The government’s focus would be on pushing through the Land Acquisition Bill as well the goods and services (CST) constitutional amendment when the Parliament resumes following a recess from today in the Budget session, Finance Minister Arun Jaitley told CNBC-TV18 in an interview.
The Parliament has passed the coal, MMDR and insurance bills in the past few days but in an interview with Nayantara Rai, Jaitley conceded that pushing both the GST bill in time as well as the land bill, which has attracted much opposition criticism, may be challenging.
“[But] I have faith in parliamentary wisdom,” he added.
Below is the transcript of the interview on CNBC-TV18.
Q: A historic day [on Friday] — a lot of legislative action that you have been able to manage on the insurance bill and mining bill as well as the coal mining bill what happens now after recess?
A: After recess, the parliament obviously assembles for the second part of the session and when it assembles for the second part of the session, we will get an opportunity to discuss the balanced legislation and we have our agenda quite full. We have our agenda in terms of the GST constitutional amendment, which is a big piece of reform in legislation.
I had the meeting of the empowered committee of finance ministers today, I think it is moving quite well and I hope that this will be passed by a general consensus in both houses of parliament after which we have to go through the individual legislations after the states gratify the constitution amendment once it is passed.
We have the land bill, which is pending. I have the incomplete companies act, alterations which were made by the Lok Sabha which is pending before the Rajya Sabha and there are some other economic legislations, which are pending. I think we will have our agenda quite full of economic legislations and other bills as far as the second part of the session also is concerned.
There is the land bill and I quite understand that the challenges in the land bill will be far more than the current three legislations, which we passed but I am one of those who firmly believe that the land bill is in favour of rural India. Without this law to develop infrastructure in terms of rural roads, irrigation, rural electrification is not possible. To create highways which pass through rural areas, which are a part of rural infrastructure, electrification will not be possible.
For housing, for poor and affordable housing where there is a large-scale migration from rural areas to urban centres or to suburban centres is not possible and therefore it is extremely important in the interest of people living in the rural areas that this bill be passed. The industrial corridor as against the industrial hub runs through rural areas and wherever it runs through, there is going to be development on both sides of the road.
It will be a narrow industrial corridor. The values of the rural land will go up because of development, additionally rural youth will get jobs in the industries located close by. So it is extremely important that this piece is passed and we will try and convince the opposition parties as we convinced them in the other three legislations that they are in larger national interest.
Q: So far what has happened? You are confident, you will be able to convince the opposition?
A: I have a faith in parliamentary wisdom. After all the insurance has been passed, the mining has been passed, the coal allocations has been passed and there is no reason why we should not be able to pass this piece of legislation.
Q: This land ordinance is valid till April 5, 2015. Are you going to prorogue this parliament session, any decision?
A: This is a decision which the cabinet will take. There was no decision taken today but there is a lot of time between now and April 5 and therefore this is a decision which the cabinet will take.
Q: Between now and April 5, we could see something?
A: I cannot presume anything.
Q: You have also met with the state finance ministers, have you decided who is going to head the council of ministers?
A: We have had a general consultation both collectively and individually. I concede we fixed up a wrong day for the meeting today for the reason that many state ministers are busy with their own budget sessions.
Therefore, some of them I spoke to last night could not come because of their budget sessions. We need to consult all of them and develop a larger consensus. I don’t think this is a contentious issue, it should be a simple issue to have one of the senior ministers become the chairman of the empowered committee.
Q: The rumour is it could be Sourav Patel [finance minister] from Gujarat?
A: He is a senior minister, he has the experience and he knows the GST subject like the back of his hand but there are many others also who know it.
Q: You think you are at track to rollout GST by April 1? There are still many challenges left?
A: I quite concede there are many challenges. There is a challenge in first passing the constitution amendment then having it ratified by the states then there will be three supporting legislations which will have to be passed by the state, some of them also particularly the ones which concerned the states.
Parallelly we are getting the IT backbone for GST. So once all this is done, we need to put GST in place and then we have to come to a revenue neutral rate so that the rate is not excessively high. Therefore it should be a reasonable rate and eventually when more and more products come within the GST and evasion is avoided, the rate starts moving down gradually. So that is a responsibility, which is there of the GST council.
Q: It still will be around more than 20 percent?
A: I cannot speculate at this stage.
Q: This is also your first interview since the insurance bill has been passed. Are you expecting the floodgates to open? So far we have seen Analjit Singh and Sunil Mittal make announcements?
A: These are two of the important companies and I am quite sure the kind of interest international insurance majors have been taking in this area, a lot of them would want to come in and once capital flows into the insurance sector which had been starved for a lot of funds, we will probably make headway.
Q: You have made a lot of announcements about pension in the budget, could that be an area we might see some action in foreign direct investment (FDI)?
A: As far as the legislative hurdle is concerned, it is over because pension coexists with insurance that is the legislative mandate. So when insurance moves up, the pension itself will move up. How do we implement that will have to be seen. In any case, it is a part of any growing society and a society where market economy has a lot to play to convert that society on the principle of social security from a pensionless society into a pensioned society.
So I have gradually thrown this idea in the present budget. So in the present budget as far as the weaker sections are concerned, we have announced the pension scheme and the pension scheme is that you invest when you are working, a modest amount and you get a pension when you retire. After you, your spouse gets it, after both of you the entire corpus goes to the family. So it is a saving plus it is a social security plus it is an inheritance.
The second step that I took, which I think is a major step which will suit self-employed people, self-earning people, middle classes that I give a big tax incentive up to Rs 50,000 a year for whoever invest in the national pension scheme.
Therefore if you start investing now and my advise to most people particularly youngsters entering the job market or professions or trades or self-employed people is start putting in money every year into the national pension scheme. It is giving very attractive rates of interest. I am told close to 11 percent and you get a tax rebate and once you are old and not in a working condition, you will get a sizeable amount and that money is all yours at the end of the day.
Q: The Budget Report has to do with the Reserve Bank of India (RBI), the money market powers been taken away from the RBI given to the market regulator, the monetary policy committee, where do things stand, there are certain fears that is too much been taken away from the RBI?
A: RBI is a time testing institution and the government has the full confidence in the ability of the RBI. Therefore the question of taking away any significant powers from the RBI does not arise. Whatever steps we take we do it in consultation with the RBI. The RBI governor has been in touch with me and the finance bill will be taken up before parliament so you will have to wait for an answer to your question only then.
Q: Will the government bond will that stay with the RBI?
A: You wait for the finance bill to be taken up for the discussion.
Q: Anything about the committee that you can tell us?
A: We have made the announcement and therefore now on the passage of the finance bill you will have to wait for the final word on that.
Q: How concerned are you about unseasonal rainfall and agriculture?
A: It is a challenging situation, it is unseasonal rainfall, it has damaged the crop and therefore yesterday I had an opportunity in parliament to re-assure the farmers. Now teams are being sent to every state.
Additionally the three ministers in the ministry of the agriculture are going to be visiting each of the states. So they will get a first hand, they will comfort the people there and then immediately you have inert-ministerial groups which sit together and then give recommendations on how the farmers are to be compensated.
We are going to take very large hearted view as far as the problem of the states is concerned. The states also are now enriched, states have lot more money than before. I am sure collectively we will be able to look after the interest of the farmer.
However, damage to the crops and its consequential effects will also be there. So in terms of it could impact on inflation, it could impact on certain shortages but then we have surplus as far as food grains is concerned. Therefore we can cope up with the issue of shortage quite comfortably. However, we will see what impact it has on other issues.
Q: How are you immediate is immediate, by when do you think the states will have to tap into their disaster funds or the centre will have to tap into it?
A: All this have to be done within days. It does not have to be done within months.
Q: Do you think there could be any changes in the ordinance that was promulgated last year and what the proposal has been so far?
A: That ordinance has already undergone a change because in the Lok Sabha some changes were suggested by the government itself after the consultation with the pharma groups and those has been already incorporated in the bill as passed by the Lok Sabha.
Now since they have been incorporated in the bill as passed by the Lok Sabha, this bill will now go to the upper house and therefore we any of the opposition parties has any valid suggestion to offer which makes sense we are always opened to consider it. However if they adopt a stand that come what may we will not agree then it is a difficult situation.
Q: A very ambitious target which has been set out in the Budget we could not achieve the FY15, I know we are just within the days of closing that and how feasible is it, how realistic is it and also this news coming that certain sick PSU are going to closed?
A: People will have to improve the efficiencies of PSU. Taxpayer can not be charged taxes merely to fund losing businesses, you can do it up to a point you can not indefinitely do it. As far as divestment is concerned it is challenging but we will try an achieve it.
Please do not forget that last year the amount which we divested even though we started late is the highest ever in one year. Therefore there is no reason why we should not beat that target.