Coalition politics has not affected economic policies of the Centre: Nirmala Sitharaman

Union Finance Minister says the issues that took priority before the push and pull of coalition politics are the same issues in focus now; she says no State gets ignored in the Budget and any other narratives by the Opposition are arguments for political convenience

Union Finance Minister Nirmala Sitharaman on Saturday said that coalition politics has not affected the planning for the Budget or any other programmes of the Centre. In an interaction with senior journalists of The Hindu Group of Publications at its head office in Chennai, the Minister articulated her views on various topics including allocation of funds for healthcare, allegations of conflict of interest against SEBI Chairperson and the future of investments in Artificial Intelligence.

In the last 10 years, you [the BJP government at the Centre] had the clarity on plans by being a majority government. Now the coalition politics era has started. Does the push and pull of coalition politics impact the process and even the vision for what lies ahead in terms of economic policy?

No. It hasn’t affected the way in which I have planned for the Budget. It hasn’t affected any of the programmes. For instance, when I was preparing the vote on account, issues before me at that time continue to be the issues before me now. So I don’t see any special addition or deletion because of the coalition politics. 

But Andhra Pradesh and Bihar attracted some attention in the Budget...

Andhra Pradesh and Bihar, were also like many other States, included for considerations which were made explicit in the Budget speech itself. And this again is a careless and convenient argument to immediately think that if I have not mentioned a State in the Budget, I would ignore them without giving them any money. This was the narrative with which the Opposition stood up in Parliament. These are political convenience arguments, but no State gets ignored. Of course, on consideration of floods and building the capital, I had to mention these two States.

There have been quite a few allegations against the SEBI chief. But two of them seem quite material. One is that she holds a stake in a private consultancy firm which has been receiving fees from various companies which SEBI regulates. The second is she has been earning income from ESOPs from ICICI bank, though she is SEBI chief and decides on matters relating to companies. Now she has given a clarification in her personal capacity, saying that she recused herself and she was not really in conflict of interest. Isn’t it necessary that these facts be independently verified by somebody? And given that the SEBI chief is an appointee of the Central government, doesn’t it actually fall to the Centre?

I did comment on this earlier also. I think what is being missed out in this discussion is the facts. Take the facts on board and then allege or defend or talk about what has got to be done. I think there’s just a lot of to-ing and fro-ing, but facts are not coming into discussion at all. Facts will have to be taken on board. 

But why is there no transparency on this issue? Why can’t they put out all the details? 

I thought everything was transparent in this. Everything is absolutely available in the public domain.

One thing that has made India stand apart in the last couple of years is relatively stable inflation, although slightly on the higher side, stable bond yields and stable currency. We see what’s happening in the developed world. So, the dividend of a measured stimulus is visible today. But three or four years back, economists were criticising the government for not printing money. What was the conviction in the government that this is how we have to go when there is so much criticism and all your counterparts in developed markets are for printing and stimulating fiscal? 

The fiscal responsibility to handle affairs, particularly during and immediately after COVID-19, was not just taken by sitting in the Finance Ministry’s rooms. Extensive consultation happened with stakeholders, observers of Indian economy, and political leadership of various parties. The Prime Minister did his own consultation as well.

The route of targeted assistance to be given was a conscious decision taken after these due consultations. The Prime Minister is extremely careful about not splurging and splashing it to make everybody feel, ‘Oh, yes, the government is spending…’ Because of the layered approach and the tools which we adopted in handling public money, the loss to the public exchequer was far less, and timely relief was made available.

We didn’t take up printing and distributing, the easy solution which comes out of books of economic theory. We went along a laborious route... The effectiveness is purely because of that principle which the Prime Minister very strongly follows in everything. You plan something and you execute it. But you must go till the last mile. Keep monitoring and giving them support. Any scheme only be effective if you are literally doing the follow up.

We made a small start with ₹10,000 crore allocated to boost Artificial Intelligence infrastructure. But actually just four big tech companies are spending $200 billion a year. Simultaneously over a period of three years they are going to spend $500 billion in capex, most of it for setting up hyperscalers and data centres. We can’t invest that much, neither can our country. Do you think with a long-term perspective there is a case to incentivise them to set up hyperscalers in India like tax incentives or land subsidies?

It hasn’t come like that to me. But what has actually happened is, by the way in which the policy got formulated for AI, the domain experts, today, are willing to come to India. They are willing to work with Indian companies. The movement is rapid. Many of our universities, including IITs, IIMs and some private universities, are also taking a lot of initiatives. Funds are not constrained to only that ₹10,000 crore. There are also corpuses, which have been created by the government for science and related matters, which are now being used to raise more money from the market, and projects are getting funded. It hasn’t come to the extent of tax concessions yet, but there is activity. 

Regarding budgetary allocations for healthcare. Historically, we have never gone beyond 2.2%. Do you foresee a future wherein we will be able to allocate 6% to 8% of the GDP, which is recommended? 

There is never a question of not wanting to spend on health. Again, it is a subject between the States and the Centre. When we take this number [percentage of spending] normally, we tend to take the number which the Central government puts out saying this much is being spent as a percentage of the government expenditure, not as on the GDP. When norms are fixed or when suggestions and recommendations come, they equate it to percentage of the GDP. But what the Central government takes as an approach is the percentage of the total expenditure that comes up in the Budget. What I certainly can’t get or should make an effort to get, is how much States are spending on their own in building health infrastructure. This put together may still not reach 6% of the GDP. 

But this calculation on the GDP is also something which we’ll have to understand if government expenditure is well within my domain, and of that, if I am able to give a bit more for health, it is ideal. I try to improve that number each time... Our priority has been in building hospitals and making sure it runs on its own. Between 2014 and today, barring AIIMS, nearly 157 hospitals have come up newly and in each one of them, we are now allocating money for having an adjacent college of nursing with it, so that when doctors’ number goes up, the nurses’ number also equally goes up and we don’t suffer for want of manpower.  

India is one among the 44 countries that has not conducted the population census, yet. Why is there an undue delay?

There was no undue delay. Because of COVID-19, we were not able to conduct it in 2020-21. In 2022, we were coming up with so many other systems which depended on school teachers, and many other government staff. In 2023, we were already into the election phase and, in 2024, we had elections. Soon it will happen. 

Published - September 22, 2024 09:09 pm IST