India is on course to become the world’s fourth-largest economy, yet its per-capita income remains below that of advanced economies. How do you see the FY27 Budget’s focus translating into job creation and productivity gains?
What do we understand by ‘jobs’? It is productive engagements, so that you are able to make some earnings out of it—to support your family, make your living better. You can be an entrepreneur, a tradesman or a businessman of some sort. So, a task is to help create more entrepreneurs in this country. There is a special announcement in the budget for that. So, it is not just looking at government jobs. It is to make our youngsters well-endowed with skills and entrepreneurial spirit so that even as they come out of universities, they can confidently say, “Right, I have these skills. I can do this”. So we have taken on the task of job creation with a much broader scope, to relate to the generation which very quickly needs to ramp up capacities and be ready.
When we establish medical hubs in the country, every radiologist, anesthetist, and paramedic of any kind—10 types are listed by the health ministry—will find opportunities.
When we are saying education will have some kind of a skilling component, and that there is going to be a permanent standing committee which is going to advise the government on ramping up the content of the course, it is in that direction that the committee is going to function.
When we say rare earth corridors are going to be established, are they going to be established without any human interface in it? Are there not people who are going to invest to extract the mineral? Are they not going to be manned by people? Are they not creating jobs there?
When we say we are going to improve on animal husbandry in the rural areas, we are going to have more veterinary doctors, more testing labs for animal and livestock care, is that going to be done by machines? Are they not going to be done by human beings?
And similarly, when we say we are bringing in programmes for fishermen, both in the coastal area and also in the inland water bodies, with restoration of 500 sarovars, is that going to be done for nothing? Are people who are living in and around that area not going to benefit from it? Are there not people who are going to get jobs out of it?
We are putting our primary emphasis on manufacturing. It’s not going to be just the large industries who are going to get the PLI.
When we say SHE-Marts, are they not going to be for the women entrepreneurs who are producing? SHE itself is ‘Self-Help Entrepreneur’ Mahila. Lakhpati Didi was a success, so now we want to provide them a platform through which they can sell their products. Isn’t that supportive of women’s work?
“When we state that women should qualify in STEM and pursue jobs with demanding hours, isn’t building a hostel for this purpose specifically intended to help them secure employment after their course?”
In your Budget speech, you spoke about the scheme to revive 200 legacy industrial clusters and support MSMEs. How exactly is this going to work?
We said, in order to sustain growth at the level at which we are, so that we are the fastest growing economy, we should keep that momentum up. We are putting our primary emphasis on manufacturing. It’s not going to be just the large industries who are going to get the PLI (production-linked incentive) support. And in the PLI also, we have put in a lot of money, the Electronics Mission 2.0 is going to have ₹40,000 crores. Similarly, the PLI for the semiconductors also continues. Now, with all that said, we have also named seven strategic sectors in which we will take that forward.
On the other side, we are saying, MSMEs, which contribute 40% of the export of India…We want to make champions out of the medium size industries. And this support to the MSMEs has been on for three complete budgets now.
Now this time, we have clearly said we are giving three kinds of support. One is your professional, one is your equity, one is your liquidity support. All three are going to be extended. Now if you are doing that to the MSMEs, we are also simultaneously improving the TReDS platform so that every bill that is there will be treated like a security backup, so they can monetize it.
So with policy support, we expect these small industries and the medium industries, also to grow. Now if we assume that these are going to be new industries, MSMEs, and therefore you do it. No, we are equally saying 200 legacy industrial clusters will also receive our support so that they can upgrade. They require technical support. Technology support, some assistance to upgrade the machinery, some assistance to bring in greater AI into their productivity gains and so on. So that is where it is.
There were some discussions on reviewing Press Note 3. What is our position on opening up the economy for more investments from China?
So the Press Note 3 reference that you’re making relates to those projects in which there were equipment coming from China, and investments somewhat made technology sharing possible. If the experts don’t come, the technicians don’t come from there, the project wouldn’t progress, or it will come to a halt. And to that extent, there was a limited window for people to come, so that these projects don’t halt. So that was the one I think youre referring to.
You have announced a pivot in fiscal strategy, moving the anchor from the fiscal deficit to debt to GDP ratio, but for the bond markets fiscal deficit is a much easier number to understand. Your comments?
Fiscal deficit will also be mentioned in every budget. We are not saying that fiscal deficit will be ignored and we will mention only debt-to-GDP.
This year (FY27), you have assumed the tax to GDP ratio to be lower than FY26. Is this a deliberate strategy to keep some kind of financial buffer, keeping in mind global uncertainties?
First of all, the fact that I have given income tax rebate upto ₹12 lakh, will play out only from this year. The filings will happen only this year. GST has been given across the board. So with all this in mind, what we have come up with is a realistic number.
So do you think there could be a positive surprise later?
We’ll have to wait and see.
Given the tailwinds which we will see from the US trade deal once it is operationalized…
It is not just that one deal which will change it. We have had five deals till now. EU-India is a big deal. No wonder, EU president Ursula von der Leyen called it ‘Mother of all deals’. You have an agreement with EFTA countries. You have one with the UAE, you have one with Oman, you also have one with Australia. So we are continuing on the trade agreement route.
It is not just one trade deal. We have had five deals till now. EU-India is a big deal.
Is there any further scope for a demand stimulus?
I’m not thinking about the coming years now. We’ve worked on it (the budget) thinking about the coming years and the coming decade. It has not yet been cleared by the Parliament. So how will I think in terms of what more I will do next year? At this stage, I need to have the Finance Bill cleared, and the year should start. After that, we will think.
The new GDP series is expected to be released soon. Will that warrant a recalibration of the budget numbers during the year?
We’ll have to see what the numbers are, and then take a call on it.
In this year’s budget, you have taken measures to provide more tax certainty to global investors and toned down the penalty provisions. Can we say that industrial and economic development policy goals are now being built into the tax policy?
In a way, that should have been the principle even earlier. Even if it was, I think what got muddled up is the processes, the compliance, and eventually not having a stable approach towards, let us say, customs as a whole, income tax as whole, and so on. That is what we have addressed this year.
The money which you have allocated for the city economic regions…is it going to be unconditional or is it going to be linked to reforms?
It is going to be on a challenge mode. Do you want to improve the fundamental infrastructure using the PM Gati Shakti? Are you telling us that there will be enough footfall? Or you’re doing some fancy project which is not going to benefit the larger public? So that kind of scrutiny will be there. Only those cities which are going to rise to that kind of scrutiny will be funded.
So will there be some kind of competition when you say ‘challenge’?
Yeah, each state will have to look through the PM Gati Shakti. We think this one serves all those purposes. Then there will be quick scrutiny of it, and then they will be awarded. So I am not sitting here and naming the state. It’s for the states to ask for it.
What will be the contours of this infrastructure risk guarantee fund?
In some sectors, investments are constrained because of the rules there. We are trying to simplify the rules. But even then, there are potential risks in some sectors. We want to encourage people to come in and show that the government has a skin in the game. So for better participation that gives confidence to private investors.
You announced a high-level commission for banking. Can you share a few details on what will be the scope of this committee?
We’ll have to decide on the terms of reference to see what will be the scope. Then decide the people who will have to be on the committee and so on. This is the best time, I think, because banks in India are in a better position, both public sector and private sector. We are looking at the ways in which we will have to strengthen this for funding, the various routes. So the committee will have to tell us what more should be done to take it forward till 2047. That’s the intent.
In some sectors, investments are constrained because of the rules there. We are trying to simplify the rules.
Net FDI has been negative despite India being in a Goldilocks kind of a state. Given the global uncertainties, is there anything else which we can do to further unlock foreign capital?
You would have seen how the chief economic advisor in the economic survey explained it. The assumption is monies flow where the fundamentals are fine. But you see that India, which has kept its fundamentals fine over the last four-five years, is today seeing its currency suffer for want of funds coming in. Fund flows, therefore, don’t seem to move on the commercial logic. There seems to be something else driving them, but with this conversation happening between India and US, hopefully we should have funds coming back.
What kind of investor interest are you seeing in the defence sector?
There is a huge interest in the defence sector, not only for meeting India’s defence requirement, but also for exporting from here. The success of the India-made OEMs, equipment, artilleries, guns, bullets etc. is making investments attractive. People are willing to come and partner with Indian companies.
Will customs reforms continue?
The Centre has been reducing customs duties and the number of tariff rates, as well as simplifying airport processes. We’ll still have some more work done. It could be for scanning of the goods which come—can it be completely mechanized? Can it be devoid of human interface?
On IBC, now, have you accepted all the recommendations from the select committee?
There are a few which we didn’t accept. Many of them have been accepted. We’ll have to bring it to the cabinet and then to the Parliament.
PM has been pressing that states should be business ready and should reform and attract FDI. Are you seeing that kind of enthusiasm among states on reform?
States have been very good on this. They’ve done their homework. They have understood their strengths. They know which of their strengths to project. It’s been a healthy competitive environment. They’re doing absolutely fine, and it should continue. But even they are impacted by global equity or the fund managers probably waiting to see which way the trend is flowing. And as long as the trend flows towards India, they would come to participate, despite your fundamentals being fine last year, the year before that, this year, even the next year. That’s why I said FDI flows don’t seem to follow a commercial logic. Beyond commercial logic, they seem to be waiting for some kind of a signal. So states, despite all the good work, are impacted.
With the 16th Finance Commission retaining a 41% devolution share, states have been talking about cesses. What is your view on sharing cesses with the states?
They are being used for the states. They are collected for a purpose, and for that purpose, they are being used. And every time this issue has come up, I stood in the Parliament with the facts—say how much was collected and how much has been sent to the states for the purpose for which it’s been collected. That will happen, that will continue. Cesses and surcharges are the constitutionally given right to the Centre that cannot be undermined.