Exclusive: India means business, says minister Anurag Thakur
"We invite the UAE and the world to invest in our growth story," says the Minister of State for Finance and Corporate Affairs in exclusive interview.
Indian Minister of State for Finance and Corporate Affairs Anurag Thakur is bullish on the country’s growth story despite the economic havoc caused by the pandemic. Export-oriented growth is the focus. “We invite the UAE and the world to invest in our growth story and become partners of equitable growth and development in this new era of globalisation,” he says in this exclusive interview to Khaleej Times.
With the unlocking happening more rapidly now, how soon do you expect the Indian economy to bounce back even as cases rise?
In the past one month, we have seen a decrease in the number of new cases and deaths due to Covid. In September and October, we have seen green shoots and robust signs of recovery.
The GST collections for the month of September stood at Rs954.8 billion which was much higher than the collection in August 2020 and September 2019. India’s Manufacturing PMI for the month of September 2020 increased to 56.8 from 52 in August 2020 which is the highest since early 2012. In September, consumption of steel, toll collection, sale of tractors, passenger vehicles surpassed pre-Covid levels seen in February. Spending on electricity, which is seen a good and reliable indicator has also seen an increase.
I am extremely bullish about India’s economic resilience and confident that the reforms will help us revive growth in the months ahead. In the World Economic Outlook released by IMF, India is expected to grow by 8.8 per cent in FY 2021 which will again make it the fastest growing economy in the world.
The recovery faces two risks: rising infections and stress on state finances. How do you propose to surmount them with state revenues at new lows?
The infections and the number of cases have been declining while we have been rapidly increasing the number of tests being conducted. It is a fact that India has amongst the world’s lowest mortality rates and ranks high in terms of testing per million.
Regarding the stress on state finances, the Centre along with RBI has since the very beginning supported the states financially. In the first week of April 2020, the government released the central share of State Disaster Response Fund (SDRF). Further, to provide additional resources to states to fight Covid-19, additional borrowing limit of up to 2 per cent of Gross State Domestic Product (GSDP) has been allowed to the states for the year 2020-21. More than Rs2trillion has been borrowed by the states against this additional two per cent already. Assistance under the AatmaNirbhar package has also been provided that helps citizens in every state. They have been provided food grains, pulses; farmers have been paid through PMKISAN. Direct cash transfers to women under PMJDY have been done apart from support to senior citizens, widows and disabled under the National Social Assistance Program.
The recovery thus far has been uneven. How do you think the latest fiscal stimulus will boost growth?
The Rs20 trillion AatmaNirbhar Bharat package which is 10 per cent of India’s GDP, helped hundreds and thousands of businesses and individuals. Under the Emergency Credit Line Guarantee Scheme, the total amount sanctioned stands at Rs1.8 trillion, of which Rs1.3 trillion has already been disbursed to 2,709,027 borrowers.
We have issued refunds of over Rs1.23 trillion to more than 3.8 million tax-payers between April 1 to October 13. This includes personal income tax (PIT) refunds amounting to Rs334 billion issued to 3.6 million taxpayers and corporate tax refunds worth Rs900 billion to over 189,000 taxpayers.
We announced measures of Rs730 billion to stimulate consumer spending in an effort to fight the slowdown.
We announced a LTC (Leave Travel Concession) Cash Voucher Scheme under which government employees will be provided cash payment in lieu of LTC during 2018-2021 along with leave encashment. It is expected that it will generate additional consumer demand of Rs280 billion.
All Central government employees can now get an interest-free advance of Rs10,000 under the Special Festival Advance Scheme. It is expected that it will generate additional consumer demand of Rs80 billion.
Covid-19 has slashed jobs in the service industry and could be pushing people into poverty. How do you plan to tackle this?
We understand the concerns of the service industry and we are taking steps to help them. The Emergency Credit Line Guarantee Scheme helped a lot of these companies and professionals with additional liquidity which helped them stay afloat at that time and saved a lot of jobs as well.
We also suspended Section 7, 9 and 10 of the Insolvency and Bankruptcy Code to ensure that no company is taken to the NCLT in these times. This step has also helped prevent job cuts.
As per the IMF, Bangladesh has overtaken India in GDP per capita. Are there any lessons for India here?
In 2019, India’s GDP in purchasing parity terms (PPP) was 11 times more that of Bangladesh while the population was eight times more. In purchasing power parity (PPP) terms, India’s per capita GDP in 2020 is estimated by the IMF at $6,284 as compared to $5,139 for Bangladesh.
In fact, the IMF World Economic Outlook report, in the same graph and the same column, has estimated India’s GDP to grow at 8.8 per cent in 2021, amongst the highest in the world and twice that of Bangladesh at 4.4 per cent.
On the topic of per capita GDP, it is also important to note that under the Modi government, it has increased from Rs83,091 in 2014-15 to Rs108,620 in 2019-20 which is an increase of 30.7 per cent. Under UPA 2, it had increased from Rs 65,394 in 2009-10 to Rs 78,348 in 2013-14, an increase of 19.8 per cent.
Further, if India’s neighbours prosper on the economic front, it’s a good sign for us as our trade relations will be strengthened and it will bring regional prosperity.
Farming sector reforms have run into some rough weather. How do you seek to convince your critics to get on your side? Long-term benefits are clear, but the short-term pain during the pandemic is unacceptable to some.
Let me make it crystal clear again — the government is not going to withdraw purchasing farm produce and we are not doing away with the Minimum Support Price scheme. It has been enshrined in the Act passed by the Parliament that every farming agreement shall explicitly provide for a conciliation process and formation of a board consisting of representatives of parties to the agreement.
India’s farmers will have the advantage of competitive prices, larger market and diverse opportunities.
On FDI investments, what are the sectors that you expect the UAE to invest in the country? Will these investments be protected? Adnoc is a major investor in Reliance.
India and UAE have shared trade links through the centuries. Close to $6.65 billion was invested by the UAE in India through the form of FDI last year. During the visit of Prime Minister in August 2015 to UAE, it is decided to establish UAE-India Infrastructure Investment Fund, with the aim of reaching a target of $75 billion to support investment in India's plans for expansion in railways, ports, roads, airports and industrial corridors and parks.
The National Investment and Infrastructure Fund (NIIF), India’s first sovereign wealth fund, signed a $1 billion investment agreement with a wholly owned subsidiary of the Abu Dhabi Investment Authority in October 2017, to invest in energy, transportation and other infrastructure-related sectors in India. ADIA is investing $1 billion in affordable and mid-income housing projects in India's leading cities.
We invite the UAE and the world to invest in our growth story and become partners of equitable growth and development in this new era of globalisation. India offers a perfect combination of openness, opportunities and options.
Big Tech companies have invested billions in some Indian retail and telecom companies. Do you see more moving to India?
Definitely, I do.
The AatmaNirbhar Bharat reforms undertaken open up vast opportunities for companies looking to expand, collaborate and accelerate growth.
In the sectors of defence production, atomic energy, space, logistics, agriculture, food processing, we announced our intention of opening them up and inviting private companies on board.
The global business community has consistently shown their interest and enthusiasm to come and do business in India. We want to become a manufacturing hub and we want to have export-driven growth.
As many as 16 companies, including Foxconn, Samsung, Pegatron, Rising Star, Lava International etc. have been selected for the PLI scheme which will generate some 300,000 direct employment opportunities in the next five years.
India offers the world a perfect combination of openness, opportunities and options.
Covid showed how brittle the healthcare system is in India. The government must step in at the local level and not leave it to private players...
At the very outset of the pandemic period, Prime Minister Narendra Modi announced Rs150 billion allocation to healthcare, which was disbursed to various Indian states and utilised for essential items such as testing labs, kits etc. Not only this, we announced a Rs50 million insurance cover for health professionals. We also announced infectious diseases hospital blocks in all districts of India and an integrated public health lab in all districts apart from implementation of the national digital health blueprint.
Further the PMCARES Fund has also been utilised to scale up the number of ventilators in hospitals at a record pace. It is also true that when the pandemic broke, we did not have the capacity to manufacture masks and PPE kits on scale. Today. India is the world's second largest manufacturer of masks and PPE kits. In fact, we are providing it to nations around the world now! Today, India has 1,600 Covid-19 dedicated hospitals.
The damage done to the SMEs during the crisis has been colossal. Is the government looking at taking some steps that provide direct relief to households and MSMEs through tax transfers?
We just announced a couple of measures to revive consumer demand in the country. The schemes announced under AtmaNirbhar Bharat are still active. A record number of people are getting work under MGNREGA. We are monitoring the situation and we will announce further steps when required.
Growth-enhancing reforms have been largely missing from India for years. India has been clocking low growth even before Covid. What vision do you have for India for the next five years?
Modi government is working with a set target, timeline and trajectory to make AatmaNirbhar Bharat. This has been the year of mega reforms and in the months ahead, you will witness accelerated growth and investment.
We introduced three farm bills which will unleash the full potential of the agriculture and farming sector.
We also made comprehensive reforms to labour laws. The Industrial Relations Code will introduce more conditions restricting the rights of workers to strike. Under the code, there will be an increase in the threshold relating to layoffs and retrenchment in industrial establishments having 300 workers. These steps are likely to provide more flexibility to employers for hiring and firing workers without government permission.
We also announced the New Education Policy, which will enable India have the world's largest skilled workforce hub and bring innovation in the education sector.
In the past five years, we introduced the historic Goods & Services Tax, a massive financial inclusion plan through Jan Dhan Accounts, the landmark legislation on the Insolvency Bankruptcy Code and historic corporate tax rate cuts.
We want to become an export manufacturing hub and we will make that a reality. In a world where it's no longer business as usual, India means business.
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