The economy dominated the President Mukherjee's first address to the joint session of Parliament. He didn't just lay out a road map for economic recovery he went into specifics, talking of high speed train networks, housing for all, the development of a 100 new cities and without a trace of irony he also spoke of the need for a non-adversarial tax regime. In an interview to CNBC-TV18, R Jagannathan, editor-in-chief, First Post and Forbes India and Gaurav Kapur, senior economist at RBS discussed the importance of this address and how much of these statements of intent could translate into ground reality in the upcoming Budget.
Below is the verbatim transcript of R Jagannathan and Gaurav Kapur's interview with CNBC-TV18's Senthil Chengalvarayan and Menaka Doshi
Senthil: How much of this will actually translate into Mr Jaitley's speech when he announces the budget next month?
Jagannathan: I don't think more than 10-15 percent will get into it except in terms of statements of intent. What did the President say today? If you put together all of Modi's economic policy speeches during the campaign and the Bharatiya Janata Party's (BJP) manifesto and put it altogether and distillate through a nice sub-editor, that is what you got in a president's speech. That is the intent, but he has to signal the intent and so it is important. As a government they will have to look for resources, they will have to see how to raise money this year and next year through unconventional means, which will include a lot of divestments maybe not below 51 percent but money is there and the market's buoyancy is helped. So, a lot of things which Chidambaram couldn't do, I think Modi can do because of the fact that Modi is Modi.
Senthil: What is your reaction on the speech and let us move forward, where do you think you are going to go, how do you think you are going to be able to reduce fiscal deficit, how do you think you are going to be able to raise revenues, all of that could be very important now for growth going forward?
Kapur: For reducing fiscal deficit, clearly there are no quick fixes. On one side, it will have to continue curtailing subsidie. We have seen that happening on the on the fuel side and perhaps one needs to do something similar on the food side as well and in a manner where it does not make it unremunerative for farmers to continue forming but at the same time you do not see the kind of MSP increases you saw in the last six-seven years. They were years when the MSP increases were extremely sharp.
On the revenue side, again the roadmap is very clear, you need to implement GST and DTC. Technical ground work on GST is done, you need to get the states agreed to some of the contentious issues, create an environment of incentives for states to implement and basically ensure that the economy starts growing at its potential, which itself has come down. You ensure stalled investment activity is pushed ahead. So all these things essentially mean that there has to be a comprehensive set of reforms, which are complimentary to each other. There are no quick fixes.
While that said, there are in fact many solutions which are visible. Now the issue is how you go ahead and implement it. The intent is clearly there. The address is essentially out of what the BJP manifesto spoke about. Essentially, we have all the right elements for a longer-term a vision for the economy with shorter-term measures. Basically it now leads to a point of implementation in fact even on the case of creating a non-adversarial tax regime, which I think implementation of GST and DTC itself would to a large degree move us in that direction.
More to follow
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