ET Awards for Corporate Excellence: Now, it's time for good news on growth & clean politics

Top union ministers Arun Jaitley, Nitin Gadkari, Suresh Prabhu and Piyush Goyal stoutly defended demonetisation at a panel discussion, moderated by ET. They said the adverse impact would be brief, after which people should expect good news on taxation, growth, inflation and interest rates apart from clean politics. Edited excerpts:

SRIRAM: How are we going to benefit from demonetisation?
PRABHU: Let us look at the larger picture. We were the largest economy till the first industrial revolution, then came the second one, which took us even behind, the third one we missed out. The fourth revolution is going to be the digital revolution and if we can actually embrace it, can ride it and not just see it passing by, we could be the real winners. Now if you want to really bring a revolution of any kind, it presupposes disruption.

Mr Gadkari, how do you see things?
GADKARI: The impact in my department particularly is very positive. People are giving good response for development in infrastructure. We have already finalised contracts of more than Rs 4.5 lakh crore and next December my target is for Rs 10 lakh crore. Processes are moving fast and people are giving good response to the tenders. The problem is with bankers because of the previous situation, there was some hesitation to support infrastructure projects. But I feel that today... banks have to invest in these infrastructure projects because we have already solved all the problems.

Also Read: ET Awards for Corporate Excellence - Celebrating the makers of a new India


What big-bang reforms do you have in mind?
GADKARI: We need a fast-track decision-making process. If you do not want to do it, say no. If you want to do it, say yes. But without taking any decision for three to four months, the file is only moving, this is not the correct thing. So today in my department, I have taken a decision — if the officer is not taking a decision, we will take action against him.


Also Read: ET Awards - Govt is delivering big bang reforms, says Vineet Jain


Mr Prabhu, is revenue collection an issue? How will you fund projects?
PRABHU: Nowhere in the world can you create infrastructure from the present revenue streams. Infrastructure creation would necessarily require raising debt. Yesterday we had a chairman of the Canadian pension fund who has almost $200 billion. This gives us the best opportunity and the railways is the most preferred destination because cash flow in railways will never be a challenge. Mr Jaitley, what benefits of demonetisation can we expect in six-seven months or more?

ET Awards: Radical reforms inevitable, even if bitter, says Zarin Daruwala



JAITLEY: I think you are being too pessimistic looking at six months and more. Once the remonetisation exercise, which is at a fairly advanced stage, is completed, it would not take the kind of period which is being mentioned by some people and a lot of the currency comes back into recirculation. The volume of paper currency will shrink, that is inevitable, and this will be substituted by a lot more transactions by other means. So the two obvious consequences are that banks will have a lot more money and therefore they will have the ability to support the economy and growth. Our growth was coming from a lot of public spending and foreign investment. We were all introspecting that the private sector investment, the role of the banks because of excessive NPAs (non-performing assets), was somewhat inadequate. Now those parts of the economy I think are going to be adequately dealt with. In the long run, you will have a higher GDP, higher revenue and probably a far cleaner economy and far cleaner public life.


Also Read: ET Awards panel discussion: Short-term pain of note ban to yield big gains



Will more money solve fiscal issues, boost spending?
JAITLEY: Before the present government, there was a particular model of spending: You announce large spending in the budget and in November you start cutting. This year we are going to spend more than we projected in the budget. I am candid enough to say that obviously months of November, December where you had the currency squeeze, there will be an adverse impact... not the kind that you see with exaggerated estimates on television screens. Once remonetisation settles down, obvious advantages will start coming in. There has been some controversy about tax treatment of political parties...

JAITLEY: I think this is a complete media creation. I’d like you to introspect if a single change was made in the last two months or last two and a half years with regard to taxation and political parties? The answer is no. If somebody creates a political party for the purposes of channelising funds, obviously the law will step in. There is no evidence of social unrest, which shows that people are willing to take the inconvenience because they knew it’s for a better cause. There’s a small group of people, whether individuals, whether it is within the corporate world or the banking world, who tried to misuse the system. Similarly, if anybody in the political system tries to misuse the system, they will be dealt with in exactly the same manner in which this other minority group of people who are trying to abuse the system will be dealt with.

BJP has done well in recent by-elections. What lesson are you drawing from this?
JAITLEY: I think in the first two years when we were making incremental reforms, day after day a suggestion was thrown: What about the big bang? Now you had this huge reform, the same columnists start writing: Is India prepared for a big bang? Since you asked about the political impact, I’m certain it’s going to be very positive electorally but that’s not the consideration. One good political impact is going to be hopefully on future political fundings. We also have to become more transparent; that is an obvious political impact.

Mr Goyal, what are the benefits for your ministry?
GOYAL: As more and more of the economy gets into the formal economy, it’s obviously going to help the discoms. In the past, we had instances where large mills — because they wanted to sell a portion of their production outside the formal economy —would have to plan that they buy the raw material in cash. They would adjust the electric meters or electric billing so that they did not reflect the full consumption and the entire chain was corrupted all across. I think one big change is in the mindset of the people.

More and more people are realising it does not pay to be dishonest anymore. If we can see lower taxes across the system with more people coming under the tax net, then possibly GST rates come down, interest rates will have an automatic impact with lower inflation, thanks to black marketing or hoarding coming down. I’ve been interacting a lot with the trading community, the middle class. Small traders, they are facing a lot of pain in the short run. The younger generation amongst the trading community is very excited that if all of us have a level playing field and all of us are going to compete only on quality and good service, then it makes life so much better for everybody.