 Hello and welcome to NewsClick. I am Paranjoy Guha Thakurtha. On Sunday the 17th of May 2020, Finance Minister Nirmala Sita Raman conducted a press conference, a media conference lasting around two hours starting a little after 11 a.m. This was the fifth in the series and all the numbers were put out and the government is now claiming that it will be spending the equivalent of 10% of India's gross domestic product that is somewhere in the region of 20 lakh crores. India's gross domestic product is 200 lakh crores on various schemes. Now the critics of the government are saying that these are many of these schemes have been repackaged, many of these are really loan guarantee programs and not really new infusion of money. Many many new policy changes have been made but some old policy changes have been sought to be packaged as something new and among the major announcements that were made today was an increase in the allocation or to the Mahatma Gandhi National Rural Employment Guarantee scheme by 40,000 crores to reach about 100,000 crores or lakh crores. So before I go into detail into specific issues let me ask my guest here, Professor R. Ramakumar. He teaches economics at the Tata Institute of Social Sciences Mumbai. What he sees as a big picture he's been very active on the social media. What according to you Professor Ramakumar is the big message that the government is trying to convey through this fifth media conference and by saying that the government is spending the equivalent of 10% of India's GDP that it cares for the poor, that it cares for the migrant worker and it's doing its level best to revive the working of the economy. Let's have your initial comments before I ask you specific questions. Thank you Parijay. My first two comments are this, it is very clear that the government does not want to open up its purse. It doesn't want to spend as yet. That's point number one. It largely has been using monetary policy and the deposit base of the banks is a substitute for fiscal policy that I think is the one major takeaway from these announcements. The second biggest takeaway from these announcements is that they see this crisis as an opportunity. They see this as an opportunity to bring in a number of reform measures which have over a period of time been extremely contentious, not just with the states but also different groups like Labour for example. So these two are my big takeaways from this announcement. Let me just say this. Across the world if you see governments have opened up their purses to deal with the crisis. They are not necessarily spending in revival packages of the Keynesian kind that we have seen in the past. What they are largely doing is to try to hold on. What I mean by trying to hold on is that until the pandemic is over, till the spread of infections is contained in some form, let us keep jobs safe. Let us keep people healthy and nourished. Let us keep people in a better state. Now that is the focus of the 10% of the GDP measures that you have seen across the world. About $7.5 trillion is being announced as fiscal packages across the world. Out of these $7.5 trillion packages you will see that about $4 to $4.5 trillion are largely fiscal measures, direct spending by the government. What are these direct spending by the government? They pay the companies, small-scale industries and so on. They pay them with a condition that they will keep the workers in their payroll. They will pay them 50 to 80% of their wages so that their jobs are not lost. They are given a large number of grants, subsidies, exemptions, etc. in this period in order to allow them to hold on till the crisis blows over. So about only about $3 to $3.5 trillion out of the $7.5 trillion is monetary policy measures, what is called as below-the-line measures. Now this is the global situation but we, out of this 20 lakh crore that we have announced as part of this Atman-Nibbar package, I seriously do not see a spending of more than 2 or maximum 3 lakh crore. The rest about 17 to 18 lakh crore I largely see as being pushed through banks using their deposit base or asking institutions like NABAR to borrow from the market and spend in some kind of funds and so on. That is the nature of this 20 lakh crore package that I see. I do not see more than 2 or 3 lakh crore being spent from the budget of the government. One sentence worth, even this spending of 2 or 3 lakh crore that we are talking about from the budget of the government is not necessarily fresh expenditure. A lot of this 2 to 3 lakh crore is actually expenditure that is already committed in the budget or it will come by cutting some head of account and then saving money from that head of account and spending in this package. So it's not necessarily fresh budget expenditure, it's going to be some kind of re-appropriation that we are going to see. Professor Ramakumar, I was in fact doing a bit of back of the envelope number crunching with my friend A.K. Bhattacharya, our business standard and I in fact, our numbers are lower than yours. If we look at schemes which have a direct impact on the fisk, then we actually come to a figure that if one is very, very charitable towards the government, a little over 1% of our GDP, that means you have the 40,000 crores on Manrega, you have 8,000 crores which is the viability gap spending for various social infrastructure projects, for the agriculture sector roughly 6,000 crores, for migrant laborers and farmers another 16,000 crores, for the micro small and medium enterprises package, we see barely about 40,000 crores and even if we are very charitable and the Pratamansi, the Yojna which was announced even before these five schemes, out of the 1.7 lakh additional expenditure, even if we take that about 70 or 80,000, the number comes to just a little over 1% of our GDP and we see that the bulk of the money that is being accounted for and added to the number to arrive at this 20 lakh crores is really as you rightly pointed out, the biggest chunk is what the central bank, the Reserve Bank of India 8 lakh crores will really be in the form of various form kinds of refinancing, we find public sector organizations like the Power Finance Corporation, the Rural Electrification Corporation where the distribution companies, the electricity distribution companies there, the bailout package of 90,000 crores, the food corporation of India, about 40,000 crores and of course the state governments, in other words the central government will be spending barely an additional 1% more of GDP but telling India and telling everybody else and telling the country that we are going to be spending 10% of GDP. That's a wrong argument Paranjai, I agree with you, I do not, what I said as 2 to 3 lakh crores, I was being liberal because how we count what is fiscal can differ across different estimates but what in my view direct fiscal, if you count it in that sense, it will not be more than 1.5 lakh crores that's in my view out of these 3 lakh crores, what I see as the rest is largely, for example, the 45,000 crore expenditure that you mentioned as part of the FCI expenditures, it's largely a monetization of food grain stock that you already have with you, so that's, it need not be counted at all as part of a fiscal package, so if you remove all that out, I would agree with you that we would be somewhere near 1 to 1.5 lakh crore, exact estimates are yet to be done but when I looked at the different slides that Nirmala Sitaraman presented today, I do not see direct budgetary expenditures exceeding 1.5 lakh crore but direct and indirect fiscal measures may add up to about 2-3 lakh crores somewhere in between depending on how you measure them. That's what I would say, I agree with you that a Himalayan proportion of this 20 lakh crore is largely not money from the government, it's hard earned money of the depositors and which will be sort of mobilized to create different funds, a fund for NABAR, NABAR for example has to raise 1 lakh crore for a package, now that 1 lakh crore would largely come from market borrowings of NABAR, that's not something that will get reflected in the fiscal deficit of the government, that's another way of borrowing through NABAR and not showing it in the fiscal deficit. So a lot of bookkeeping adjustments are happening of this sort and I do not see that the biggest problem with this kind of bookkeeping tricks is that you end up giving very little directly to people, I think this is the time when you should give money directly to people or in kind or in cash, that doesn't matter but that is the most unfortunate part. Yeah, I'm going to come to you when the Finance Minister was asked question as to why money was not being put directly into the pockets, into the account of people and how she reacted but before that let me look a little bit at some of the changes that were announced in the way in which state governments are going to be like borrowing money. Now the Finance Minister said that their borrowing limit has now gone up from 3% of the state's gross domestic product to 5% that would give them an additional 4.2 lakh crores and they feel that since the burden of taking care of the migrant workers etc has fallen on state government, it's really a very very tough call for them. Now they have a net borrowing ceiling but now they are saying they can borrow more but she's laid down a host of conditions. She said the RBI ways and means advances can can now go up, the number of days a state can stay in continuous, overdraft has been increased from 14 days to 21 days and from 32 to 51 days every quarter but in all fairness she's saying you have to be good boys and then she spells out what are these, said the one is of course the ration scheme, the one nation, one ration card kind of scheme that was one thing that was she said the very very category. Then she also laid out four more things, one was about the ease of doing business, the other one was about the power distribution companies, the other was about how the urban local bodies were and how they were to raise funds and all these are quote unquote reforms but the state government that means would be able to borrow more only if they meet three out of these four conditions and lay down milestones. So whereas it is being said that they can borrow from 3% of GSDP to 5% the unconditional part is only 0.5% so what do you how do you sort of look at this way in which the finance minister saying states no you have to do all the hard work, you have to do more, we will release all the pending money etc etc etc but you must do one, two, three, four reforms to be eligible to borrow. That is further to it Parujay, so let me begin by saying that this is a very unkind way of dealing with the states during the time of crisis if the states were given conditionalities based on how they tackle the epidemic, how they tackle the pandemic depends on how many shelter homes you build, depends on how much food you provide in community kitchens, how much testing kits you are able to procure and so on then it would have been understandable. What is happening here is a slightly different thing while the fiscal deficit limit has been raised from 3% to 5% in the of the GSDP, only 0.5% of this is unconditional, out of the remaining 1.5% let us take 1% and that 1% is going to be divided into four tranches, four 0.25% tranches and one each of these 0.25% tranches are going to be allocated to ease of doing business, the reform of urban local bodies, one nation one ration card scheme and finally the urban local bodies and then power sector reforms. According to the notification that has come afterwards it says that the implementation of one nation one card system will depend on whether the Aadhar seeding of all the ration cards and beneficiaries in the state are completed and number two automation of all the FPSs in the state are completed. So these two are the conditions that are listed in the one nation one ration card scheme system. Second in the ease of doing business what they are saying is they need the implementation of district level licensing reform. So each state has to complete the first assessment of the district level business reform action plan as listed by the department of industries at the union level each state will eliminate the requirements of renewal of certificates and approvals and licenses obtained by the businesses for different activities. Each state will implement computerized central random inspection system under the different acts of department of industry and so on. In the strengthening of local bodies at the third point they'll say to enable better public health and sanitation they basically with the view to augment the resources of urban local bodies it has been allowed this 0.25% the state will notify a flow rate of property tax in urban local bodies it will give flow rate for user charges and store and then finally power sector reforms which are very contentious. My point is this is something to do with the pandemic all these are primarily linked to a certain set of reform measures that the government has been trying to implement over the years and this is being seen this pandemic is being seen as an opportunity to force the hands of states to do certain things that's okay that's most completely against the principles of federalism in my view. Alright so you made your point very clear that the pandemic is being used to force state governments to undertake certain so-called reforms at a time when the central government should be giving much more to the state governments because they have to bear the burden of taking care of not just migrant workers but the entire economy which is in terrible terrible shape on which there's no disagreement. Now in the name of an economic stimulus package the government has undergone a series of policy initiatives now some of these are old policy changes which have been sort of repackaged and sought to be passed out as something passed on as something new I mean I'll just give you one example for instance all the changes in the coal mining and the coal sector deregulation were all it had been enacted in March on the 12th of March it had been completely enacted I mean you know about agriculture on the agriculture prices agriculture produce marketing committee changes the relaxation that the essential commodities act a lot of what has been announced is really a recycling of old policy schemes but I want you to focus a little bit on something which was announced earlier in the day which I believe is of great significance the government is now going to privatize state-run enterprises and what are called non-strategic sectors and allow private firms in all other areas they can invest in every every every other area and this is supposed to be a new coherent public sector enterprises policy that will define we do not know the definition is yet to be given we do not know the list of sectors which will be termed strategic where the presence of a public sector undertakes will be absolutely required and this is all supposed to ensure minimizing risk will administrative costs and it says the number of enterprises in strategic sectors will ordinarily be only one between one and four and every word all the other enterprises would be privatized or merged or bought and are holding companies and this is all supposed to be a part of atma nirvana part of the self-reliant India now please what are your views that we still don't know what are these strategic sectors what are these going to be will it be oil distribution will it be oil and gas exploration will it be what do you call defense I mean we already see an attempt to say private sector we are depending on you and public sector do your best to survive is this the message that's coming through in the name of a new atma nirvana or a self-reliant India the two messages in my view one is one is what you said that is use the private sector to to overcome the crisis address the crisis rather than get the state back in which is the trend the world over the second is another thing which is that the government has to spend at this time during the pandemic now in order to spend the government has to either borrow more or it has to print more money it has to monetize the deficit it does not appear that the government is ready for either of these measures what the government is probably trying to do in my view is to embark on a massive disinvestment program and to generate the resources that should otherwise be generated through borrowing more or monetizing the deficit it is there is there appears to be an ideological opposition typical of a neoliberal policy framework where you are worried about a higher fiscal deficit you're worried about what foreign investors would think of your economy and you basically get into an alternative mode of selling off all your public assets in order to generate more revenue I think it's a very reactionary move at a time at a time when there is an enormous attack on labor and labor rights the whole embarking on a disinvestment program is is completely is completely reactionary in my view this is not the time world over the trend is for the state to get back into the economy to get back into controlling the levers of the economy including nationalization measures are being adopted across the world to address the economic crisis caused by the pandemic India appears to be walking in the opposite direction and that's appear and that in my view is a is a highly suicidal sort of path to take and in my view the government should be basically generating the sources through either borrowing or monetizing its deficit to spend more in the social sector because particularly in health you need urgent investment of about 1% of your GDP in the health sector to develop a public health system which can meet the challenges posed by the pandemic but that that does not appear to be the the focus of this government instead of spending they appear they appear to be more eager to invest in this whole private hospital based networks by introducing 8000 crore into viability gap funding and so on and not quite investing in public health centers or a narrative or that kind of programs which are which are supposed to be focusing on public health that's a very sad part of the story okay professor Ramfubat you have specialized in in agriculture sector and you have studied deeply the way the farm economy of our country works now the various schemes that were announced especially in the third tranche of the announcements made by our finance minister this was today Sunday this was made on Friday on on the food micro enterprises the the fisheries program the Pradhan Mantri Matsya Sampad Yojana top to total the operation green agriculture in infrastructure from this the biggest item this is about a 1 lakh crores plus of course smaller amounts for animal husbandry herbal cultivation beekeeping etc now if you look at that combining with the additional allocation to the Mahatma Gandhi national rural employment guarantee program of 40 000 crores what impact do you see these schemes having on the agricultural economy of our country at a time when large numbers of people have moved from areas which were traditionally the the green surplus parts of the country Punjab, Haryana, western Uttar Pradesh two states which have been traditionally deficit in eastern India including Bihar, Jharkhand, Bengola, Saab, Orissa, Chakrishkar how do you see these schemes playing out and how do you see the rural economy and the farm economy getting impacted in the time to come? Paranjai there is an absolutely no new investment in agriculture no new spending in agriculture on in that third day's program that is if you take the that's why I mentioned this earlier the 1 lakh crore fund that NABAR will create it's completely through market borrowings of NABAR there's no fiscal expenditure involved there the micro food enterprises it's an ongoing scheme which is already there of the government the Pradhan Mantri Matsya Sampad Yojana it has an outlay of 20 000 crore from 2018-19 itself that is nothing new in that allocation in fact the expenditure finance committee in january has already passed that scheme much before the covid epidemic hit the national animal disease control program that's been in existence from 2018 the animal husbandry infrastructure development fund again has been in existence from 2019 herbal that's nothing but 400 crore herbal and medicinal plants be keeping 500 crore herbal 4000 crore and this is 500 crore I'm sorry so these are these are these are not new initiatives at all these are these are like five-year plans these are like four-year plans and not something not the measures that are directed to alleviate the distress that we have at present at present the farmer is looking for either a significant cash transfer made to him that you have I'm a critic of PM Kisan but you have PM Kisan so use it use it to at least frontload the second installment of 2000 rupees of PM Kisan into a direct cash payment today or you increase the MSP or you give them some kind of debt relief not moratorium debt relief because in moratorium you have to pay that interest rate later and sometimes yeah that's right sometimes you also have to pay interest or interest when pre-structuring happens so that's not what I'm talking about I'm talking about that direct cash relief to the to the farmer who is reeling under the impact of sharply falling farm prices at the time harvest are happening he also needs liquidity for the Kharif season so these are measures that are required but instead you have extraordinary vague announcements with the old schemes being rehashed into new announcements absolutely no new allocation one small point there are some legal measures also that have been suggested by her which is related to a long pending demand of neoliberal economists which is the the repeal of the essential commodities act and also the sort of bringing in a central law to free interstate trade and interstate trade of all kinds of barriers that's in my view in my view all that is not going to happen in that's not going to happen anytime soon number one number two it's also going to be not of any use to the farmer why am I saying this because begin with the problem of the farmer yes there are problems in the marketing side but the real problem has been facing over the many years in the past in the recent past has been a sharply right costs of cultivation and that is something that has been that has been really burdensome to the farmer so I don't think they're going to be beneficial to the farmer in any way because private trade has has proven to be inferior to the APMC market system in every state where APMC laws have already been repealed and amended. Professor Ramakumar I was reading an article in business today where Nevin John has made a list of all the large corporate conglomerates in India that are likely to benefit from the policy changes that have been made and these are policy changes pertaining to coal mining, electricity distribution, defense production and these are the Anil Dhirubhai Ambani group the Tata group Adani Power, JSW Steel, the airport yes those who are in airports besides Adani there is GVK, GMR, there's also Hindalco and in defense production there's also the Kalyani group of Pune. So these corporate conglomerates are likely to be beneficiaries of the government's policy changes am I correct? Yes absolutely I think the whole agenda of the reform program that is being suggested is thoroughly procorporate in its focus people poor people, migrants, farmers, workers they are not in their agenda for the last few years whenever growth was coming down in India, economic growth was coming down in India the effort of this government was not to try and boost public investment but instead to provide all kinds of SOPs and exemptions including a huge corporate tax cut to the private corporate sector in order to sort of incentivize them to generate the growth that was lagging behind. So that there's a continuity there but across the world that there's discontinuity across the world what you see is the state coming back in into regulation into ownership into how governance is conducted while that is the trend the world over, the neoliberal policy being discredited the world over and the state coming back in India is walking in the opposite direction. We are trying to and therefore the cronies and the oligarchs the government seems to be depending on them to revive the economy having failed to intervene to initiate measures to boost the economy to create jobs to put money in the pockets in the hands of the poor so that you have a demand side effect. Am I correct? Absolutely, the effort is to disinvest and generate money and not raise budgetary resources the sort of privatization of minds allowing private sector to even go to space to probably start a quarantine center there in space create an Elon Musk in India probably sort of allowing private sector in the defense sector where the ambanis have a serious presence the allowing for example the opening up of FDI in defense even in the same breath you speak about making India in defense and in the very next breath you say that you are raising the FDI in defense. So all these measures are very clear in their focus they are pro-corporate the agenda is to sell off public sector enterprises create a thoroughly anti-labour regime and to transfer the burden of the pandemic on to the working people and provide a sort of a smooth exit route for corporates out of this pandemic that appears to be the focus of the package of the government. Professor Ram Kumar you know just as you say you know the government says one thing but its actions are have a completely I mean have a different impact the opposite impact we see the same thing I mean today the finance minister Nirmala Sita Raman she got particularly aggressive I would say she got aggressive but she was also on the defensive at one level she said we can't do enough I can't see I mean that however much we do do it is not adequate at the same time she's saying we are putting money in the in the accounts of people and then when people say you know the migrant workers are having to pay for their full railway ticket she says no that's not correct 85% is being borne by the government of India and 15% by the state government and then she says it's up to the states to ask for more you know for more trains and she says at one level we have taken on board all suggestions and then she says we are not splurging we are spending sort of responsibility and then she says we don't we don't want to politicize it and no too too but actually she ends up only doing the same thing let me just quote you verbatim what she said instead of wasting the time of migrants and sitting with them walk along with them and carry their suitcase she's meaning to she's meaning she's referring to what Rahul Gandhi did she says in congress rule states we request for more trains so that migrants can reach home they call us drama bars what about yesterday that is drama basi i mean she this is what ned malas sitar aman said and then she says let us more deal more responsibility with this issue this is my humble request to Sonia Gandhi so is she on the defensive is she sort of inadvertently by her aggression revealing how nervous the ruling regime is because their actions can be interpreted to have been too little too late as far as the poor and the migrant laborers are concerned what we are perhaps witnessing is the biggest internal migration in the history of humankind as we talk yes let me say this i saw that press conference in the morning and i admire the journalist who asked that question by i would have preferred if he was better prepared with a supplementary question to her answer her response was appalling appalling it was it had it had it was completely insensitive and appalling and i'm shocked that the finance minister gave such an arrogant response to a to a problem that is so so much in front of us and falling in front of us uh the the what is the what is the point here the point is that there are about 14 crore internal migrant workers in india out of those 14 crore if i assume very conservatively there are about 10 percent of them want to go back home uh to their villages it will be about 1.4 to 1.5 crore people who want to go back home but as by her own admission her government has transported only about 10 lakh people back to their villages that's a trick in my view that's been one absolutely the second point is the following that that whole controversy around the ticket fare it's a total hoax i think this is the this is what the government is saying the government when it says that we are meeting 85 percent of the cost what it is saying is historically primary even before the pandemic hit us there was a 57 percentage of subsidy being given on railway tickets now that is based on some internal calculation within the railways so that 57 percent stands and on top of it we are giving a 28 percent additional subsidy so 57 plus 28 becomes 85 and the rest 15 percent is to the state government now the interesting part is nowhere nowhere has the central government provided us with any official communication to this any state government in india where they are told that you meet 15 percent we meet if not 85 at least 28 percent there is no communication on ticket fares between the center and say state governments so all this talk about 85 percent is an absolute nonsense it has no basis i we should challenge the minister to provide at least one letter written to the chief ministers in this regard the point is that we have tickets all how much is one migrant worker paying say from southern part of india to the eastern part of india the total transfer to the total fare that the migrant worker has to pay is between 800 rupees and 1000 rupees that's higher than the normal rate that he would pay for a ticket during this time of the year now that means that it's it's an enormous outcome the railways is profiting out of this migrant workers crisis why can't they simply forget all these all these complexities and say we're going to run the trains free we will the tickets will be free whoever has ticket can go and can can enter the train and travel that's a very simple way of doing it instead of that it is a completely convoluted argument being put out 57 percent that we are already giving plus 28 percent new plus 15 percent state government and no official communication on any of these appalling okay professor Ram Kumar we've run out of time thank you very much for giving us your views and time alone will tell how many people are convinced by what the government has been claiming that it's going to be spending 10 percent of the country's gross domestic product to to revive the economy to take care of the underprivileged to take care of the migrant workers or whether sooner rather than later people will realize that behind all these numbers all these claims what is actually happening on the ground is is a shadow it is a it is a pale shadow it is a small fraction of what the government is claiming that is the reality on the ground once again thank you very much and keep