coming from a person who has been quite critical of...

(Quite critical of) all Budgets, of everybody. It was like my grandmother never being happy with what others prepare anything in the kitchen, and always having her own taste.

Every Budget has to be measured on what needs to be done and what could have been done in the context of the economy of the day.

Now, Nirmalaji must consider herself a very lucky finance minister, partly because of the government's response to covid and partly because we as a nation have done very well as an economy, post pandemic.

Simply put, we are one of the most stable economies of the world. After 2007, I see an economic sweet spot at the macro-economic level. She has brilliantly leveraged all these and has taken some bold decisions.

Like?

Like the capex this time. It is a big spin-off because we are going to see Rs 10 lakh crores investment from the central government.

She has also said that the loan given to the state governments is subject to capex expenditure by them.

It's not that she is giving them free loans; she says you can repay in 50 years, but you must spend on capex.

This will have a spin-off effect on the finances of the government.

For example, when you buy steel or cement, you pay GST and will have a positive spin-off effect on the finances of the government.

Then, the private sector is also going to gain from this.

Every policy decision needs to be timed perfectly. This is coming at a time when the bank balance sheets are clean, corporates are flushed with money...

We hear this every year, but the private sector has not been investing...

It is different this time. In the last six months, the Indian corporates are investing and there is an improvement in the lending from banks.

It is early days, but there is a very good chance of a virtuous investment cycle beginning. If not now, never.

Remember, the finance minister cannot take a decision after everybody has taken a decision.

She has to lead. She has seen that is a positive movement and she has taken a huge gamble on growth.

You feel this gamble will pay off?

I think so. The Indian industry is now genuinely looking at expansion.

I move with businessmen, investors, market analysts and economists as I move up and down the country.

I meet a kaleidoscope of people and get all these ground level titbits about the economy from the horse's mouth.

That's why I am matching the views on the street with the policy decisions.

The next important point is the tax cut she has brought about. It is a long overdue one.

You have always been writing that the government should abolish income tax...

As a theoretician, I can say that, and I know it is a long way off. Only when I become the finance minister, it will happen which I will never become!!!

Income tax is paid by a very small number of people, but the revenue collection from it is significant, especially personal income tax.

At this point, it is difficult from the government's point of view to do away with income tax as they are dependent on it for revenues.

Either ways, this government is too conservative for such decisions.

Now, they have cut the highest slab, from 43% to 39% and also the lowest slab. This is welcome.

The reason for cutting the highest slab is, in 2021-2022 as well as 2022-2023, she has exceeded her revenue budgets significantly.

It was possible as they have brought in a lot of people in the tax net because of GST. And, you are just going about milking everybody in GST net.

You were a critic of the way GST was implemented. But the government regularly declares the large amount of money they are generating through GST...
Do you think GST is a success now?

GST is a success as far as revenues are concerned. GST is not a success as far as MSMEs or SMEs are concerned, especially its implementation.

So, there are two different aspects. While the finances of the government have improved because of GST, the finances of the MSMEs have not improved.

But there is an important policy decision that the FM has taken to help the MSMEs.

What she has done this time is, anybody paying money expenditure to MSMEs has to actually pay the money before claiming deduction under the Income Tax Act.

By this, she is forcing people to pay the MSMEs. MSMEs are crying because of lack of capital and lack of liquidity. I hope this will address the issue.

For the first time, income tax is used to benefit the MSMEs. It is an indirect benefit.

Another good thing about the Budget is the millet programme.

If you go back four generations, in the traditional Indian houses, consumption of rice and wheat would be only on special occasions.

We were always consuming millets. because of Green Revolution, we shifted from millets to rice and wheat.

This over dependence on rice and wheat is the reason behind food subsidies, fertiliser subsidies, water problem in Punjab...

Overall, this Budget is nutritive. Barring this Rs 5,500 crore (Rs 55 billion) they have given to Karnataka, I think there is no specific targeting of any state.

• Part II: 'Amrut Kaal is not an instant noodle'

• Union Budget 2022-23

Feature Presentation: Aslam Hunani/Rediff.com