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The Rediff Budget Interview/ Union Minister of State for Finance Ginjee Ramachandran

'It is a welfare Budget'

Ginjee Ramachandran, 57, says this Budget has made him feel good.

As minister of state for finance, he has had calls coming in all day, complimenting the Budget.

February 28, 2001 has been a busy day, but late in the evening, the Tindivanam MP took time out to meet Roving Editor Ramesh Menon and proclaimed that he feels that Budget 2001 was going to do a lot of good things for India's economy.

Will the momentum of reforms go forward?

Of course! This Budget will give a thrust to develop our industry with new reforms coming in. Infrastructure will also be developed. We are giving import duty exemptions to increase inland production. More duties have been imposed to protect our indigenous industry. Our farmers have to be protected.

Does the Budget put the economy on a sound footing?

There can be no doubt about it. The fiscal deficit has been maintained at 5.1 per cent of the GDP. Steps are being taken to reduce it further.

Was this Budget the best thing that Finance Minister Yashwant Sinha could have done?

Among all the Budgets, all sectors of the public are happy with it. It is a welfare Budget.

But the GDP growth rate of six per cent this year is lower than last year's growth rate?

Due to the poor monsoon last year, in spite of so many setbacks, like an earthquake, high international petroleum prices, we have maintained the six per cent rate. It is a good job.

Will this Budget enable India to achieve a higher growth rate?

It will give an impetus to industry and business because of the lower fiscal deficit and proposed tax reforms.

But government expenditure has always been the lid on growth. Has the finance minister done enough to cut government expenditure?

Over a period of five years, we will reduce, by 10 per cent, the government employee strength. That will be enough to administer effectively. The finance minister has already started restructuring in his own ministry. He has also identified other ministries with the help of the expenditure reforms commission.

Will the Budget stimulate investment?

We have started so many schemes to promote investment. Financial institutional investors can invest in a company under the portfolio investment route. More foreign investments are expected now in the domestic markets because of the concessions.

Infrastructure industries have not done well. How about reviving the economy in those areas?

We have increased allocations in areas of power, ports, roads and telecom. A 10 year tax holiday in the core sectors will also help.

But subsidies have been a bane. Will they continue to drain the economy?

My personal view is that there should be no subsidies.

But for that to happen, we should be able to bring our people to a level where they can purchase the essentials they want. We have to rationalise subsidies. And ultimately phase it out.

Steps are being taken to dismantle the administered pricing mechanism in the petroleum sector by next year. Steps are being taken to phase out the retention price scheme of fertilisers too.

Interest rates in India are among the highest in the world. How could the finance minister have encouraged investment?

We are trying to reduce interest rates to encourage investments like we have done in the agricultural sector. Interest rates is only one factor for encouraging an environment conducive to investments.

Do you think the Budget will improve the efficiency of business?

If we are on our way to improving our industries, export and import policies, automatically business will prosper.

But people have money but they are not ready to spend. There is so much of uncertainty in the market. That feel good-factor is not there. Why do you feel that is so?

That is not correct.

India is a signatory of the WTO and is also an agricultural economy. We are formulating so many policies to maintain price levels of essential commodities. We are giving concessions to industries and a climate for investment. The concessions offered should generate a feel-good factor.

Everyone complains about the high rate of taxes...

India has one of the lowest rates of tax. Central excise is also low. Customs, in the next few years, will be progressively reduced. The concessions and incentives make the tax burden lower. Tax evasion is rampant. Polite requests, like the one in the finance minister's speech have not helped...

On one side, you have to rationalise the tax structure. We are taking steps to help honest tax payers and punish evaders.

The agricultural production last year dropped. This year's climatic predictions are grim. What will the government do?

Due to monsoon failure, unexpected things happen. We are taking steps to maintain the production levels of food grains.

Inflation has been hovering around eight per cent levels. Will it get worse?

This Budget should reduce inflation.

Despite repeated assertions, nothing has been really done to make government spending accountable?

We are serious about fiscal responsibility. We are determined to ensure that. We have introduced a fiscal responsibility bill and everyone will be held accountable.

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