Higher EBR justfied by the returns: Goyal PDF Print E-mail
Thursday, 07 February 2019 09:10
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Brushing aside concerns of high extra-budgetary resources (EBR), or borrowings by PSUs to finance the government’s Budget expenditure, finance minister Piyush Goyal told FE on Wednesday that “the economic returns more than justify the borrowings” in areas like railways and roads. On the issue of FCI’s large borrowings (roughly 1.3% of GDP in FY18 and 1% in FY19), he said, “Food security is an important national concern. So, this is justified.”
On the charge that the Rs 75,000-crore income top-up for farmers was an admission of inadequate agriculture reforms, Goyal contrasted the Rs 7 lakh crore the government would give farmers over a decade with the Rs 52,000-crore farm loan waivers by the UPA in its last five years. He spoke of the sharp hike in MSPs and defended the fact that farm prices are 20-30% lower than MSPs by saying this was the result of surplus output and low global prices. He said the BJP had procured farm goods several times more than what the Congress had.

On the charge that there was no farm exports policy till now, he said this was because food inflation had to be tamed first. So, did this mean farm exports would always be hostage to local prices? Goyal said “by and large we have larger surpluses and a buffer stock”, so, that is not an issue now.

On Rs 20,000-crore disbursement to be made to farmers in FY19, Goyal said, “The lists have started coming in … we need the cooperation of the states to be able to transfer the money to validated beneficiaries.” Goyal dismissed concerns of high-frequency data like auto sales not matching with the official GDP estimates. “Data collection systems have not evolved adequately to capture economic activity fully… but with the formalisation of the economy due to GST etc, this will get all right.” He gave an example of how, with new technology on train arrivals/departures, data in the railways was now more accurate.

The finance minister wasn’t too worried about the 13 bps rise in bond yields on the day of the budget or on FPIs turning sellers in the bond market after the Budget. He said this was nothing to be overly concerned about, but declined to give a view of what bond yields should be “on the eve of the monetary policy”.

He didn’t think the government was being harsh by asking PSUs to give higher dividends, buy back shares and also buy other PSUs and then invest more since “they belong to the people and their money is being put to use for the nation”. PSUs, he said, “have an in-built advantage for several schemes”. He dismissed the charges of PSUs not having enough flexibility to do business as compared to the private sector or that they had lost value relative to the private sector. “The NCLT cases prove that the private sector’s so-called speed resulted in huge losses.”

In the context of the BJP’s unfinished agenda, he said reducing import-intensity was big on the list and the government had already taken steps to keep oil imports growth down to 3-4% and that, had imports of coal taken place at the old rate, they would be very high today.

Goyal was not too worried about the high import content of mobile phones — all units in India are really assemblers of components from China — and gave the example of how, in the case of LED bulbs, the government programme had led to a large local production with just Rs 1-Rs 2 of imports for each bulb.

Goyal said he was very happy with the government’s progress given the legacy it had inherited in terms of double digit inflation, twin balance sheet crisis … being part of the Fragile Five countries … and Rs 1.6 lakh crore of unpaid bills; given all this, he said, the government had done a great job.

On being asked whether the problem was that while the government had done a lot, people were dissatisfied because they had unrealistically high expectations, he said, “you have high expectations only of people who can deliver.”



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