Finance Minister, Arun Jaitley, while addressing at the Indian Business Leader Awards function, through video conferencing, organised by CNBC-TV18, on January 17, dropped strong indications that the Interim budget 2019 may go beyond the convention and be more significant than a vote on account.
This came at the backdrop of speculations on whether Jaitley, who is currently in New York, for his medical treatment, would be available to present the crucial February 1, interim budget.
However, dropping no hints that he would be unable to perform the crucial task, Jaitley was quoted as saying, “The convention has always been that the election year budget normally is an interim budget and ordinarily there should be no reason why we should move away from that convention. But then the larger interest of the economy always dictates what goes into the interim budget and that is something which cannot be discussed or disclosed at this stage.”
Traditionally there are no big announcements in the Interim Budget but, some sources have revealed that the union government is thinking of introducing direct cash benefit scheme for farmers and is planning to introduce certain tax benefits for the middle class as well.
Rubbishing doubts that he is under pressure to present a populist budget after the recent election defeat in three states and ahead of general elections in April-May, Jaitley said: “The NDA (National Democratic Alliance) government had been in this game for far too long to have nervousness about the budget. We are confident and proud of our performance over the last five years. The NDA government has succeeded in restoring the credibility of the economy and its decision-making process over the last few years.”
However, Arun Jaitley did confirm that in order to deal with a few economic challenges, which would be in the interest of the country, the Government might deviate from the election year convention.
He suggested that issues confronting the farm sector would constitute one such challenge, which can cause the government to take a detour of convention and pointed to the problem of high production and slower rise in prices of key agriculture products.
Though the reference to the farm sector is seen to be crucial as the government might be under pressure to announce measures for the farm sector which is linked to more than half of the population, however, Jaitley made it sufficiently clear that the government will stick to its path of fiscal prudence.
“I have always believed that fiscal discipline is always rewarded. In the past when governments have not stuck to it, we have seen the consequences,” the minister said. But he also added that in “unusual situations”, a deviation from the fiscal consolidation path might be required, which was understood by the markets and analysts.
Along with addressing the issues pertaining to the farm sector, Jaitley also showed concern about the growth rate. As per the report, Jaitley said the 7-7.5 per cent growth rate will not suffice and the eight per cent barrier would have to be crossed. However, Jaitley did say that the problems could not be addressed through “negative politics”. He added that the “nawabs of negativity” may come together but they wouldn’t hold together or have enough credibility.
Though Jaitley refrained from expressing any view on any rate cut, he did specify that India cannot have a real rate of interest that’s higher than anywhere else in the world.
Addressing to the recent grievances between the government and RBI, which saw Urjit Patel’s resignation nine months before the end of his term as governor, the minister said that the central bank and the Centre have often had different points of view but it has been resolved through consultations.