NITI Aayog Vice Chairman Rajiv Kumar
NITI Aayog Vice Chairman Rajiv Kumar gives his views on the Union Budget 2019-20, speaking exclusively with BTVI’s Siddharth Zarabi.
He talks about Public Private Partnership (PPP) model for faster development of railways projects, says hike in the FDI limit in the insurance sector will spur the growth of the industry in a big way, sees housing sector getting the required boost with tax incentives to affordable home buyers, feels India's debt to GDP ratio is the lowest in the world, and hopes to see 100% FDI in multi-brand retail also.
Here is the full conversation:
Siddharth Zarabi: Yesterday, we had spoken about private investments becoming key drivers for the economy. Explain to us about the key tenets that have been put in place for private sector demand push. Already we have seen greater reliance on FDI in certain sectors.
Rajiv Kumar: There are several announcements in this Budget, which will attract private investment. For starters, there is a huge emphasis on PVP in railways across value chains which will bring in the private sector. There was a nudget of announcement where the finance minister said the some of the lands belonging to CPSEs of state and central governments should be made available for private investors if they come up with any good proposals. There is increasing FDI limit in insurance intermediaries and the hint for insurance companies the FDI limit will also be increased. There is opening of investment opportunities for FDIs across equity and debt market. There is intention of revamp UDAY scheme. The bluepint for infrastructure sector, ‘one nation one grid’. Investment in Air India and other CPSE where the government could go down eblow 51% on a case to case basis. The measures also taken with regards to corporate bonds. Other than this, the rise in interest expenditure of up to Rs 3.5 lakh to be deductible for loans housing will rejuvenate the real estate sector. All these steps will bolster current investment. This is the focus of the current Budget.
Siddharth Zarabi: How significant is the move for the central government to borrow overseas? What does this mean to external debt? What is the response to those raising the red flag? Does this expose us to some future pressures or headwinds?
Rajiv Kumar: Any fears are completely misplaced. India is on the lowest external debt to GDP ratio. This is very well within the comfort range of any credit rating agency. We have never gone into soverign bond issue. It is hightime we did. Some of our corporate have gone for bond overseas. It is hightime the government of India also does it. This also help raise longterm capital for us. There is no fear on India becoming external debtor.
Siddharth Zarabi: In the past, you wrote an important recommendation on retail. The government is looking at greater liberalisation as far as FDI is concerned in several sectors. This announcement today is politically significant and brave. Ho9w happy are you on what the finance minister said on retail front?
Rajiv Kumar: Further liberalization of FDI is necessary. I hope that in time to come we will also see the entry of 100% majority owned FDI in multi-brand retail. That will help modernize our own retail sector which today needs modernization.
Siddharth Zarabi: Would you agree with assessment that this is an incremental budget that prioritises fiscal deficit discipline over any sort of stimulus at this stage?
Rajiv Kumar: There are enough measures already to stimulate investment. The public capital expenditure has gone up by Rs 20,000 crore over the revised estimates for FY18-19. There is also huge push for recapitalization of banks. There is government open offer to support in NBFCs and additional lending by banks. It is an investment-oriented Budget. It is much better than giving some consumption sops because these effects don’t last long. There is also new tenancy law to improve housing in the real estate sector. I think all of these are in the nature of stimulus. You will see soon that economy will get stimulated and growth will be on higher trajectory.