 Welcome to the NewsClick special edition on budget 2021-2022. The budget we had been told before it was announced that it would be historic. And one of the commentators writing after the budget said that it is a good interim budget, except that it is not an interim budget, it is the budget for the full year. And in some cases, the finance minister has projected so far as five years and six years. So this budget comes at a special moment, a crisis of COVID and the lockdown, which caused extreme economic distress. We have two speakers with us today. We have professors Vikas Ravel and Rohit Azad. And I wanted to begin with Professor Ravel. Do you think this budget is really a stimulus? Is there a hidden stimulus somewhere which we, which is not immediately apparent? Well, there is no stimulus. It's a budget which is, I mean, it's as if the government is in a denial mode, unwilling to accept that there is a, there is a recession, that there is an economic crisis that this country is facing. And you just written a budget in that framework of denial. So that's, I think, what the budget is about. And there are specific sectors. In fact, what is striking is a complete lack of, you know, attention to that, complete lack of a stimulus. And you, I mean, that's, and you just kept waiting for that stimulus to come. And you thought when she was giving the speech that she's perhaps keeping it for the end, you know, she's going to make some big announcement about agriculture. She's going to say something about expanding NREGA. But then it just ended and she just never came. So one of the amazing things about this budget is that the allocation for almost every social sector, including the allocation under the head of social sector, have gone down. Now, but, but still the government says that this is a budget about spending, spending, spending. So where is this spending going to happen? And do you think that when the, as a year rolls around, there will be a need for, you know, more and more demands will be raised on the government. And that this sort of penny pinching at this moment is only putting off the inevitable, you have to spend on something. Otherwise, people will suffer immensely like in health or agriculture. And, you know, where is the agriculture spending? And what explains the priorities of the government? Once you go through the speech and read the budget, what according to you is the priority of this government? No, you see, it's a very peculiar situation. The revenues of the government have collapsed. Government simply doesn't have, have not has not is not mobilizing revenues. You know, when they say it's about expenditure, it's they're merely saying that it's the excess of expenditure over revenues is now much more than it used to be. But that's not because their expenditure has gone up. It's because the revenues have collapsed. They just have no known. I mean, they've not, they've not been collecting taxes and their revenues have fallen so drastically that the only thing they now have is this idea. Is this idea of just selling off national assets to somehow keep some revenue. But even with all that, you basically don't have have a lot of money. So, so it's only in that sense that expenditure is high. Professor Azad, we were just talking about the government's intent to sell off public sector units and at a wholesale level this time. Do you think this is going to be an effective strategy to bring money into the economy? It's like, I mean, everybody was talking about this once in 100 years, but not everybody, but the mainstream media. And in one way, this is once in a hundred year budget because they are trying to sell off something which nobody dared to touch, which is LIC. I mean, it's already the thing that started last year. But LIC is very risky. I mean, selling it off or privatizing in whatever way. A, because it has the savings of the low middle class of poor also. I mean, LIC is it mobilizes savings from a big section of the population to put it in the hands of the private sector like insurance companies. Let's say in the United States, you don't know what is going to happen to those savings. That's one. But more importantly, why sell it? I mean, LIC is not a body which is making losses. You normally sell things which don't give you anything if at all you want to sell. Here is an asset which is giving you something. It's a revenue generating machine, so to speak, and you're selling that off. So somebody was saying, I mean, Professor Dhar was saying in the morning that you can't sell your family silver. You can sell it only once, but you can't sell it twice. So that is the problem with this strategy. And if you look at the data, in fact, the disinvestment targets that they had set even last year, they couldn't meet it. So there's there's nothing suddenly that is going to happen, which with even though the invest this investment itself is wrong. But I'm saying to include that as a revenue to calculate your fiscal deficit is something which is anywhere not going to happen. So what will happen? Ultimately, you'll have to then cut down your expenditure because you want to meet the target, which is exactly what they have done in the previous budget. Most of the, as Vikas correctly said, the fiscal deficit that has risen has not risen from the expenditure side as much as it has risen from the fact that the revenues have fallen. So, I mean, that doesn't give any injection of demand in an economy which has seen its worst recession in the history. So this is not this was the time for a fundamental change in terms of what you can do in a budget. This was the most if there was one budget, this was the most important budget in perhaps the history of this country. And what we have got is nowhere close to that. I mean, there's nothing in it which can be called historic other than selling. One very interesting statement in the budget speech that last year, the corporate tax rates were reduced to a level which is the lowest in the world. You know, if you are not tinkering with the rates right now, then why do you think the government had to mention this? Is this attempt to draw global interest in investing in India that the tax rates are very, very low? And what is the meaning of very low corporate tax rates? What does it mean for economy right now? I wanted both of you to answer that if you could. First, if you could go. So two things on that. I mean, one is that you may want to incentivize all this, but incentive can only be taken if there is something. So, for example, you give a lot of tax rebate doesn't mean investment comes by what may happen is that this tax is going to be pocketed by the big corporates as it happened. I mean, their profit after tax has risen has sold in a time when the sales have fallen. So what they do is they'll pocket this and as far as the international, I mean, international investment is concerned. Why would they come to a country or at this point when there is a global slowdown to come to a country just because you've given a tax rebate. People invest in a country when there is a possibility of a market. If the market itself has gone down, why would they invest here? Additionally, this is going to affect your budget numbers itself. If you give concessions, not only do you not get anything out of it, I mean, one could have understood if it influence private investment, but it doesn't. On top of that, it affects your after, you know, let's say revised estimates as as you would see next year of the budget numbers, which is essentially going to be to cut down expenditure from the projected levels themselves. You know, I think, yeah, exactly, you see two things. One is that even if I'm not wrong, the revised estimates of corporate tax collection for the last year are considerably lower than what they had budgeted. What the budget estimates were and what they're projecting for next year is lower still. So the point is that the only effect that lowering corporate tax rates will have is that your revenue mobilizations are less. You see, I want to make one point about this idea of sorry to take you back to the idea of selling national assets. You see, you have to remember that in a period of economic slowdown, selling national assets would only mean two things. One is that as Roy was saying, there's no way you can mobilize what you are claiming you will mobilize by way of selling these assets. But what you would, my fear is that what you would end up doing is that you would end up eventually selling these assets for a song. It's like having a buffalo and selling it during a period of drought. You know, you basically sell it for a song because, you know, there's no market for it. So that's one. The other is that, you know, one really has to understand this in a period such as this where, you know, the crisis of livelihoods, the problems of people is, is unprecedented. In that period, you have a budget which does not have a single big ticket welfare scheme. There's not one major scheme that has been announced in this budget. Nothing to give relief to the people. You see, so that's really, you know, stands out. There's the biggest problem with this budget. There's not one single major welfare scheme announced. And obviously, if you are not going to tax those who are reeking in the profits, then you will not have the room to ever have the stimulus that you need. Now one of the interesting ideas again is this revival of the asset reconstruction. Now there are a lot of private sector companies which are trying to, you know, take care of the stressed assets of banks. You're trying to have a bad bank and, you know, all these ideas have been floating around, but is this the right time to really drift off into this territory? Now, you're going to give it 20,000 crore rupees and you're hoping that they will, you know, sort of fix the problems in the banking sector. Now, the earlier RBI Governors had said that the way to fix it is to fix accountability on the borrowers who don't repay loans. This doesn't seem to be that kind of an idea. Where do you think the government is heading? What does it tell us about the government's priorities? Is it infrastructure which they are after? Are they hoping that will generate jobs, et cetera, Professor Abul? Well, I think Rohit might be better placed to talk about the financial sector. But to me what does seem is that two things have happened. One is, well, or three things have happened. One is that the burden of wrong economic decisions made by this government over the last few years has fallen quite significantly on the banking system. So you do a demonetization and one major hit is on the financial system. You know, so each of these things has hit the financial system very badly. So the health of the financial system has, you know, gone from bad to worse. The second thing is that, as you rightly said, the big corporate borrowers, you know, the NPA is created because of lack of repayment by big corporate borrowers is something that has clearly hit the banks. Now, you know, this is not something that you can, you know, pass off bad debts from one bank to another institution to another institution and resolve the problem that way. See, unless you're willing to give a clear message that these corporate borrowers who are basically fleeing with public money are, you know, you're going to stop that. You know, that signal is not, that's not being done. Now, that's one. The other is that you really not made any significant change in the way financial, you know, public sector institutions, you know, public sector banks, you know, what is going to be done to take care of their health, what is going to be done to deal with the stress they have. There's no perspective here about that. So, you know, I don't see that problem being resolved with this minor tinkering that they're doing. But Rohit may have something to say. You know, I think this asset reconstruction is essentially the experience so far has been that in the name of the IBC and bankruptcy code, what they have essentially done is they have sold off assets of industries of let's say firms at a pittance. They have sold because they became NPAs, you sell it to a big buyer at throw away price. You're not recovering. I mean, that's not really recovery. That's essentially just selling it off to a big player who gets all the assets at almost nominal prices of that. That's not really solving the problem. I mean, you are essentially writing it off if one were to, you know, if you were to be honest, you're essentially writing it off the books of the banks and look at the write offs themselves. I mean, this is just the, you know, from the restructuring. But if you look at the write offs themselves, they have, they have risen as well in during the term of this government and write offs are what basically the bank the the losses that the corporate sector is making you and I are paying for it because it's after all going from the government's kitty to these banks to write those loans off. I mean, why should we be bailing the corporates out who have messed it up at their end? I mean, they should be made to pay for it. So, but this government has had that approach as far as the NPAs are concerned, that's not really solving the problem. I would say you're actually giving a signal to the corporates to swindle funds in the future, knowing that the government is going to bail you out in the future as well and from not from our money actually effectively, it's after all our money. Absolutely right. Now the, the other amazing thing is that the allocation for almost every social sector which I, you know, agriculture, even health a very minor increase, food subsidies substantially low allocation compared to the revised estimate of the last year. Education, 6,088 crore decline. Social welfare, health ministry, even the planning and statistic collection budget has been, you know, quite substantially reduced from 6,094 crore to 2,472 crore. ICDS, mid-day mail scheme. You know, does it, what does this lead to? How do we understand this? Because these are supposed to be the bedrock of any budget, the ordinary citizen waits for these announcements to see whether they will be eggs served or potatoes served in the, you know, in the schools, for instance, whether they'll get better books and so on. Now, where does the finance minister, you know, hope to make up for the bad results we've got on the nutrition front, for instance, across the board, the things which people need haven't been catered to. One would think that the farm of protest is going on, so there would be something to assuage those spirits. Have you seen anything for agriculture, which is good on any of these trends? The budget of agriculture ministry has been reduced. The budget of agriculture ministry has been reduced. By 6,500 crore almost, I see that figure. So, it's actually quite incredible. That's what I was saying, that how on all the sectors in which, you know, major welfare schemes are run, you see a cut. Now, and to do that in a period such as this, to do this when, you know, this major protest of farmers is going on, you know, you have, you know, there's, I mean, as if they see no need whatsoever to provide relief to people. So, what should one say? I mean, it's really disappointing. I think it's one of the most disappointing budgets of even the India government. What would have made it a little better in your estimation? Where would the finance minister's attention have gone? Well, clearly they needed to, well, what they should have done is to substantially raise revenue through barrack taxation, through wealth taxation, through raising corporate taxes and use it to provide relief to the working people. To have substantial expansion of NREGA, substantial expansion of public distribution system, significant increase in allocation for procurement, significant increase in things like mid-day meals and so on, education, health. So, you know, that's what you needed to do. You just needed to expand spending on these things, which would put money in the hands of people and would in fact create demand, generate employment, generate incomes, generate, in fact, create demand for even the industry to grow. The biggest constraint the industry right now faces is lack of demand. You needed to put money in the hands of people so that the demand could be strengthened. Right, we seem to have lost Professor Rohit for the moment right now. But the last thing is, you know, have you been, have you been able to pay attention to the other development, the finance commission report was also able today? I'm afraid I have not, unfortunately. All right, yeah. So is there something in this which would sort of rescue the budget from the doldrums which it seems to be in? Is there any, I think the water resources, you know, the sanitation and water has been? No. In fact, it's quite interesting. PM Kisan, the revised estimate is significantly lower than the budget estimate. This year's allocation is about 10,000 crores less than last year's allocation. So, you know, even those things where, you know, there's a direct spending, there is, I mean, not only you are not increasing the amount of money that you give because after all there is some inflation. You see, you need, I mean, even if you want to maintain the real value of the transfer, that should have meant that that 6,000 rupees should have been increased by some of them. Not only you don't increase, what you've actually done over the last year is that you've reduced the coverage of PM Kisan. The number of people who are getting PM Kisan transfers, who are the first transfer of PM Kisan, the number of farmers who've been given the subsequent transfers has fallen. So, you see, you've actually narrowed down the coverage of PM Kisan. And that's what you're basically doing, that Pradhan Mantri Sichahi Yojana, the allocation has been brought down. So, spending on education has fallen. So, sector after sector, scheme after scheme, you see a tightening of belt in a period where, you know, you needed to actually expand spending. You needed to increase spending. So, you've gone exactly the wrong way. All right. Thank you. Thank you. All right. Thank you, Pradhan. Yes, all right. Thanks a lot. Bye-bye.