One of NDA regime's focus areas was reducing expenditure. Speaking with Business Today's Anilesh S Mahajan, Cabinet Minister Piyush Goyal explains how the government plugged various loopholes and strengthened the economy. Edited excerpts:
Q. There is a feeling that the economy is slowing down. How are you planning to accelerate the economy, if the NDA comes back to power?
Piyush Goyal: There are no ifs and buts left now. It appears that voters have already made up their mind. NDA is returning to power. There is not much of a slowdown. There is some base effect and generally people reduce their consumption level just before elections. There are some effects of global scenarios. In the last five years, we have strengthened the fundamentals of the economy, and in the future, we envisage only one-way growth.
Q. The indicators are not encouraging, and consumption is going down. For example, electricity consumption growth is merely 3.5 per cent.
Goyal: This is because the NDA regime focussed heavily on energy conservation and efficiency. In the normal course, this would have led to wasteful consumption, which otherwise could have been saved. With our LED programme alone, we have saved an expenditure of Rs 50,000 annually for consumers; 110 billion units. This is huge. Just imagine, we are saving 10 per cent of the country's electricity consumption.
Q. If we factor in the corrections made in the last five years, and try to foresee the economy in the next five years, what do you think should be the government's strategy for investments? Can we expect the return of private capital or will we have to stick along with the public sector spending?
Goyal: Firstly, there is no difference in the efficiency and performance between the private and the public sector. Take for example private sector banks. We all have seen skeletons coming out of their closets. The industry and businesses in the private sector too fail. It is largely because of NDA's vision and leadership that many PSUs are either coming back on track or are already performing well. We inherited a collapsing economy; India was part of the fragile five (Brazil, Indonesia, South Africa, and Turkey). At that time, inflation was in double digits, interest rates were high, fiscal and current account deficits were high, the growth was slowing... in such a scenario, it was difficult to encourage private investment. Above all, between 2008 and 2014, there was indiscriminate lending by banks; and all this led to over-capacity.
In days of over-capacity, which private player will invest. In the last five years, we pumped money in infrastructure to strengthen the economy. It was the correct and practical thing to do. This led to an improvement in capacity utilisation, which subsequently encouraged private money to come in. FDI also started coming in. During this tenure of NDA, we had maximum inflow of FDI. This money is coming because the world has started reposing its faith back in the government and the leadership. The confidence boost obviously encourages investors - domestic as well as foreign - to put their money.
Q. FDI largely came in brown field projects; hardly any money came for new investments. Can we expect money to come into large projects sooner?
Goyal: This was largely because we had surplus capacity. Obviously, the investor will not put in money in such a scenario. But we are now expecting money to come in all sectors; be it financial services, insurance sector... Now that the steel projects are being resolved via NCLT (National Company Law Tribunal), we will ensure that steel consumption goes up. We have strengthened and streamlined the domestic production of oil and gas. Similarly, we made the mining industry transparent. The results and dividends of all these will be visible sooner.
Q. There is another debate going on: inflation vs deflation. Are we in an economy of low inflation or is there a deflationary scenario?
Goyal: If we look back, whenever Congress came to power, inflation remained at record levels. This may suit them. Since 1947, if we do an analysis of the speeches of all finance ministers, right from R.K. Shanmukham Chetty, apart from the (Atal Bihari) Vajpayee regime, inflation remained a concern. Vajpayee-led NDA too was successful in curtailing inflation, as did we. PM (Narendra) Modi strongly believes that inflation hits the poor and the middle class the worst. Inflation has been continuously coming down in the last five years. This tenure witnessed the lowest average inflation in last five years. This has given confidence to the country that inflation can be tamed. Those who are worried about deflation must realize that the poor and the middle class deserve some relief.
Q. Those backing the deflation argument say that inflation is lower because of the tamed food inflation. They argue that this is, in turn, not allowing farmers to get a fair price for their crop.
Goyal: The NDA regime has already started work to double farmers' income by 2022. This is work in progress and several steps have been taken to push this. The MSP has already been enhanced to 1.5 times of the cost. We ensured that farmers' credit flow improves, along with improvement in irrigation facilities and scientific tracking of the quality of soil (via soil health cards). In the next five years, we have committed to invest Rs 25 lakh crore in the agriculture sector, to improve storage facilities, cold storages, logistics chain, food processing, et al. These segments will get strengthened further to ensure that farmers get fair value for the produce. Today, we are self-sufficient, unlike under the UPA regime when we were import-dependent for various products. Remember the pulses price shock we had? The prices had touched the roof. We did a root cause analysis and did the treatment.
Q. Do you think the NYAY scheme (Nyuntam Aay Yojana) offered by Congress will work here?
Goyal: It is a complete non-starter. Till today, no one from the Congress leadership could explain the scheme well to the people. They are also not been able to explain if this will be funded by fresh taxes. How will they arrange funds? Remember, Indira Gandhi took the taxation slab to 97 per cent. Their ideologues are already saying that the middle class should pay more tax.
Q. Are you satisfied that inflation control is proportional to structural reforms?
Goyal: In 72 years, the NDA regime implemented the most number of reforms, including on inflation. We initiated the decisive fight against black money, which was one of the biggest reasons for inflation. We made ourselves a food surplus country. Capital goods like metro coaches and locomotives are manufactured in India now. We initially pushed solar based on imported panels. Now we are emphasising on developing the technology and equipment in India. We are doing things in the correct order; not only to make India self-sufficient but also to moderate the inflation in the economy.
Q. You talked about black money. Most of the consumption of this ill-gotten money happens during elections. You are also the treasurer of the party (BJP). How are you ensuring that at least your party and candidates stay away from this?
Goyal: The leaders from Samajwadi Party, Bahujan Samaj Party, Nationalist Congress Party, or Congress will be able to tell you more about consumption of black money. From the days of Bharatiya Jan Sangh to Bharatiya Janata Party, we have kept our finances very transparent. We ensure that we fight elections with transparent and honest expenditures. We faced challenges as well. That's why we brought in electoral bonds so that honest money could come into electoral practices. The NDA regime has reduced the limit of accepting cash donations from Rs 20,000 to Rs 2,000. Unfortunately, some political parties divert these monies towards their private investments. Hence, they dislike the transparency and oppose these reforms. I appeal to all donors to make political donations either through electoral bonds or via cheques. They should force political outfits to contest elections on honest money. This will lead to the formation of more powerful, honest, and transparent governments.