Finance Minister Arun Jaitley said on Thursday that the interim Budget, to be presented on February 1, will be within the existing conventions. Its contents, however, will be dictated by economic compulsions and realities of the day, he added.
Amid concerns over his health, Jaitley was speaking live from New York and addressing an event in Mumbai organised by CNBC TV-18. Ahead of the next meeting of Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC), Jaitley also said that real interest rates in India cannot be higher than most major economies.
“There is a convention for interim Budgets, on what you can and cannot present. Ordinarily, there should be no reason to move away from that convention, but then the larger interests of the economy always dictate what should be in the interim Budget,” Jaitley said, without disclosing details.
“If we look at the bigger picture, there have been successes over the last few years. There have also been challenges. Without getting into specifics, some of those challenges really can’t afford to wait. There is a necessity to address some of them. We intend to work within the parameters of the conventions that exist,” Jaitley said.
He also hinted that these very economic realities could decide whether the government sticks to a fiscal consolidation roadmap or not. He admitted the farm sector has been facing challenges due to rise in production and a fall in food prices.
“Situations like natural calamity, drought or stress in a particular sector are those that cannot be considered ‘populist expenditure’. Markets will never understand if you act just for the sake of populism. If it is in the larger interest due to a compelling situation that develops, then that’s a rational and logical thing that markets tend to understand,” he said.
Since the losses in the three states, and with the 2019 general elections around the corner, there has been a lot of buzz on a number of populist measures the Centre could take.
As reported earlier, a massive nationwide income support programme for farmers is in the works, and could include free crop insurance.
Any such programme will impact the Centre’s expenditure pattern and future fiscal roadmap. According to the medium-term framework, the Centre is supposed to target a fiscal deficit of 3.1 per cent of gross domestic product in 2019-20. For 2018-19, the target is 3.3 per cent, which also looks quite challenging.
Jaitley was asked his views on what the MPC could do in its upcoming meeting. “You can’t have a real rate of interest in India larger than anywhere else in the world. Now that the RBI is consulting all stakeholders, I am sure they have a better feel of what is the real situation of the economy.”
The Finance Minister once again attacked the opposition parties and called them “Nawabs of Negativity” and “Compulsive Contrarians”.
In a blog, Jaitley accused critics of the government of ‘manufacturing falsehood and subverting democracy by weakening a sovereign elected government’. He said that while free speech and the right to dissent are critical components of a democracy, falsehood, subversion and institutional destruction are not.
“The compulsive contrarians had no qualms about manufacturing falsehood. They could concoct arguments even if they went against the general interest of the country. They could masquerade corruption as crusade. They could adopt double standards whenever it suited them,” said the blog titled The Compulsive Contrarian and his Manufactured Logic.
Jaitley touched upon a number of issues including the Rafale deal, the death of Judge Loya and the flashpoint between the government and institutions like the RBI and the Central Bureau of Investigation.
Without naming the Congress or others, Jaitley said, “There are some in the political system who thought that they were born to rule. Some who were part of the ideological left and the ultra-left obviously found the NDA government wholly unacceptable. Hence emerged a new class of compulsive contrarians, who run perpetual propaganda”.
They picked holes in every proposal that empowered people, be it 10 per cent reservation for the poor, Aadhaar, demonetisation, GST, CBI, RBI-government relation, Rafale, or non-issues in Supreme Court and the Judge Loya case, the minister said. “These actions reveal the mindset of the compulsive contrarians. Weakening a sovereign elected government and strengthening the unelectable is only a subversion of democracy,” he wrote.