This was the seventh consecutive Budget by a lady who has been a finance minister. That is a record and that is the glass ceiling that you have broken. Congratulations. Does it feel any different this year than it did in the previous years?
Nirmala Sitharaman: No, not at all.
Nothing different? No pressure?
Nirmala Sitharaman: No, every year, till the Budget gets passed in the Parliament – it is a task which you have to go through and each year has been a learning experience.
Has the middle class been catered to?
Nirmala Sitharaman: I respect that the middle class should be given some relaxation. How much ever I wish to give, I love to give more, particularly when it comes to tax-related issues. That is why to make a difference to the salaried people I made sure that the standard deduction will go up from Rs 50,000 to 75,000. Once the tax rates are also being changed, that will benefit even the higher taxpayers. Because Rs 1,00,000, Rs 5,00,000, Rs 10,00,000, Rs 15,00,000 – that exemption will benefit even the higher income groups. First of all, we intend to give something to the middle-class salaried people. I increased the standard deduction. I wish to do more. However, there are limitations in taxation. How much more can I give? This is a question that I have to look at. So, ideally, yes, I love to give more. But there are limitations. And I have to consider there are limitations, that is why affordable housing. I am giving some kind of a benefit and subsidised interest. I am also making sure that student loans for students who are going to study in Indian universities are up to Rs 10,00,000 and that a subsidised interest rate will be given to families spending on children’s education. So, there are various ways in which we have tried.Especially when papers are leaking all over the place.
Nirmala Sitharaman: Well, that has been taken up in the Supreme Court and the Supreme Court has come out with its judgment. I think we should learn to respect the judgment which has come from the Supreme Court.
You have talked about simplification of taxes
Nirmala Sitharaman: That is why we brought in the new tax regime, which has far lower rates compared to the old regime. The old regime has a lot of exemptions and so on. Many people said we do not need the exemptions, so we brought the new regime. We try to reduce and simplify the taxation, the entire system, and the regime itself. It is difficult to convey this.
I do not know how I am going to say this without causing this outrage about, how dare the finance minister say this, but please allow me this indulgence. Is the GST tax on the essentials, brought in only by GST? Earlier, in the pre-GST regime, every state carried out taxation through VAT or excise. It is a great principle to say do not tax at all. But to say that it was GST, that brought in my soap, oil, comb, under taxation is not right.
Even I come from a middle-class family that lived on a salary. Do you think I am here now doing things that I do not understand, – GST on daily-use items? Every state was doing its own thing earlier. It is being brought together so that it becomes simple and the same all over the country. In some states, buying a car was cheaper and in some other states it was more expensive. So, to get the entire country to deal with it in one fashion, there was a GST Council formed and rates were decided. Now, the ministers who sit in the GST Council spend a lot of time understanding this and representing the people. I can for sure say that post-GST, the tax rate on all of them has come down. I have released N number of data to show that ordinary daily use, common man items, have seen lower taxation after the introduction of GST. Let us give credit where it is due.So, this is about political one-upmanship?
Nirmala Sitharaman: I do not look at it. Honestly, I feel there are some items and some issues on which political parties will have to come together.
Can you see that happening with the kind of confrontation that we see every day in Parliament in the rhetoric during elections? Do you see any consensus building, taking the country forward kind of activity because many political parties are deciding not even to participate in the NITI Aayog meeting on 27th. Mamata Banerjee is going to come because she wants to fight with the central government since you are not giving her money.
Nirmala Sitharaman: With due respect, I admit that is a good position to take. Because NITI Aayog like forum where the prime minister is the chair is a very good forum to come and speak about the issues that you think are important for the state. It is a good forum. And I think opposition by taking this kind of a position is losing an opportunity. They should come to the NITI Aayog and say, look, my state is getting this much. It should get this much. These are the projects which need funding and speak up. Do not you want to use that opportunity? I would honestly want states to participate in it and speak about their issues.
But most opposition parties have protested outside Parliament today saying that your Budget was a kursi bachao (Save the throne) Budget because you announced schemes for Andhra Pradesh and Bihar. There was no mention of any other state. You even had a little bit of a confrontation in Rajya Sabha with Congress’ Mallikarjun Kharge. The fact that you took only these two names was a political message.
Nirmala Sitharaman: No, I took Himachal Pradesh’s name.
In flood control. You announced flood control measures.
Nirmala Sitharaman: Yes. I took Assam and Sikkim’s name. I have taken other states’ names. It is not as if I have named only two. And I also repeat the point that I said in the Rajya Sabha. I want to challenge the Congress Party on each of the budgets that they have spoken about. If they had not mentioned the name of any one state in it, did it mean that they did not want to give money to that state? Can I conclude like that?
The way they seem to be behaving today, that’s what it implies, whereas I did not imply that. I will still have money going to states that have not been named in my budget. I will still have projects undertaken in those states. I will still have centrally sponsored schemes happening in those states. So, I will still look at ADB or World Bank functioning support coming in, financial support coming in as loans to fund projects in those states.
But the way the Congress Party interpreted it and walked out during the zero-hour discussion in the morning, does it mean that in their budgets if they did not mention the name of one state, they stopped the money going to that state? I would like to challenge. I would like to pick up on those budgets. Today somebody who has read Indian budgets as a matter of hobby every year gave me the news that once an alliance partner left the alliance, they dropped mention of that state totally during their alliance days. That kind of trick may be what they play. We do not play those games.
Take the Budget documents that go along with my speech. Whether I mention it in my speech or not, the documents will show by scheme what moneys go under each scheme to which state. Every state has it. Every state gets projects funded and money goes whether I mention them in the speech or not and that is why I took the example of Maharashtra where there is a big project, a seaport, which this country deserved to have for the last 70 years. It’s the Vadhavan Port in Maharashtra. Did I mention it in my vote on account or did I mention it now? I did not in either of them. But the Cabinet has approved to build one of the best, biggest ports for India in Vadhavan for Rs 76,000 crore.
That is an election-bound state. So, I will again be political and say that you gave Maharashtra because there was an election.
Nirmala Sitharaman: Please have your team look into the Budget documents and tell me which state has been ignored.
Tamil Nadu says they have been ignored. West Bengal says they have been ignored. Telangana says they have been ignored. Karnataka says they have been ignored. Especially the Karnataka chief ministers even said that you come to the Rajya Sabha from Karnataka and you have got nothing for Karnataka in your budget.
Nirmala Sitharaman: I would want each of them to please look into the budget documents and see if there is anything made as provision for those states or not. I think they are just being unfair in misleading and putting forth a misleading argument or a narrative and confusing the people.
This election has seen the people of India elect a government as much as elect an opposition. An opposition that was given above 50 seats, which was the earlier position, 99 seats to be responsible. But by making all these baseless arguments and putting forth unsubstantiated allegations, they are doing a disfavour.
Why do you think they are targeting you? Is it you or your party?
Nirmala Sitharaman: Not targeting me. It is targeting this government. And why do they do it? They just do not like Prime Minister Modi. It is a visceral hatred and therefore, anything that he does for this country is unacceptable to them. There cannot be a greater petty-minded opposition than what the Congress is. It is a sad state. I wish the party would rise from that kind of pettiness. When Congress was in power, the pettiness was shown against Gujarat and against the chief minister of that state. Central agencies were used to undermine the chief minister and every minister there. It is that attitude which continues even today.
So, then is it payback time when ED and CBI go after the opposition?
Nirmala Sitharaman: Not at all. We have stated it publicly, that our fight is against corruption in this country and we will go after black money wherever it is and therefore, they are out there. Doing their job. We have not made them a caged parrot, like the way CBI’s chief during UPA’s time commented about himself.
But the washing machine perception hurt you in elections.
Nirmala Sitharaman: That is a different story. Anything can hurt anybody in elections. I am not going to go by it, but is it not true that the black money, fight against black money is being taken up by the agencies under this government because they have been given the freedom to do what is lawfully got to be done?
It takes me back to all the comments on social media which says you promised, you would bring black money and honour the salaried class because they are the real patriots and what have they got? They have got an increase in long-term capital gains tax, which has gone up from 10% to 12.5%, which means for a lot of retail investors in the market who invest in mutual funds, their tax has increased. They do not have a pension cover. They do not get Ayushman Bharat. They do not get the Garib Kalyan Yojana. You would not give subvention to their children even in loans. But their tax has increased. LTCG has come down from 20% to 12.5% in the assets segment, but indexation has been taken away. Your party can joke that everybody is an indexation expert, but in some cases that tax in some cases will hit people selling in the short run.
Nirmala Sitharaman: I am sorry. I do not know who informed you on the long-term capital gains tax and the measures that we have taken. In fact, since last night, the CBDT has been explaining in detail as to why this has been made. Yesterday, in the press conference, the revenue secretary neatly explained how Rs 1.25 lakh has been exempted annually for the smaller investors in the market. Rs 1.25 lakh is not subject to the tax.
So, keeping in mind the small investors, we have given that exemption. But as the revenue secretary rightly explained, a majority of them who are earning big amounts out of it are the ones who will be paying 12.5% rather than 10% now and the indexation removal has been explained very clearly with case instances. So many cases have been shown as those which we studied before we brought this so that people will pay less than what they have been paying even with indexation.
What they are going to pay at 12.5% is less than even what they have paid if the indexation were to be there. So, enough work was done in consultation with people who advise us on these matters and it has not been brought in thoughtlessly. And today and since last night, the kind of explanations that we are giving to dispel all these quick-fix answers people have given that are not right. I would want everybody to please go through the explanations, the clarifications, the FAQ, which the income tax department, the CBDT have put out. Then, you will know that it is certainly not going to hurt most people.
There can be some who are getting that benefit at a higher level, but certainly not the middle class, certainly not the poor small retail investors. I can assure you. Let me assure you with this one line. It was not done for revenue considerations. It was more of an exercise to simplify the entire long-term capital gains and also to make sure all asset classes are treated similarly.
So, there is no relook that you are planning on this issue?
Nirmala Sitharaman: It is now a property of the parliament. I cannot comment on it beyond this.
Because there are people who have said that while you are treating the appreciation, there is no indexation on the basis of the real value because inflation has not been taken into account in the period an asset was bought and when it is being valued today.
Nirmala Sitharaman: They are getting a sale today.
Getting a sale today. Number one, the issue of inflation has not been looked at and the second, the cost of money, which means most people who are buying assets like a home or something will take a loan and there is an interest burden that they will carry. Some of those people might not be super rich and in the highest tax bracket. I am only bringing to you saval ka public ka.
Nirmala Sitharaman: Absolutely no harm in asking. And I am willing to answer every question. My answer is for the public and I appreciate you asking it. But I am saying, please go back to look at the FAQs and the issues that have been clarified by CBDT.
