Minister of Finance and Corporate Affairs, Nirmala Sitharaman, speaks about the budget and idea behind it, taxation system & slabs, private sector investment, economic conditions, share market and $5-trillion economy among others during an interview with Swati Khandelwal, Zee Business. Edited Excerpts:

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Q: What is the thing in the budget that assures you that the issues related to slowdown and demand will be arrested now and we will see a growth comeback in the system?

A: Already there are signs that the system is taking a turnaround, i.e. the sectors that were undergoing through stress, which was also discussed, are seeing, specifically, a slight reduction in larger challenges. It is not so that the problem has come to end in a complete sense. Even the growth figures highlighted in the economic survey - in terms of impact on the economy - gives a sense that early green shoots are available in several sectors with whom we have been meeting since July 2019. I am not saying that everything is over and that's why in this budget I have to make so many different action points, very clearly.

Q: There were expectations that big announcements related to infrastructure, real estate and automobile sectors, which propel consumer demand will be made but it didn't happen. What is your take on it and do you think that those things have been addressed or you will have out of the budget discussion on it?

A: This budget gives a good larger picture, which talks about larger sectors like rural development and agriculture. Now, I am not giving a budget, sector-wise. If the economy, its consumption, investment are all driven through the government investment, government's direct benefit transfer (DBT), reduction in income tax, cut in corporate tax, then I expect that the impact to be in every sector of the society. If there is a tax reduction which helps in bringing some more money in the taxpayer's hand then it is up to him in which he might go by car, buy a home or make the first instalment of some purchase or he might save. So, it is in the hands of the public to decide and I think it will have an impact on the industry. It is not so that the government should provide a direct fiscal incentive to improve a sector. So you must look at sector-specific things but have a look at the overall economy where we have made certain allocations for almost every sector. We have also presented a blueprint of work that can be undertaken by using those allocations. So, the government will look at in the budget on all these rather than one sector or the other.  

Q: Private sector investment was not taking up for the last two years and you have also accepted it. Interestingly, the announcement of the corporate tax cut in the last quarter hasn't been able to pull fresh investments in large number. What can be a reason behind it and can you provide a timeline by which the private investment cycle will kick-off?

A: I can't say anything about it. But, the corporate tax cut has benefitted the private sector. It seems that they are planning the ways to use the benefits that they have received through the cut like should they save it or pass it on to their shareholders through a dividend or should they clear-off the previous debts and then think about the future. It is their priority and that's why can't make any comment on it, at present. However, whatever route it takes will benefit the economy. If they are paying back their loans then the banks' books will get better. If they give a dividend to their shareholders then it will help. So, why should we expect it to be only to win one form?

Q: The market has crashed by almost 1000 points. What is your take on it? Do you think that the market has failed to understand the budget or some other reason is associated with it? 

A: I am not going to make any comment on the market right now because the market was not open completely today as it was a Saturday. I will wait till Monday - when the market will open once again - to see how the market will respond. And, I am confident that the market will assess the budget completely by then and will respond to it on Monday, in true sense. It will happen because this is the first time when the debt market was discussed thoroughly in the budget, especially in these many aspects like to deepen it, the way to open it and then reap its benefit. Same goes in the case of the sovereign fund and it was mentioned after having long discussions on it and they are interested in investing in India. This is why we have extended some benefits in it.

Q: Decision on DDT was a good step but there is disappointment with LTCG (long-term capital gains) as there were expectations that it will be abolished. Let us know about the reason for not taking any step on LTCG? 

A: LTCG was introduced just two years ago and the income that the government will get from it is likely to start not, it happened due to the slowdown in the economy. Interestingly, the demand to abolish LTCG has propped at a time, when the government in a stage where it can get some income from it. However, we have removed the DDT. There is a list, out of which 2 things are left, then you will say the budget is bad. Then what can I do?

Q: How the steps taken in the budget will be fundamental and growth-driven and help us in being a $5-trillion economy, as the budget has been termed as an aspirational budget? 

A: Blueprint for the foundation for future reforms has been created through this Jan-Jan ka Budget. So, reform works will continue to happen and I feel that it will create buoyancy in the economy. Because, now, what is the issue? You have attended to the supply side and now you have to give for the demand side and we are doing that. Private investment will happen when it will happen? Public investment is happening through the pipeline project, which we have already announced. Rs100 lakh crores which the Prime Minister has announced over the five years and I am saying that I am ready to give whatever you need in the first year, itself. If all these things will happen then media will be asking me, you are doing it but what about the reforms? Then we are reforming.

Q: Divestment target of Rs2.10 lakh crore is too ambitious especially because you have reduced this year's target to Rs65,000 crore from Rs1.05 lakh crore.

A: It has a reason and a complete one year has not ended since when the budget was announced in July. And, how speedily a government department can work on issues like disinvestment they will have to make sure that no question is raised on them and later the issue moves into the hand of the CAG. So, the department moves ahead after analysing the things on all these aspects and I am astonished to see how far they have reached in just 6 months. In short, they have overachieved things in a way because expression of interest (EoI) document has been issued in just seven months and several tie-ups have been completed and numerous buyers are ready not just for Air India but also for BPCL and CONCOR among others. Undoubtedly, I spoke about them in the July budget but its benefits will be seen not in this financial year but the next fiscal. So, discussion on such aspect after the budget is unfair especially because I haven't been able to reap the benefits of the entire year. I had a target to complete the entire work of a year in just 6 months, which was a challenge. However, I have made my intentions clear, through the budget, that we will be realistic in whatsoever we do.

Q: The nominal GDP numbers presented by you has been appreciated by people as it is a realistic number because it falls under the 6-6.5% band. Are you confident that the numbers will be achieved and tell the time by which we will be able to get at 10% GDP growth rates? 

A: Initially, the Parliament hasn't paid attention to what I said and they felt that I am talking about the actual GDP numbers and they said what? This is why I read it two times as nominal GDP. However, I can't speculate the numbers but we will move fast as the intention of the government has been made clear, money is going where it should go. And, the money that we will raise through the divestments will not calculate it under the revenue but we are showing that we will invest in investments for infra and that will go to those two companies which will manage investments in long-term risk-taking businesses. So, we are directing and responsible and the money raised through divestment will not go for anything but asset creation.

Q: You have given good news in respect to the personal income tax cut by recalibrating the band but there is a googly that it is optional that either take this or go with the existing exemptions?

A: This has been done because we didn't think of forcing and restructuring everything just in one year. The same path was adopted in the case of the corporate tax in which you should allow people to make because there are exemptions that they are enjoying. I cannot for just for my fancy thought that forgets your exemptions and comes here. Let them exhaust the exemptions in corporate tax and it is not exhaustion here because exhaustion is possible in the case of corporate tax. Here what we want to tell in the same spirit that eventually this country should have a simple, easy to comply with taxation. 

Q: You are talking about an IPO of LIC, especially at a time, when the option provided in the personal income tax had an impact on the stocks of the insurance companies, which crashed hugely. Do you think the timing for the announcement is right? 

A: Definitely. It will not face difficulties because I am saying those who want to continue in the old system please continue or in the new system also, we are giving some exemptions and they look like your savings being drawn out, VRS, leave encashment, we obviously can't deny those rights to the people. We are moving ahead by carrying all these things together. So, it is easy for me to say the old system will continue but after four years will give you a simpler and minimum rate of tax. It is easy for me to say that but we don't want to say that and wanted to start it, now and gradually move towards the system where all exemptions will go off. Now, it is also a nice thing to think that the taxpayers, if he has more hands in his hands because he is paying less tax. Then will have to be told where his money should go? Is he not adult enough to take a call they are free to use it how they wish maybe insurance or savings, it is their choice? You are adult to chose and also today I would want them to move towards many other market-driven instruments, whether it is buying of shares or mutual funds or debt market. They should have options.

Q: You have benefitted those who fall under the income bracket of Rs5 lakhs and also to those with annual income up to Rs15 lakh. What beyond that as people above this range are saying that something would have been done for them as well? 

A: I understand. The point is everybody wants something. Even, I also want something to run the country.

Q: What are the things that suggest that there will be an improvement in GST collections?

A: What to do with things at least when GST collection has crossed the 1 lakh crore mark for continuous three months.

Q: But certain dips have been seen. So, do you think that there will be a consistent growth and the tightening measures will end the loopholes and what are the realistic number where it will get stabilise? 

A: It will stabilise but I won't get on the number because every three months in the GST council, we reduce some rate, then provide refunds, i.e. more refunds then what we earn, and it is our duty and I am not grudging that. So, when you have a GST system where there are certain changes every three months then it is very difficult for us to assess what you will get in a year. That is why I have given a request to the GST council is would they please consider that rate reduction or rate increase should be done one in a year instead of in every three months because it becomes very difficult for me. I have asked the GST council to think about it because of it they are those who should take a call on it.

Q: Explain to us the importance of the 'Vivaad Se Vishwas' scheme and what impact it can make on economic growth? 

A: First of all, we tried to provide relaxation in the indirect taxation segment through 'Sabka Vishwaas' scheme, whose date was extended till January 15, 2020, from December 31, 2019. We succeeded in it, yes I agree that those in high rate and with big amount didn't come into that system and they want to fight in the court. I am okay with it as I can't force anyone but the majority who came, were small and medium and lower issues but we have received around Rs40,000 crore from them and number of people - about 4,83,000 - have felt the relief that the cases have closed.

Now, the scheme has been announced for direct tax cases in which we want to people to come and pay up just the disputed amount by March 31, 2020. No penalty, no interest and nothing else will be added on it and then we will close the cases. If you can't do it by March-end then you may do it by June 30, 2020, but that will be slightly different in rate and then we want to close them. You have two months and we want to end the cases, which are pending on direct taxes.

Q: You are talking about LIC IPO and IDBI bank's 47% stake sale. Are we talking about the LIC's stake and is there any similarity between the timelines of the two events?

A: Details and timeline related to LIC's IPO will be released soon by the department. IDBI has been something, which has already have been partly given to LIC, so we want that to be sold out in the next financial year, i.e. FY21.

Q: You have raised the fiscal deficit target to 3.8 per cent of the GDP from 3.3 per cent pegged earlier for 2019-20 and have reduced it to 3.5 per cent for 2020-21. What was your thought behind it and do you think the entire money that you will raise from it will be spent only on infrastructure development?

A: There are some schemes that we have announced but the point is if 3.8 per cent is something which we have to touch because the spending is more. We have to spend on a lot of many meaningful asset creation activities. We have to distribute money and people have to have money in their hands and so on. This is why we have to take this course also because our revenue generation was also getting weak. So, there was no go but to take escape cross. But for the next year with the revenue generation improving, I don't see it very difficult to come down to 3.5 per cent.

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Q: What is your view on export where we are lagging and how can we leverage our position in the domain for its benefit?

A: The electronic industries being given particular support mechanism, which is WTO compliant. So, we see a lot of export potential in that industry and they have been provided with a scheme in this budget. Similarly for others who were receiving some kind of benefits scheme which were not WTO compliant will now get WTO compliance scheme. So, they will also have handholding and support for export.