Home Government and Policy Modi ministers in five years - Finance and Corporate Affairs minister Arun Jaitley

Modi ministers in five years – Finance and Corporate Affairs minister Arun Jaitley

As Modi government completes its five year term, we examine the achievements of various ministries

We at OpIndia are doing a series on the works done by the Modi government in last five years and why should India vote for Narendra Modi again. In the last article, we saw the achievements and initiatives of Prime Minister Narendra Modi. Today we’ll have a brief look at the achievements of Arun Jaitley, Minister of Finance and Corporate Affairs.

Arun Jaitley started his political career as Delhi University Students Union (DUSU) president in 1974 from ABVP, the student arm of RSS. Being a prominent student leader at that time, he was under preventive detention for 19 months during the emergency. After being released from jail, he joined Jan Sangh, the earlier avatar of BJP. He continued to practice law, rising as a senior advocate while continuing to hold different posts in BJP. When BJP government led by Atal Bihari Vajpayee assumed the office in 1999, he was made minister for state (independent charge) of Information and Broadcasting. Later he also held the charge of the ministry of disinvestment, when it was created for the first time during Vajpayee government. After Ram Jethmalani resigned as minister for law and justice in the July 2000, he held that ministry as an additional charge. He was elevated as a cabinet minister in November 2000 and made the minister of Law and Justice, Company Affairs and Shipping. He resigned in July 2002, to join BJP as its general secretary and national spokesperson, keeping in mind one man, one post principle of the party. He again rejoined the government as minister in January 2003, as minister for Commerce and Industry and Law and Justice, and continued till 2004, when Vajpayee government was voted out from the centre. He again returned to his legal career, and was given the post of General Secretary in BJP. After 2009 elections, he was chosen as leader of opposition in Rajya Sabha, the post he continued to hold till 2014 elections. After 2014 elections, he joined Narendra Modi government as the minister for Finance and Defence. He continued to hold the charge for Defence ministry for about six months, till Manohar Parrikar was appointed as full-time defence minister. He was on a brief sabbatical last year, due to his kidney replacement surgery, and Piyush Goyal officiated as finance minister in the interim. He returned to take charge of the finance ministry in August 2018. He was on sabbatical for the second time in this January and Piyush Goyal presented the last budget of this government.

Here are a few notable achievements of the Finance Ministry in the last five years:

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GST – This government implemented long awaited one nation, one tax – GST which subsumed all other indirect taxes, except for few state-specific levies. This has resulted in increased compliance, formalization of the economy, more people coming into the tax net, and therefore more funding available to the government to spend for development and welfare activities. GST has also resulted in abolishing check posts at state borders, thereby reducing turnaround time in the transport sector and making our logistics industry more competitive. This has also substantially reduced pollution as trucks don’t have to stop at every state border. Just like Rafale, GST was also being discussed since the days of Atal Bihari Vajpayee government, however UPA government lost crucial decade on deciding both and country suffered due to non-decisiveness of the government. An entire book can be written on the benefits of GST, but in short, this is it.

Demonetisation –On 8th November 2016, the government of India suddenly withdrew old Rs 500 and Rs 1000 notes from the market. It did give time to people to exchange the notes. Though people have criticized this move, saying almost all the banknotes were returned to the Reserve Bank of India and therefore demonetisation had failed, we should remember that success of demonetisation can’t be judged from the number of banknotes returned. It was never the only stated objective of demonetisation. Though it temporarily slowed down the economy as former RBI governor Raghuram Rajan has rightly stated, such kind of shock treatment was necessary to get out of economic slumber we were in.

Demonetised banknotes of ₹500 and ₹1000

Please remember that it was done right before Uttar Pradesh State Assembly Elections, the biggest and politically most crucial state for any party. No other government would have dared to take such disrupting decision, just before the elections of the biggest state in India. Please read this article backed with official figures, to see the success of demonetisation.

Increase in taxpayers, returns and tax collection – Due to collective effect of Demonetisation and GST, tax base increased like never before and was the fastest to rise in 4 years period historically, where all the figures almost doubled in short time of 4 years.

Insolvency and Bankruptcy Code (IBC) – India long needed a proper bankruptcy and insolvency code. Earlier provisions in the law were not enough to deal with corporate loan defaulters. However, IBC has set a stringent and time-bound process to get NPA recovery done. Now no one can skirt the system like earlier, and it has seen the results with biggest NPA account worth almost 40,000 crores of Bhushan Steel settled, which was almost twice bigger compared to the infamous Vijay Mallya and Nirav Modi combined, resulting into Tata Steel taking over and lenders getting their money back. In short, IBC means pay up or lose your business. This law was immediately operationalized and cases were referred to it. The government even carried out amendments based on the feedback such as original promoters of defaulting companies can’t take over their companies at reduced prices through IBC. Arun Jaitley wrote a detailed blog on how cases are being resolved through IBC when it completed two years. It can be accessed here. Earlier such process to liquidate assets of defaulters used to take years. Even last law dealing with defaults (SARFAESI) was enacted by the last NDA government led by Atal Bihari Vajpayee. However, it was proving insufficient to deal with the current NPA mess which was inherited by the Modi government from the last UPA government.

Merger of Public Sector Banks – This was a long-discussed issue for at least last 10 years but the government was unsuccessful in merging the banks. Thought behind merging banks was, India doesn’t need many small banks but few big banks to reach effective lending to help the economy. Big banks can also absorb economic shocks better than their small counterparts. This government first merged all the remaining subsidiaries of State Bank of India in 2017, where the last merger happened way back in 2008-09 when it merged State Bank of Indore with itself. Now the government has set the ball rolling by announcing the merger of Dena Bank and Vijaya Bank with Bank of Baroda. From April 1st, Vijaya Bank and Dena Bank would be merged in Bank of Baroda.

Mudra Loans – Mudra Schemes offers to small businessman and self-employed people up to Rs 10 lakh without any collateral. This has helped a lot of people to be self-employed and also to create jobs. Till date, the banks have sanctioned Mudra loans worth Rs 8.25 lakh crore to 17 crore entrepreneurs. Though opposition keeps claiming that most of Mudra loans have turned NPAs by quoting absolute numbers a detailed analysis reveals that Mudra loan NPAs are in line with the banking sector average.

Today Congress alleged that Mudra loan NPAs have increased by 1120% by quoting absolute numbers but analysis shows otherwise. The latest publicly available figure of NPAs under Mudra scheme is Rs 11,000 crore which comes to 1.33% of total disbursement which is even below the average banking sector NPAs which range between 3-4 % is considered normal. During Modi government, banks were forced to come clean on NPA mess and they rose to staggering 12-13% for some banks, which were hidden all these years by window dressing.

Jan Dhan Yojana – Under this scheme, people not having any access to the formal banking system due to lack of bank accounts were covered. The scheme was operated in mission mode with over 35 crore accounts being opened in the scheme and nearly one lakh crore rupees being deposited in these accounts. In other words, a total of Rs 1 lakh crore which was lying unused at homes of these poor people have come into the formal banking system. The best part about this scheme was these were zero balance accounts. It was often observed that poor people didn’t have any bank account due to the requirement of minimum balance in the account, which these people wouldn’t be able to afford, and that’s why they were out of formal banking system. This scheme has resulted in almost all Indians, who were mostly poor, getting bank accounts, who further benefitted under the DBT scheme, where subsidies were directly transferred to their bank accounts.

Pradhanmantri Jeevan Jyoti and Suraksha Bima Yojana – Under these schemes, a person is insured for Rs 2 lakh for a small premium of Rs 350 per year and Rs 12 per year respectively. One can opt for these schemes easily through your bank. Jeevan Jyoti is life insurance scheme and Suraksha Beema Yojana is an accidental insurance scheme. More than 5.5 crore people have registered for Jeevan Jyoti Beema Yojna while more than 14.5 crore people have opted for Suraksha Beema Yojana. These schemes have increased India’s insurance coverage ratio, which was abysmally low before these schemes.

Atal Pension Yojna – Government launched this social security scheme primarily for the people from the unorganized sector to get them regular pension after the age of 60. Around 1.40 crore people have subscribed to APY.

Cracking down on shell companies – After demonetisation, the government has deregistered around 2.26 lakh companies and identified another 2.25 lakh companies for action and closed almost 1 deregistered over 1 lakh companies various non-compliances according to the latest data. Post deregistration these companies have been debarred from operating bank accounts until they come clean. Most of these companies are suspected to be shell companies acting as a conduit to route illegal black money. Out of already deregistered 2.26 lakh shell companies, only 1157 companies have applied to NCLT for restoration, effectively proving that all the companies deregistered were indeed shell companies. Further Central Board of Direct Taxes (CBDT) has asked income tax department to probe all these 3 lakh companies for money laundering, pointing out the rot in the system, which was continuing unabated before Modi government.

Separately, the government is considering making mandatory for companies to geo-tag their registered offices in statutory filings with the Registrar of Companies (RoC) in an attempt to tackle the black money menace. Geo-tagging means giving data on the exact location of the registered office. “This will help us identify instances of one building being used by hundreds of shell companies as their registered office or of companies citing vacant plots as their registered office address,” minister of state for corporate affairs PP Chaudhary told Mint newspaper.

Sukanya Samruddhi Yojna – Arun Jaitley launched Sukanya Samruddhi Yojana (SSY) as a part of Beti Bachao, Beti Padhao campaign of the government. Under this scheme, parents can open an SSY account in any bank, in the name of the girl child and can invest up to Rs 1.5 lakh per year which would be tax-free. The aim of this scheme is to encourage parents to save for the education and marriage expenses of girl, because of which most girls are aborted at the prenatal stage, even though it is a crime. Currently if parents invest Rs 1.5 lakh per year making total deposit of Rs 21 lakh in 14 years (maximum permissible under the scheme), at the current interest rates, maturity amount would be Rs 70,23,219 at the end of 21 years which is a huge amount, which can be only withdrawn by the girl child under whose name account has been opened.

Advancement of union budget date from 28th February to 1st February – Traditionally union budget was presented by the finance minister every year on 28th February. By advancing it to 1st February, the government now doesn’t require to take approval of parliament on a separate vote of account for the expenditure of first two months of the financial year by the time Lok Sabha approves the full budget, generally in the month of April or sometimes even May. As the financial year starts in April, if the budget is approved before the financial year ends, it would enable operationalizing the budget for new schemes/projects included in the budget right from the commencement of financial year and ministries can plan their expenditure allocations for the full year even better. By advancing the budget by 1 month, the government has made sure that all the ministries get the approval at the beginning of the new fiscal itself.

Arun Jaitley presenting the 2018 budget

This government also scrapped separate railway budget and merged it in general budget because, when the tradition of separate railway budget was introduced by the British, railways consisted a huge chunk of the government expenditure (84%) and therefore a separate budget was needed. Over a period of time, railway expenditure was in line with most other departments and therefore the basic reason for having a separate budget was non-existent. Also having separate railway budget paved way for increased politicization of railways. The government stopped the political football played in the railway budget where often, the state from which railway minister belonged, used to get preferential treatment much to the chagrin of the other states.

It is interesting to note here that during the tenure of Atal Bihari Vajpayee, the colonial tradition of presenting the budget at 5.30 PM was abolished and the time for presenting the budget was set at 11 AM. As there was a time difference of 5.30 hours between England and India, the British government used to present the budget at 5.30 PM in order to ensure that, the budget can be heard in England at 12 noon. This tradition was even continued even after independence, without giving much thought on why it existed. Due to the late presentation of the budget, newspapers used to scramble to gather the information. This advancement had brought much relief for media persons, who could now peacefully report on budget provisions.

Fugitive Economic Offenders Bill – Government also brought in a bill to take action against fugitives like Vijay Mallya who have left the country after committing financial fraud in order to evade arrest and prosecution. Under the provisions of this bill, properties of the people who have committed the bank fraud of at least Rs 100 crore and left the country to avoid arrest can be confiscated by the central government and would be free from all encumbrances, meaning the central government would have first right on such confiscated property. Recently a court in Mumbai declared Vijay Mallya as the first fugitive economic offender under the new act.

Benami Transactions (Prohibition) Act – This existed since 1988, but it wasn’t operationalised due to legal infirmities. Finance ministry moved an amendment bill to this act in 2016 and made the law operational. The amended law empowers the specified authorities to provisionally attach benami properties which can eventually be confiscated. Besides, if a person is found guilty of offence of benami transaction by the competent court, he shall be punishable with rigorous imprisonment for a term not less than one year but which may extend to 7 years and shall also be liable to fine which may extend to 25% of the fair market value of the property. this law came into the effect from 1st November 2016

This law makes difficult to own a benami property now. This is in line with Narendra Modi’s assurance on cracking down on corruption. Recently the I-T department challenged relief granted to actor Shahrukh Khan under the new law who allegedly owns a benami property in Alibaug as per the IT department.

Income tax relief for the middle class – In the tenure of this government, the middle class has got several reliefs in income tax. In four budgets presented till now, Finance Minister Jaitley has raised income tax exemption limit to Rs 2.5 lakh from Rs 2 lakh, income tax deduction limit under section 80C has been raised to Rs 1.5 lakh from Rs 1 lakh, also deduction limit on interest payable on home loans has been raised to Rs 2 lakh from Rs 1.5 lakh, health insurance deduction was raised to Rs 25,000 from Rs 15,000, transport allowance deduction. Further, the tax rate for the lowest bracket which is up to Rs 5 lakh was lowered to 5% from 10%. Overall, the middle class got substantial income tax relief in the tenure of Modi government. After taking progressive steps on income tax relief for the middle class for last 4 years, in the last budget, the government announced complete income tax relief for those who earn up to Rs 5 lakh per year benefitting crores of middle-class taxpayers.

In the last budget, the government announced that within two years, all IT returns would be processed within 24 hours after filing and refunds would be also issued simultaneously, meaning within 24 hours of filing returns, taxpayers will get the refund, the process which currently takes anywhere between 4-6 months.

UPI and BHIM app – National Payments Corporation of India (NPCI) introduced one-touch United Payment Interface in 2016, which can directly transfer funds real time into recipient bank accounts in one touch, obviating the need of using NEFT and RTGS for small amounts up to Rs 1 lakh per day. NPCI also launched UPI based BHIM app for fund transfer using mobile phones. Several banks also have launched UPI based fund transfer apps for their customers. Companies like Google and WhatsApp are also offering UPI based fund transfer now. Many independent UPI based apps like PhonPe, Google Pay are now available and has become hugely popular.

UPI Apps on Google Play Store

Bharatkosh Portal – Government launched Bharatkosh portal in February 2016, to collect non-tax receipts like dividend payments by RBI and other PSUs, spectrum fees paid telecom operators, royalties, license fee etc. According to an estimate, such non-tax revenue is over Rs 2 lakh crore for the central government and by completely digitizing it, the government took another historic step in its pursuit of Digital India and Digital Governance.

 

The author is journalism pass out from Indian Institute of Mass Communication, New Delhi. After dangerously flirting with the idea of left during his IIMC days, due to the proximity of the IIMC with JNU, a den of radical leftists, he became firmly aligned to right after realizing the futility of the left. He tweets at @kpophale.

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