“Strong mandate has brought stability and made India attractive,” said FM Nirmala Sitharaman in an interview.
Nirmala Sitharaman, the minister of finance, said that the new tax system will be the default, but it won’t be required. Instead, the government plans to gradually get people to switch to this new system. Quotes from her interview with DD News after the Budget
You have tried to give both employees and employers more money. What do you think will happen if you do this?
First of all, if you look at the economy, it’s clear that it’s on the road to a strong recovery. With a strong recovery, sectors like services are losing a lot of workers. At the same time, they need people with skills in advanced technology because they are using it more and more. So, to pay more means to pay more for people who have the skills needed. And that’s why, in this Budget, the Indian government has stressed the need for skilling, upskilling, and skilling for the Industrial Revolution 4.0 in many different ways. We put extra emphasis on the last point because Web 3 is becoming more and more popular today. And if Industry 4.0 comes along, employers will also pay more if you have the right skills. We pay a lot of money and bring in this kind of training so that people can make more money. So, the government is pushing it from a different readiness on the supply side. Of course, the industry will have to pay for that.
Your thoughts on the changes to the new tax system and how to make it pay off.
The old system is hard to understand, and people have asked for it to be made easier to use in the past. There were ideas to make the process easier, lower taxes, and improve compliance. We did everything in the Budget, and the new system will be the default, but it won’t be required. Our goal is to slowly win people over to this new system.
Before GST, you were paying tax on household items at 18% or 20% and so on… some even 30-35%… all of them have been brought down… There is potential for more reduction in taxes, and work is happening on that.
What do you think about the hope that the new direct tax system will help bring in more money, since some people say that too much money comes from the GST sector?
That’s wrong! Because I think direct taxes have also been so strong this year. You can see that more money is also coming in through direct taxation. So we don’t depend on GST, which is an indirect tax, to fill our coffers.
Before GST, you had to pay 18% or 20% tax on household items, etc. Some were as high as 30–35%, but all of them have been lowered. The revenue neutrality was between 15.5% and 20%. It’s now 11%, which means things have gotten cheaper. So, GST should itself send that message… that even with GST in place, you’re still paying much less for household items than you did before.
There is room for more tax cuts, and work is being done to make that happen. But this time, direct taxation has been so strong that you can’t say that this government only makes money from the GST indirect tax and not from that (direct taxes).
We brought corporate tax down. Also, we extended the period by which many of them will have to bring in additional capacities or establish new units. All these measures are working now in favour of the private sector to invest.
Record government investments have helped spur growth and could lead to new jobs, but how much private investment is actually being crowded out as a result?
In fact, at the press conference this evening, it was made very clear that increasing public investments in infrastructure have never hurt private investment between 2021 and 2022 and up until now.
People have asked, “What kind of crowding in is this? This is the first time you’ve mentioned it.” But that private investment is happening because we lowered the tax on corporations. We also gave them more time to add more capacity or start new units.
Some businesses are happy about the green push, but others feel left out.
All of these factors now make it more likely for the private sector to invest. So, when you go to the market to borrow money, you find that many of them are just as able as you to make money or bring in money from the market. This hasn’t stopped anyone, though. That is exactly what “crowding in” means. It means that people can come in and bring in money, banks can bring in money, and the private sector can bring in Indian equity. It’s not like money is coming from somewhere else. So, I think that crowding in has been made possible by the right mix of policies, not just the public investments in infrastructure.
Taking a look at some of the Budget’s green parts. You talk about getting rid of old government cars, and you say you’ll pay for that. But is the government actively using the e-vehicles you’re trying to get the rest of the country to buy?
First, we want to set an example by saying that both the central government and state governments, if they want to, can get rid of the vehicles, even some of the government-backed ambulances. We think it’s important for the government to set an example by getting rid of all cars that are 15 years old or older and replacing them with electric cars. This way, we can show that we will be able to reduce pollution and protect the environment. Because of this, we have backed the policy to get rid of old cars, which was announced earlier, and now we are also giving it a boost.
Now that India is the leader of the G20, everyone is looking at us. The IMF told us this, and we want to be the third largest economy in the world. Some people are curious about how race affects China. Where do you think India and China will be in five years?
I would like to see India become more atmanirbhar, which means that India makes many things for itself and for the rest of the world. We are growing quickly because people are still interested and because our government is responsive.
Also, this government has been stable because it was given a strong mandate, and we will be attractive because we handle tax matters not with rashness but with a more level-headed approach that keeps the tax system stable and predictable.
