Calling the debt-laden national carrier Air India's sale to Tata Sons a 'seminal moment', finance ministry's principal economic adviser (PEA) Sanjeev Sanyal said that the government has managed to carry out a large privatisation in a clean and popular manner. Expressing optimism over India's economic recovery, Sanyal expects the gross domestic product to post a double digit growth in the current fiscal and in the following year 2022-23.
"It had to be demonstrated that a big privatisation could be done, it could be done cleanly and that it would be a popular move," said Sanyal on the Day 2 of the 19th edition of the India Today Conclave 2021. Hitting out at the critics over the deal, the PEA said those complaining should have put together a consortium and bid for the airline.
"If anybody thought that the Tata should not have been purchasing it, they should have put together a consortium and bid for it, and bid more than Rs 18,000 crores and we would have been very happy to sell it to them as well," he said.
With the government deciding to hold back on Air India's non-core assets including land and building, valued at Rs 14,718 crore, Sanyal said those could will be taken through the monetisation route and help pay the legacy debt of the national carrier.
"Those assets can be monetised in various ways. You can outright sell them where it is appropriate, you can lease them out. For infrastructure that's [leasing] a better thing to do because, after a period of time, you can get it back and you can then decide what to do depending on that time, and so on. So this will bring back some more," said Sanyal.
As part of the Rs 18,000 crore deal, Tata will take over Rs 15,300 crore worth of debt, leaving a Rs 46,262 crore debt with the government of India.
Sanyal expressed confidence over the economy clocking a double-digit growth this fiscal and the next. "The economy is recovering quite strongly, all the high frequency data, whether its exports or Google's mobility index and many of the other indicators, … they all suggest that it's, it's a very strong V-shaped recovery," said Sanyal.
He added that the Indian economy survived the shock of the pandemic well. "The economy clearly is recovering, I would be surprised if we do not do double digit growth this year. But, of course, I never will not never know about a third wave, but short of that, we will probably do double digit growth this year, and possibly even next year," he argued.
The Reserve Bank of India has estimated a 9.5 per cent GDP growth for FY22.
Amid outcry over skyrocketing petrol and diesel prices, Sanyal justified the high fuel taxes as helping the government ramp up capital spend to boost growth.
"The oil prices have gone up very significantly and domestic prices are very high, but there is a trade-off here between collecting taxes and inflationary pressures that may be there… there's no right or wrong answer about this… where to be on that trade-off is something that policymakers think about a lot… what we do into the future is different… but the good news is…we'd have created a large kitty of revenues. So our fiscal numbers are exceptionally good right now. Yes, and we have the resources to ramp it up, especially on capital expenditure on infrastructure," said Sanyal.
Highlighting the reforms agenda of the government in the last 18 months. Sanyal said that the government has opted for supply-side reforms to revive the economy as against the demand management approach followed by other countries.
"We have created the world's largest food programme with 800 million people being given free food, …[but]... our approach was not that you can revive the economy based on demand management. When you get a shock, you need to make sure people don't starve, people have some money in their pocket, and you don't get cascades of defaults happening through the financial system and so on. So we provided the support for that. But reviving the economy ultimately has to be a supply side reform approach," he said.
Sanyal added that the government opened up so many sectors in the last few months. He said that through the Production-linked Incentive (PLI) scheme, the government was encouraging people to ramp up.
"So we're [doing] both in terms of opening up sectors for new sectors, as well as sectors we have identified which have probably high potential for scaling up, we have given a PLI scheme," he said.
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