A very candid conversation with Finance minister Nirmala Sitharaman
The Wuhan virus is taking lives and bleeding economies and the leaders of the world have a double challenge now, to save lives and to save livelihoods. WION, India’s first International news channel took an exclusive interview with a leader who perhaps has the most difficult job in the world right now, the Finance Minister of the world's largest democracy - Nirmala Sitharaman on the show ‘Straight Talk’.
On being asked about the task at hand, she said, “At the very least challenging and as it is in India every issue or every policy decision has its own complexity when in comparison to any other country. India because of its diversity, because of the uneven spread of wealth and because of the levels of literacy, every policy becomes all the more complex when you try to implement it here.
About going through four rounds of lockdown and may be looking at a fifth. Where do we stand today and have we been able to achieve what we set out to and at what cost?
“As I said it was first lives of people we wanted to be sure at a time, when we had about just a hundred cases. The approach and the clarity with which one had to deal with this kind of a pandemic was unclear to many.
India went through without a break one, two, three lockdowns and so on whereas there are some countries which have lifted the lockdown and then gone back to it all over again.
At what cost is a very big relevant question. Yes, it it has meant that the economy had to take a big beating. How much is it, we'll have to wait and see but whatever it is the government is very clear that we'd stand by our industry stand by our entrepreneurs stand by our farmers we need our economy to be supported and we should support them for your job in this situation” the Finance minister explained to WION’s executive editor, Palki Sharma Upadhyay.
On positive growth projections likely only for India and China.
The Finance Minister said, “If there are engines of growth for the global economies all across - emerging, developed, not so developed economies, it's only two countries and they are India and China. What gives me the confidence to say that this holds good even now are our macro-economic fundamentals and it is on the fact that our fundamentals are strong we are able to face a lock down which is fairly severe.”
About the budget estimates and the plan of a 5 trillion dollar economy
Sitharaman started out, “Let me put it this way, the budget estimates of first February 2020 will now have to be relooked. None of my assumptions will hold good I don't think any one of us understood to what extent and even now I think we are not very clear to what extent this pandemics impact will be on the economy. I'm not going to be stuck on my assumptions of 1st February 2020 and now every option is kept open because ultimately we want the economy to be up and going so yes things are changed from the last budget we have to see how it goes
On the talk of hostile takeovers does she see a threat of hostile takeovers of distressed assets in India by foreign firms
The Finance minister said, “That's certainly a worry in that with the valuations being cut so badly and with the lockdown and the entire world being upset because of the way in which demand some drastically fallen movement of people being affected
There is definitely this risk of companies getting into a distress mode and the market being market that'll be the best time for people with deep pockets who want to come and buy and that's a reality. We have to take care that businesses which have been built by the sweat and toil of Indians and which have had a great brand value cannot be picked up by people who are just looking for an opportunity so that is a factor which all of us are worried about. We will certainly do something to ensure that Indian industries don't get picked up at a throwaway price because we want them to be able to run their business once everything is normally”
On FDI norms being changed recently to prevent hostile takeovers and what are the steps if any are being looked
“We are also making sure that the regulators will be able to look at various existing options through which they can ensure that distress companies are not going to be picked up easily. Regulators will also keep a watch in fact they have been fairly active in getting to know about even the secondary market operations through which companies are getting picked up or or their shareholdings are getting drastically changed. I would think it'll be a combination of the government and the regulators to keep an eye on the developments.” the finance minister explained.
On countries practicing economic distancing from China and creating an ecosystem for companies to shift from China to India.
The Finance Minister said, “it is certainly an opportunity, but it cannot be a reactive thing alone. I think it should be a larger approach of anyone shifting from anywhere should find India attractive and your attractiveness is not dependent purely on the taxation incentives. I think the compliance burden the unpredictability of policy fear of what respective taxation fear of you know of tax men these are all factors which either vitiated or help the kind of environment which can draw investments and I would want to play a lot on them to make sure that it need not always be a targeted incentive based approach to drawing industry. It should be a blanket approach.
So the GDP figures for the last quarter of last financial year have come 3.1 percent and the coal industry’s data for April is a 38 percent decline in growth, is this what you expected?
“3.1 for the last quarter, a quarter where we thought we started seeing green shoots because the way in which through the bank's credit was pushed between September, October, November and that is one of the reasons why the budgetary estimates were made the way it was made but if the contraction that you're talking about in core sectors about 35 percent that is in April, which is into this financial year, by which time the coronavirus hit us. So the 3.1 is actually given the fact that by February we started having some kind of an impact of the pandemic, therefore gives me the feeling that revival was happening but unfortunately the hand of God started playing.” she said.
Most agencies projecting a contraction of 5% what's your estimate?
“I said I shall not do an estimate I shall wait to see how it pans out I am
watching and hearing agencies tell us about what extent to which this
contraction is going to hit India as I said it's my duty to be prepared to face the situation and be ready to help, rather than spend time now on what will be the expected contraction.” the finance minister concluded.
The entire Interview will be available on Wionews.com and on WION’s YouTube and social media channels.