Says sluggish private investment a blowback from the past, warns of stern action against those who don’t declare black money by September 30Prime Minister Narendra Modi has said his government didn’t take shortcuts on reforms and suggested that sluggish private investments were a continuing blowback from before the time he took office.
In an interview with Network18, the PM said he suffered political damage for his decision to not issue a white paper on the state of the economy when his government took charge in May 2014, but his government has resisted the temptation to take shortcuts, positive results of which were now evident across several sectors.
The PM suggested the slowness in private investments could also be because of his “tightening of screws” on bank NPAs (non-performing assets). Incidentally, the interview was telecast on the last day in office of Reserve Bank of India Governor Raghuram Rajan. Modi said he had held a meeting with bankers and told them that there would be no phone calls to them from New Delhi (on issuing loans to industrialists).
“Despite that, the pace at which roads are being made, railways is expanding. There’s a six-fold increase in electronic goods manufacturing… These things show we haven’t taken shortcuts. And my motto is like what you see on railway platforms — ‘shortcuts will cut you short’. We don’t want to take any shortcuts and the results are showing,” he said.
On unaccounted money, or ‘black money’, the PM advised people to declare it before, under the Income Declaration Scheme, before the deadline of September 30, or they might face stern action. Modi said his government has enacted a law that has curbed export of black money.
For black money at home, the PM said: “If you made a mistake, knowingly or unknowingly, come to the mainstream now, sleep peacefully at night. I have given a way… If I take stern steps after September 30, no one can blame me.” He said nobody has the right to loot the money that belongs to the poor of this country. The scheme, which opened on June 1, allows people to declare unaccounted money by paying tax and penalty on it.
Modi said the economic situation in May 2014 was much worse than it seemed on the surface. He said he was confronted with a choice — whether to be politically expedient and put the poor state of the economy in the public domain or keep the interest of the nation uppermost. He said his government had even mulled tabling in Parliament a white paper on the economic condition before the presentation of the first Budget.
“But that would have dragged the economy even lower, markets would have been badly hit, increased hopelessness, affected the market and the world’s view of India would have become worse. It would have got very difficult to pull the economy out of such morass,” he said. Modi said this was the reason why his government didn’t make public the jugglery that was done in previous Budgets (during the UPA rule) and the condition of bank NPAs.
The PM said he opted to be silent in national interest even at the cost of political damage. “It hurt us, we were criticised. It was made to look like this was my fault. All these issues from the past impacted private investment,” Modi said. The PM said the positive fallout of this has been that he is now able to address these issues. Modi said in the years to come it will be a matter of surprise when unbiased people sit down to analyse the choices his government has made on the economic front.
On the goods and services tax (GST) regime, he said it will reduce the tax burden on the common man. Terming it the biggest taxation reform since India’s Independence, Modi said greater transparency and simplification of rules would increase compliance and generate more revenue for development.
On Thursday, the GST constitutional amendment Bill crossed a key landmark with Odisha becoming the 16th state Assembly to ratify the Bill. This met the requirement of more than half of 31 state Assemblies approving the Bill for it to go for presidential assent.
“Very few people in the country pay taxes. Some people pay taxes because they are patriotic and they want to do something for the country. Some pay taxes because they don’t want to break the law. Some pay to avoid trouble. But most don’t pay because the process is complicated. They think they might get stuck in the process and won’t be able to come out. GST will simplify tax payments so much that anyone who wants to contribute to the country will come forward,” he said.
“Secondly, today if you go and eat in a hotel, the bill that you get comes with this cess, that cess… People send messages on WhatsApp detailing the bill amount and the cess paid. All this will end,” the PM added.
On reforms, Modi said, “First of all, in our country, only what is talked about is seen as reform. If it isn’t talked about, it isn’t seen as reform. It shows our ignorance. Actually I am of the view reform to transform. I say in my government — Reform, Perform & Transform. And since I am sitting for an interview, I would say Reform, Perform, Transform & Inform.”
The PM spoke on a wide range of issues from Lutyens’ culture, relations with judiciary, atrocities on Dalits, Kashmir situation and the forthcoming elections in Uttar Pradesh. The PM said his government has improved ease of doing business by removing hindrances. He said there the economy is more vibrant now and prospects of growth are brighter now after a good monsoon.
He said his government has used technology to curb low-level corruption. The PM said his government has not indulged in any political vendetta and rejected the assessment that it has targeted any particular dynasty, a reference to Congress President Sonia Gandhi and her family.
On the issue of Dalits, the PM said he is being blamed for the incidents as part of a conspiracy by his rivals when law and order is a state subject. He, however, advised all, including BJP leaders, to be more responsible in their public statements about any particular group or community.