‘India will be the world’s third largest economy in Modi’s 3rd term’, says FM Sitharaman
Two days after presenting her sixth budget, an interim one ahead of the 2024 national elections this summer, Union finance minister Nirmala Sitharaman sat down and Mint to discuss various aspects of the interim budget, and the state of the economy.
Referring to the four caste groups she mentioned in her speech on Thursday — women, young people, farmers, and the poor — and repeatedly evoking the narrative of a Viksit Bharat (developed India) by 2047, the finance minister spoke about her government’s immediate and long-term priorities.
Criticising the United Progressive Alliance for wasting a decade (2004-14), acknowledging the challenge of Covid-19, where India steered clear of the playbook of western economies that were pumping cash into the system and, instead, launched a large campaign built around enterprise and self-reliance, and speaking of the clear-headed leadership of Prime Minister Narendra Modi, Sitharaman answered a range of questions about the budget as well as the economy. Edited excerpts:
The Modi government put the Indian economy on the growth path in its first term. In the second term, it made the economy more inclusive and focused on a saturation of welfare services. What should people expect in the third term?
The Prime Minister has already said that in the third term we will become the world’s third largest economy. So, everything that is required to do so that we reach the third biggest economy level, will be done. That’s the third term. But you may want to add that the second term saw a pandemic like was never seen before. Despite that, with reforms and with every inclusive measure the economy has been brought to the level of fifth largest (now).
Multidimensional poverty numbers are impressive. Even the IMF is saying that India is a bright spot. But, private consumption, which is roughly 60% of GDP, the single biggest chunk, that according to the first advance estimates is likely to grow only at 4.5%, 4.3%. Does that concern you? What is your assessment?
It’s also a reflection of the economy actually going through a lot of shifts, changes, the paradigms are themselves being challenged. I take a very simple example; rural workers move to urban areas and during critical seasons [sowing or harvesting] they go back to their villages. Now, since post-Covid, many of those who had been in the urban areas and acquired some kind of skills — each at his or her own level — are saying that the rural areas are giving them [similar] opportunities to utilise and monetise their skills. Many of them have not even returned [to urban centres]. If that is happening, are we able to measure that? Are we able to take into account such changes? So, I think we are at a very, very transitory stage.
Investments are coming in certain areas, but these are highly efficient and technology-driven industries such as AI, which may see job opportunities shrinking. So how to address this unemployment issue?
You have to address the unemployment issue, no doubt. But, do you think jobs are only there? First of all, AI also requires human intervention. It is not going to operate on its own. Second, on investment; it has to happen and if it brings jobs together, it’s very well. But at least when investment comes, as you say, it may not give many jobs, but those (businesses) are getting located in an area. They are going to create indirect jobs as well. So, it is a layered debate. You want investment, you want jobs, and then you want meaningful jobs, and then you want rewarding, highly rewarding jobs. These are layers to be addressed.
There has been a structural transformation and there’s also been significant transformation in the rural areas. The problem is that we’re not able to measure it properly. We also don’t have surveys to measure it. But anecdotally, for instance, we know that even for services in rural areas, there is demand that was not there previously. Is there a plan to have better data? That will really help policymaking get sharper.