Finance minister Arun Jaitley. Finance minister Arun Jaitley.

As the year draws to an end, the perception has grown that Narendra Modi has forgotten why he became the first prime minister in 30 years to get a full mandate. His decision to remain silent when some of his ministers and party men said ugly things about Muslims has allowed his rivals to bring back the old charge that beneath his talk of parivartan and vikas he was really just a Hindu fanatic. The chief minister of Delhi recently called him “a coward and a psychopath”.

Had there been signs already of those promised achche din or just early indications of an economic boom, Modi’s rivals would have been more careful with their mud-slinging. But in the absence of visible signs on the ground of real change, even political lightweights have taken to flexing their muscles. Since the Prime Minister has chosen to be wary of giving interviews, it is the Finance Minister we approached for a report card on the government’s achievements and failures.

Arun Jaitley is someone I have known for 40 years. When Indira Gandhi declared her Emergency, Arun was a student leader and I had just got my first real job in Indian journalism with The Statesman. So it was in the reporters’ room that I first heard of him after he had been arrested and taken off to Tihar Jail. I have vague memories of colleagues speaking in hushed tones about how horrified they were that someone like him could have been arrested. I met Arun when he was released after spending 19 months in jail. He came to the Statesman office. I cannot remember what brought him there but do remember that he was very good-looking and very articulate.

In all the years I have known him, I have hesitated to interview him because of his ability to shame his interviewers into thinking they have asked really silly questions. This time I took the risk because he is virtually the face of the Modi government. I had been asking for the interview for some time but it was only on a cold evening last week that I got a call asking me to come to North Block as soon as I could get there. The Finance Minister sat behind his enormous desk wrapped in an elegant blue shawl. He looked energetic and focused even though it was after 7.30 pm that I got there. He said his working hours were going to become even longer in the next few weeks when the budget meetings began.

It was the evening of the day that the Aam Aadmi Party had called a press conference to level charges of corruption against the minister during his tenure as head of Delhi’s cricket board. Inevitably it was with this controversy that our conversation began. It took him less then 10 minutes to explain how absurd the charges were. We then went on to talk about parivartan. Appropriately since we were sitting in North Block, the Finance Minister began by explaining the steps that had been taken for India to become more business-friendly.

Excerpts from the interview.

I want to talk to you about parivartan. Narendra Modi won a full majority because of the promise of change. There is a feeling that there has been very little parivartan in terms of politics, governance and the economy.

I’ll give you the overall picture. I think collectively this government works as a much better team than any previous government, a lot of younger and more enthusiastic ministers doing much better than expected. There is not a single minister who wants to hold up decisions or is an obstructionist. This government is probably one of the cleanest in recent history. You won’t hear anywhere in the corridors of power or industry — that you are familiar with — that I went to so and so. When it comes to public grievances, it is by and large a friendlier government.

That is not the perception…

I’ll just tell you. For example, if you look at the Ministry of Finance, such procedures have been set up that nobody has to run through the corridors to push a file. The FIPB (Foreign Investment Promotion Board) meets almost twice a month, there are no pending cases. Environmental clearances are being granted as a rule. Every ministry is trying to simplify its procedures.

Why is there no perception of this?

I’ll just tell you… I’ll give you the perception last. Now if you look at what… this government is decisive, no GoMs going on for three years. Now I’ll cover the other ministries also. We wanted to open up the economy because private-sector investment is slow. The private sector had over-extended itself, borrowed excessively and global demand is slow, so Indian demand is slow…

Is that the only reason? Or is it that the atmosphere has to improve for investment to pick up?

No. The atmosphere has completely changed. You have the largest quantum of foreign investment coming into the country. So if your perception is correct then this would not be happening…

Jobs, jobs, jobs, Minister… where are the jobs?

I am coming to jobs, let’s not get caught in the vagueness of this. Now we started off with a setup where our growth was being pushed by two things, public investment which has increased substantially, foreign investment which has increased by 40 to 50% in one year. Initially manufacturing was slow; in the last couple of months it has picked up… Services of course is doing well. The private sector… because of absence of demand and having overstretched itself is slow. But now domestic demand is building up (according to) recent data that is coming, consumption is improving. So you are being driven by consumption because auto sales are moving up. Then you had an adversity of a high interest rate.

You still have.

You still have a high interest rate but the movement has begun. In one year you have gone down 125 basis points. Then the UPA left the public sector banks…

Arun Jaitley outside Parliament on Wednesday, last day of the winter session. (Express Photo by: Renuka Puri) Arun Jaitley outside Parliament on Wednesday, last day of the winter session. (Express Photo by: Renuka Puri)

In terrible shape.

In terrible shape. In fact they made no effort to correct the rot… now I’ll explain. Did the UPA recapitalise the banks? No. Did they address any of the sectors which had led to the high NPL of the banks? No… So we have now started the process of recapitalising the banks. Today the bankers will clearly tell you “we don’t get phones from Delhi”… The third area is how do you address each of the sectors that caused the sickness. So the first sector that caused the sickness came in the steel sector… China started a surge. Now we have started significant action to prevent the surge, so we are expecting steel to come back. Highways had completely collapsed. The first 17 tenders the NDA government took out, not a single tenderer came because all of them were in dispute with the highway authority and they weren’t settling their dues.

No, and the government doesn’t pay its bills…

That is what I am saying. They were in dispute and the government didn’t pay its bills… Now for the first time, how have we intelligently used the fall in the oil prices? It has been shared four ways. One part went to the consumer, one part went… the states increased some VAT. One part went to the oil companies which were suffering losses… And we increased the cess and diverted it entirely to highways and rural roads. Once the highways started moving, the contractors came back… So the steel sector will now pick up…

Because of demand.

No, partially because of demand but mostly because we have protected them against the Chinese surge… The fourth area which caused stress was power. Now we are producing more power than we need.

Now?

Today. So the generation companies are ready, the transmission companies are ready, but when you go to the states most states have public sector distribution companies, populism ki vajeh se, so they were not charging the cost of the power. So if you don’t have enough money you borrow from banks. Ashok Gehlot inherited Rajasthan with Rs 15,000 crore debt and left it behind with Rs 75,000 crore debt. And the impact on the cost of power on the interest on this debt alone is Rs 2 a unit and what did UPA do…

Why did you people not say how bad the situation was when you inherited such a bad economy?

I have been saying it in most of my speeches. Now we have come up with a system of the states being given the option of the central government taking over this debt and then slowly increasing the price so that there is a soft blow as far as consumers are concerned… Then the discoms come back to health. So each of the sectors that caused the stress is now being addressed. The UPA just sat, it was a paralysed government…

The problem is jobs, jobs, jobs. One million new jobs needed every month.

Arre ek minute. We started off with low-hanging fruit, so we have opened up investment to insurance, to defence, to various other areas because we need money. You can’t say I won’t take money from outside and domestic money from the private sector is not available. And the banks are in bad shape. Second, we have a highly aggressive tax system.

And a corrupt one?

And we have so many taxation issues pending with the world that investors are scared of our taxation rules. Now I have used the opportunity.

I want to come back to jobs because until the jobs start happening, the perception that the economy is not back on track will remain.

No. No. I have to give you two or three more facts. Let me just flag the issues. So I have now — except the two or three big taxation issues which gave India a bad name, I am trying to resolve all the others. I have now announced one of the most ambitious programmes on direct tax that will make India’s corporate tax at the highest slab come down from 30 to 25 and reduce the slab every year. And most of these exemptions — not savings exemptions but those that have become rent seeking — will be phased out, so you will have the cleanest direct tax system which is globally competitive. Indirect tax, the Congress has been blatantly unfair, both to itself and to the country, that the biggest taxation reform in India (is being blocked) but… I think I will be able to push it through. The biggest unsung reform of this government has been the rationalisation of subsidies.

Tell me more.

For instance petrol, diesel are now linked to the market. Gas, the rich have been advised to give it up and the others all get the cash subsidy, so you have millions and millions of people getting cash and that itself has brought a 30% saving. We have now got experimental schemes going on fertiliser and food. So for the first time in India — what you only heard on television or read in columns — the subsidies are being rationalised so that they get targeted to the people who really need them. The whole controversy that has plagued India in the last 10 years, we have put an end to it: we auctioned spectrum, we auctioned coal mines, we have auctioned… all natural and state resources to go by the laptop process. Not a single controversy or corruption allegation in India on such large auctions. And the minerals are going to the states so that the mineral producing states — which are tribal states — are now going to get that money. Now when you speak of jobs, there is a two-way approach: where am I making the maximum investment, one. I am making the maximum investment into infrastructure. And if I get my GST through… there are at least three legislations which (will work to ease doing business) if GST doesn’t get through. Two, our social sector schemes, and seeing that the private sector is slow and not expanding…

But you have to bring it back to life because it is they who create the jobs?

Now that is a wrong analogy that you have. Big industry in India has created two crore jobs, the unorganised sector has created 11 crore jobs, so the big will take their time because they are the ones not returning bank money.

But what about the small ones? Baba Ramdev himself is saying look, the atmosphere for doing business is not good.

No, no, no. The small ones are doing reasonably well. Now for the small ones we have the most ambitious plan of this government, which is being implemented very successfully for the last three months: it’s called the Mudra scheme, under it, without giving a security you get a Rs 50,000 up to Rs 5 lakh and Rs 10 lakh loans. Now the public-sector banks and actually all the banks are going to give this year Rs 1.22 lakh crore in loans.

Has it started?

It has started and has already covered 72 lakh people. Now I have been going to those areas myself and you have women in slums (taking loans) and you ask them kya kar rahe ho (with the money) and they say main apna beauty parlour banaongi, apna boutique banaongi. So we have started a scheme on the one hand through power reforms, banking sector and infrastructure and improved manufacturing but also (we are trying) to strengthen for the first time the unfunded sector of Indian society. We are funding the unfunded. They will not just get a job themselves but also create one or two additional jobs. There are 25% of Indians in this last category which is the bottom belly. And unlike big industry there are no NPAs in this sector. You see a vegetable vendor borrows small amounts, enough for his small business, and returns it to save interest. They were all borrowing at 25 and 30% from moneylenders and now they are getting it at 10%.interest. This year our target is to touch 1.25 crore people.

Why is it that on the ground this perception exists that there has been no parivartan?

You can’t be the fastest growing economy in the world and not have anything going on on the ground. You see the gossip-mongers over coffee or wine…

No, no, no I am talking about ordinary people… people I met in Bihar.

Aisa nahin hai… you see the problems of this country are too many and we have been there for only a year and a half. So if you ask me what is the big picture, the big picture is you have a strong leader, he is not scared of taking decisions. You have a cohesive government. You don’t have obstructionists. It’s a clean government. The younger members of the government are extremely enthusiastic about what they want to do. And all our decisions are in the direction of strengthening businesses, strengthening the economy. Not a single retrograde decision. Even our social sector schemes, insurance etc.

Do you think all of this is not being seen because of the shadow of Hindutva over your government?

This government was elected on an aspirational agenda…

Parivartan and vikas…

And therefore it has to confine itself to the aspirational agenda. But there is a section which is unfair to this government and let me tell you why. Before the Delhi elections, you had churches being attacked and finally you found these were cases of petty robberies. The Delhi election was over and the entire issue disappeared and we got a bad name the world over. During the Bihar election there was a campaign for award wapsi. The Bihar elections are over and the intolerance debate is over.

Yes, but you know after Mohammed Akhlaque was killed so brutally in Dadri, your government took a very long time to respond. Why?

I will put it like this, like this…

And the Prime Minister, don’t you think he should have spoken?

You see prime ministers speak in turn, they don’t speak every day…

The President of America speaks every time there is a shooting.

We are a different kind of democracy. The point I am making is that none of the incidents had anything to do with our party or our government.

But someone from your government could have said at least that you were horrified by what happened. The beef bans had to do with your government. The Maharashtra government started it.

Let me put it like this. I was not only speaking on this Dadri incident, I gave a series of interviews.

But people wanted the Prime Minister to show some leadership.

Those who want to criticise will get into hair-splitting. The fact is what has happened to intolerance and award wapsi after the Bihar elections. What happened to the church attacks after the Delhi elections?

Do you think the media has been unfair?

I don’t want to use the word unfair… the media has its own characteristics, it loves to pick up controversies.

So the media has not been unfair?

Why should I accuse it of being unfair?

The other parivartan that seems not to have happened is in governance. You inherited a democratic feudalism-cum-colonialism type political structure. What are you doing to change things like, for instance, why do you need a Minister of Information & Broadcasting? It’s a leftover from the Soviet Union. Other than Niti Aayog, we don’t see any changes.

The Information Ministry doesn’t interfere with the media.

There is the FTII controversy, the censor board chief’s dubious interference.

It’s really the information arm through PIB and others. We don’t interfere with newspapers or TV channels.

Can’t it at least be modernised?

Hopefully one day it will be.

OK, in terms of politics and governance, what achievements can you count for me, what parivartan?

You see, in terms of governance, in almost every area pending issues one by one are being resolved. External Affairs Ministry, extremely proactive. OROP pending for decades, we had the courage to take a decision. Everyone may not be happy but most people are. Nobody in business has to come to Delhi to grease palms. Quick decisions are taken. Nobody can accuse us of favouring one business house over the other. The lobbies are no longer active. The sanctity of governance has been restored. And frankly if you look at… and we are doing this in a politically adverse environment. If Pandit Nehru can be credited with establishing good precedents in terms of parliamentary democracy, those claiming to inherit his legacy will go down in history as reversing everything Nehru wanted to do. So when Parliament is not allowed to function, you are not allowed to legislate… we are working in this environment to take the country forward.

So what are you going to do to alter this perception that there has been no parivartan or vikas?

Ultimately one of the reasons why these perceptions come, and I don’t mind that reason: India is extremely aspirational and therefore impatient. This is good because this makes people in power work. So we have to respond to these aspirations.

OK, as a final question…

I will give you another point. If with all these challenges we are growing at 7½ per cent, if next year there is a better monsoon, and the global situation improves and what if the infrastructure improves and I am able to get GST through to add another per cent or per cent-and-a-half to Indian economy — is not impossible — and that is when you get the cutting edge.

So you think that in a few months we will see this?

If we are able to go through with all these reforms and the rain gods are kinder to us than in the last two years, hopefully.

Final question: what do you think has been the biggest failure of your government?

You see, I will call it a challenge… and that is when policy or perception diversions take place, you should have the ability to restore the status quo ante.

You haven’t been able to do that?

At times we did not succeed.

Do you think it is because the Prime Minister is too silent?

No, I think he talks a lot… when he speaks people say he is talking too much.

He hasn’t given a single interview.

That’s all right. I will advise him to give it to you.

Do do that. Please.

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