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If Kuber wants to give, then you must keep doors open: Economic affairs secretary

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Economic affairs secretary Atanu Chakraborty expects the new flow of overseas money into government securities to reduce interest rates in the system. In an interview with TOI’s Surojit Gupta & Sidhartha, he hints that small savings rate on instruments such as PPF may be lowered from April, while maintaining that the government needs to protect the interests of senior citizens and the girl child. Excerpts:
Does the Budget address the concerns of slowdown?
Yes, in more than one measure, very substantially and in a very strategic, concerted and planned fashion.
There is an apprehension that not enough money has been put in the hands of the taxpayer to boost consumption…
The speech talks about boosting income through investment and enhancing purchasing power. Somehow, economists in India have got used to seeing one to one allocations. On the demand side, income tax is one of the demand boosters. Then, there are things like doubling farmers’ income through steps like linkage to the market. We are ready with the National Infrastructure Pipeline, which is fully provided for with a list of 6,500 projects and their details. There are steps on long-term finance, there is additional funds for capex. Today, most of the bond money moves through indices through passive investment. We have to attract that money. Four categories of government of India bonds will be opened up for non-resident float as well as domestic float which means larger amount of money. Whenever you have fungibility of money, rates come down. When that rate is reduced, monetary policy transmission becomes more efficient, then it moves very quickly to banks. We had closed our doors and Lakshmi was standing outside. Now, the government has opened the doors. If Kuber wants to give, then you have to have your doors open. Open it slightly but at the same time be careful.
The National Infrastructure Investment Fund has been around for a while. What is the progress?
It has already disbursed Rs 16,000 crore and has a pipeline of Rs 38,000 crore. They have set up an infrastructure debt fund and now they have set up an NBFC, where we plan to provide equity. They have also tied up with sovereign wealth funds who want to come on the debt side.
If you look at the allocation of several sectors such as MGNREGA, there is not much increase.
Everybody comes down to MGNREGA. It is not a classical long-term employment generator, that’s why its nature has slightly been tinkered with when we talk about fodder farms. It has to be pushed into asset generation, otherwise it’s a waste of taxpayers’ money.
One issue which is talked about when we refer to monetary transmission is the issue of small savings rates. Is there a move to review them since the government hasn’t changed rates?
I don’t think this is a budget issue. Wait for the quarterly reset, you will get the answer. All the questions are towards lowering of interest rates. At the same time, we have some amount of responsibility towards senior citizens and the girl child.
Ratings agencies have raised some concerns over fiscal deficit at 3.8% of GDP. Are you worried?
As far as rating agencies are concerned, it is natural that they will be concerned. They will also like to be assuaged. When I meet them, my answer would be ‘we have till now walked the talk’. See the proof of the pudding when you finish the year. May be, our articulation with them at this stage needs some enhancement. We need to do that. There is nothing adversarial. We should also give them proof of our commitment to fiscal consolidation.





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