FM: How would govts trust RBI Guv appointed by earlier party?

When former governors join the political mainstream, the whole cause propagated for autonomy of the institutions gets 68664686 68663231 68643655 impacted, said Arun Jaitley, Finance Minister, in an interview with ETNOW. Edited excerpts: What is your view on Rahul Gandhi’s NYAY scheme? I am yet to read an analysis coming from any serious economist or an economic observer who thinks that Rahul Gandhi’s NYAY is doable. Of course, for political slogan purposes, it is alright but when somebody decides and anticipates politics as a next career, I look at statements as a potential politician not merely as an economist. You have also called the critics, especially the one who have doubted your data, as constant contrarians. They have been saying that there has been a deterioration of institutions and one of the former governors is now being consulted by the Congress Party! According to me when former governors join the political mainstream, the whole cause propagated for autonomy of the institutions, itself gets impacted. When they dwell into statements which are politically loaded, rather than during their tenure as a governor, it is far easier to analyse those statements. Therefore if this trend continues, it may become difficult for future governments to trust governors appointed by the earlier party. Otherwise, nobody changes governors. After all, we also allowed Dr Rajan to have a full term. He is a very brilliant man. But after getting into the political thicket, if he makes a statement, then I will take it as more political than economic. Now let us come to the data. Our data is prepared by the CSO and various organisations, weighted at various stages. In fact, most of the time I read about it only in the newspapers. It does not even come to me the previous evening. I have never met anybody in these institutions at a pre-data stage and I am fairly categorical about it. IMF which is the mother of all data, accepts it but some left of centre academics who have signed multiple memorandums against the government sign one more and therefore the data becomes a suspect. Rafale deal became a suspect because you had signatories. EVMs which have been working from 1996 became a suspect because some people signed on it. We have thrown the defaulting industrialists out of management and they say 15 logo ka rin maaf kar diya. These are all fake campaigns. The data campaign is a fake campaign. Now let us come to institutions. Judiciary, we have had no confrontation. Only one incident, the Supreme Court judgement in the judges case says when the Supreme Court recommends names, the government can send it back once on basis a additional material. Second time you are bound. The government merely exercised that right in one case and so the institution collapsed? Mini emergency came? We just did that. What did they do? On social media, they have carried a political media campaign. There are statements saying we have no faith in the judiciary. They are threatening walkouts, You bring a fake impeachment against the Chief Justice of India and then say institutions are under threat? Second, the Election Commission. Every kind of vicious campaign of credibility has been carried on against the Election Commission -- earlier tenure as well as present tenure. Recently Tejashwi Yadav wrote to Rahul Gandhi that all electronic media is biased, we should boycott the channels in the evening!What about the state of the economy? The auto sales figures are down. I do not think one needs to over react. Auto sales, yes, that is a subject of concern which is being independently analysed as to why this is happening. There could be multiple reasons for it. From the kind of secondary data in various fields I am getting that does not seem to be so. When the March figures of the GST come in the next 24 or 48 hours, they are a direct reflection of how much purchases would have taken place in February. April figures would indicate the situation. This is not an area where the tax authorities can say pay in advance because people pay only a percentage of the billed amount. It is an entirely on the online system. So a turnaround is visible? No, I would not say turnaround, I think transiently the third quarter was not a great quarter, global factors, base effect, these were to common factors that will also continue in the fourth quarter. And the third reason of course, was credit and liquidity. We had anticipated it, we were telling the RBI this during the second quarter and this had its effect. The economy took a big hit after the IL&FS saga. Is there any important update? There are certain worrying signs and maybe it is taking much longer than anticipated to sort out? No, it is not. I am monitoring it personally, the government is monitoring it at all levels including the highest level. We have a very competent set of people who have been handling it. There is an asset-liability mismatch and they probably will try and reduce that mismatch to the best possible extent. Whatever assets can be sold off by a fair bidding process they have already initiated that action. I am told there are excessively large number of bidders. We do not know who the successful bidders are and what the bids are going to be. Once that process starts and IL&FS starts getting the money through this and therefore starts servicing a large part of its debt,it will be a positive sign. I must say with a sense of satisfaction that this is a case which shows how this government works. Had we not acted within the first few days, a collapse would have taken place and there would have been a huge contagion effect. Are you also satisfied with the way Jet Airways is being managed? The creditors led by the State Bank of India are doing it. They are making every possible effort. They have entered into various temporary arrangements with adjusting promoters, got certain set of undertakings from them and they are willing to do the bridge funding for a period and then get next promoter to come in and take over. They are making all the efforts. Was it a right decision also because it is the election year and we cannot afford a second Kingfisher Airlines?We cannot. I saw a silly statement from the Congress Party which said why intervene in Jet? Well we are not funding the promoters. We cannot afford a major Indian brand to collapse. If it collapses, there are two effects and this is the unfortunate impact when people who do not understand the subject choose to speak on it. The first impact, well the entire investment will be gone and the public sector banks and the other creditors would be the first losers. The second set of losers will be the consumers, all of you, one more airlines goes out of the system, there is shortage of aircrafts in an expanding market. In fact, the number of aircrafts in India over the next 10 years has to multiple at least five times. So if one airline goes, the demand supply mismatch takes place and the fares will start skyrocketing and the Congress Party says let that happen, we are not interested, why fund it? If that is the kind of horror story that you are giving to the country about your vision, then let the country be saved from you. Rahul Gandhi has filed nomination from two seats. Along with Amethi, there is Wayanad in Kerala also. What message does it give?There are three messages. The first is there is no mahagathbandhan. Left has already made it clear. It is a myth. They are at each others’ throat. The second is in one erroneous move, by displaying nervousness he has created a situation which has advantaged Mayawati and Mamata Banerjee. Leaders do not lose nerves so quickly. And thirdly on a lighter vein, I will remind him what is favourite character whom he always quotes once said his name was Gabbar Singh and his famous sentence was jo dar gaya wo mar gaya. I think since he quotes him very frequently, he would not forget this very wise quote coming from that man. Having said that, the Congress is quick to point out that Prime Minister Narendra Modi in 2014 also fought from two seats. This is the Congress trying to show that they are serious about south India. There was symbolism, there was a pro-Modi wave and everybody knew he is going to win both the seats by four to five lakh votes. Therefore, he wanted to consolidate in mass. He took us to 58% vote in Gujarat which gave us all the 26 seats and he took us to an amazing 43-44% vote in UP which gave us 73 seats and therefore that was not out of any fear. ET Now: So you actually think he is afraid of losing Amethi to Smriti Irani? Arun Jaitley: I think there is another factor, my colleague Ravi Shankar Prasad has made a statement. He was looking for a constituency where the majority community is in a minority. Having manufactured this theory of Hindu terror offended every member of the majority community and now in each of the judgement, the judges are saying this was concocted. There is not an iota of evidence and therefore he has to seek refuge in constituencies where the majority community is in minority. Direct tax collection has fallen short of target. What would you say about that?Many people do not pay tax voluntarily and therefore even though 15th March is the date, it trickles in by the 31st so we will know the position late tonight and early tomorrow morning when we get all the trickle effects back. I think we are fairly close to the target. There was serious farmer distress and there were several farmers’ protests. Did the government understand how distressed agriculture was? We understood it. But only in the last one year... No, we understood it and therefore there were the irrigation schemes. From Rs 6 lakh crore in five years I took the bank credit to Rs 12 lakh crore. We were doing all that. So you think it was politicisation of all those farmers’ protests. There was a whole backlog in agricultural sector. So, it was a legacy issue? It is a historical legacy and we have to get our farmers out of it and ultimately a lot of more people have to get out of agriculture and get into other sectors of the economy. Which now brings me to one criticism that has been levied by the opposition against this government that you came to power promising jobs but where are the jobs? Is the data not being released because the government does not like the data? Let us be very clear. First of, ket both of us go to a village and collect data and then meet in the evening. You meet the same family of four brothers and ask them a question do you have a job, do you own a 10-hectare farm together? They will say no. I ask them a question, do you have a livelihood? They will say yes. You see analysis depends on the manner in which you have prepared that data. It is absurd! It is all an imaginary argument. How the data was prepared becomes the principle question. Ultimately, what is the empirical evidence for any economist? You have to go and see the empirical evidence. The fastest growing economy in the world has not created a single job? We constructed 10,000 km of highway last year but did not create a single job? We created a new rural infrastructure, but it did not create a new job? We gave 17 crore mudra loan but not a job was created? These are absurdities and I believe that the first test if an economy becomes jobless is you have trade union trouble. I was able to satisfy all trade unions. I increased the basic. There was not a single big agitation. Minimum wages are increased by 42% I have given to the unorganised sector which includes farmers. Ultra left farmers come and demand pension but I have already given them a contributory pension of Rs 3,000. The unorganised sector includes them we have given them a pension anganwadi, Asha. These are 1.5 crore people. We have increased it by 50%. There is a not a section we have not satisfied -- from OROP to Pay Commission -- we have given government employees at a quality of life better than the private sector today and therefore if there are no jobs in the economy, all are jobless, then you will see a huge socio-economic protest. But not one such protest has taken place in five years and then the sitting government cannot go into the poll with a nervous opposition which says we are rivals but let us get together because this government is so strong they will still win this. How do we manage to contest elections after five years if there are no jobs, on a pro incumbency platform?

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