The Arun Jaitley Interview: One That Didn’t Make the Headlines!

(image source: www.moneycontrol.com)

Rahul Gandhi (Vice-President of the Indian National Congress-INC) and Arnab Goswami (the Editor-in-Chief of Times Now) grabbed all the attention this past week with what was being touted as the biggest political interview of the year. This ensured that Arun Jaitley’s interview to CNBC TV18’s Shereen Bhan went unnoticed. This week, we try and make sense of what he said.

Why is this interview important?

Arun Jaitley is a senior leader of the Bharatiya Janata Party (BJP). At present, he holds the post of the Leader of Opposition in the Rajya Sabha (the Upper House of Indian Parliament). In the past, he has been a Cabinet Minister when the BJP-led government was in power at Centre in the early 2000’s.

There are two reasons why what he says is of extreme importance. Firstly, he is a member of the Parliamentary Board of the BJP, which is the main decision making body of the party. Secondly, he is considered to be very close to Mr. Narendra Modi. Thus, knowing what Mr. Jaitley says can help us understand the policies of the BJP.

Let us now get into what Mr. Jaitley said on various issues and compare the BJP’s views with those of the UPA (United Progressive Alliance) government.

On the Banking Transaction Tax

Background: In our post, What did Baba Ramdev say? , we told you about how the BJP is seriously considering the proposal to replace the present taxation system with a single Banking Transaction Tax and how Mr. Jaitley had reservations over the issue. In this interview, he re-iterates his point.

UPA: The UPA government, led by the INC, is working on the Direct Taxes Code (DTC) bill which will reform the present Income Tax Act. It is not considering the proposal of the introduction of BTT.

BJP: In the interview, Mr. Jaitley clarifies that the BJP has not completely accepted the proposal of BTT. He says that he agrees that the proposal is a popular and attractive one but he is also aware of the difficulties in the implementation of such a proposal and hence a lot of debate is required with regard to the proposal.

On Foreign Direct Investment (FDI)

Background: Just a couple of days ago, the Aam Aadmi Party (AAP) government in Delhi announced that it disagreed with the previous Delhi government and hence was withdrawing the decision of allowing FDI in multi-brand retail trade in Delhi.

UPA: The Union Cabinet in September, 2012 had approved 51% FDI in multi brand retail trade in India. But due to opposition from the BJP and many other parties, it decided to let the individual states take the final call on whether they would allow it in their respective states.

BJP: Mr. Jaitley says, “I have absolutely no problem with FDI in several areas. I have no difficulty as far as FDI in infrastructure and defense is concerned but it is FDI sector wise in some areas that we are concerned with and certainly FDI in retail is one of those areas.”

He goes on to give an explanation, “As far as retail is concerned don’t forget that you have a very large number of people – 4 crore traders in this country, you are looking at almost 20 crore people which is broadly one fifth of one sixth of India's population, the largest employer after agriculture. Therefore if that is a section which is uncomfortable about a particular policy, we have opposed it as far as day one is concerned.”

On Goods and Services Tax (GST)

Background: The Goods and Services Tax is another big taxation proposal that seeks to reform the present system of indirect taxes. In fact, it’s importance can be gauged by the fact that if GST becomes a reality, then just by that decision alone, India’s Gross Domestic Product (GDP) will grow by an extra 1-2%.

UPA: Finance Minister P. Chidambaram is very keen to pass the GST bill but it is stuck due to opposition from various states ruled by the BJP and other political parties. The states have reservations regarding their revenues (income) because if the GST is introduced, then the taxes collecting power would shift to the Centre and states would get the money from the centre as per an agreed formula. In fact, in this year’s budget, Mr. Chidambaram set aside 9000 crores of rupees to show his commitment to compensating the states for their loss of revenue in the initial years.

BJP: Mr. Jaitley says, “The GST is not a BJP versus Congress issue. I personally am quite convinced about the virtues of the GST. There are some states which are lesser consuming states which certainly had concerns as far as the UPA government is concerned and its fairness to implement the GST as far as the states are concerned. Now in Madhya Pradesh there is a problem, there were BJP and NDA governments which supported the GST proposal, there were NDA governments which opposed the GST proposals.”

When he was asked a direct question whether GST would be a part of BJP’s manifesto, he avoided a direct reply by saying that if and when GST is to be implemented in the country then that will require a consensus as far as states are concerned.

On Fuel Subsidies

The present situation is such that the diesel prices are increasing every month. This is because all this while we have been paying a subsidized price. Now, the government has decided to slowly move to market determined prices. Every time a diesel price hike is affected, there is a demand from the BJP to withdraw it.

In this interview, however, Mr. Jaitley takes what might be called a slightly unpopular stand. He says that the BJP understands the importance of maintaining the fiscal balance. (Fiscal deficit, in simple terms, means the difference between the income and expenditure of the government. If subsidies are provided, it increases the expenditure). What this means is that if and when the BJP comes to power, they may not reduce the prices of diesel. However, Mr. Jaitley also said that these subsidies had to be targeted towards the poor as they could not afford these high prices.

These were some of the major issues discussed in the interview. Apart from these, Mr. Jaitley also stressed upon how the BJP intended to make India a manufacturing hub. He also said that the coal blocks that were allocated by the UPA should be looked at afresh.

The full interview can be read and seen here.