New Delhi, November 29
The fight against black money will not stop with demonetisation, commerce and industry minister Nirmala Sitharaman says, citing the law against benami transactions. The government is also ready with followup measures towards making India a cashless economy, Sitharaman told Kirtika Suneja, Ruchika Chitravanshi and Vinay Pandey in an interview. Edited excerpts:
As far as exports are concerned, we saw one month recovery and now we have demonetisation. How do you see the impact?
I met with almost 32 export promotion councils. Except for the labour-intensive ones, people did not have an issue. In principle, all of them agreed with the step (demonetisation).
Carpet makers, handicraft, weavers and metal scrap aggregators had a feeling that due to shortage of currency, the payments were affected. Even though it is a bit odd that even after two years of the launch of Jan Dhan, they claimed that none of the workers had accounts.
We did remind them that it should be one of the things they should give priority to and get going with it. But subsequently, with currency reaching the people, things are settling down and I do not think it is going to adversely affect their export commitments.
This quarter it may have an impact on labour-intensive sectors. I don’t see it hurting the total export target in a very big way. Most of the time we should not underestimate the exporters’ capability.
There has been criticism that demonetisation could have been implemented better. What is your assessment?
I believe that with the benefit of hindsight, a lot can be said. The government is taking feedback on a day-to-day basis. It is not to negate that there are difficulties being faced by the citizens of the country….
The government is not indifferent to the difficulties and is responding on an everyday basis. But with a measure of this size and scale, it is difficult to balance the element of secrecy and all the other tools of implementation. We are getting to normalcy slowly.
There is a sense that the stress has shifted from urban to rural areas where cropping is an issue. How do you see the situation?
Based on the reports that farmers may want to have more cash on hands and use the old Rs 500 note, it was allowed for buying seeds. An order was passed so district cooperative banks could be sent money up to Rs 21,000 crore.
That kind of approach to bring funds to farmers is a positive move. As of November 18, the acreage sown with wheat, pulses and til is much more than last year.
It is to their credit that farmers have not allowed the sowing to suffer despite the cash crunch. Some cities were raising the question that are you sending away money to the rural areas? Is it a see-saw situation? Not so. Till such a time that people feel urgency, all areas are receiving from the currency chest.
Are there any fears of job losses in labour-intensive sectors?
That is something that did not even come up during the meeting (with exporters) except when the labourintensive sector people said that if the cash crunch continues next week, some of them would not have money to give to their workers.
Therefore, they wanted to lay off these units for a week but so far there have been no reports of closure.
Twenty days into the scheme there are large-scale fears of laundering. How does that impact the agenda of unearthing black money?
I would rather look at the way in which the money is coming into the account. Banks are now receiving unbelievable quantum of money in current and savings accounts. Last week’s estimate was Rs 5 lakh crore reaching the banks. We do not know to what extent this money will grow till December 30.
What did not come to the bank is what will get extinguished. Till then it is too early to get speculations that how much is getting laundered.
Schemes such as the 50 per cent tax, has it come out in hindsight?
There are decisions taken in hindsight such as allowing farmers to use the old `500 note. But this one they might not have wanted to announce before. I would rather have the finance ministry talk about the reasons for this announcement now.
Will rupee depreciation in some way negate the impact of demonetisation ?
Rupee fluctuation is not so significant compared with the other currencies. Fluctuations in currencies has been fairly steady. As the finance minister often says, fluctuation is the new normal.
The government wants to bring a behavioural change towards cashless transactions. Do we see follow-up measures coming?
Follow-up measures are coming because we are very clear that eventually the transactions based on currency should be lesser than what they are today. For smaller payments, we want to have this Unified Payment Interface (UPI), which is now existent without a particular name or identity, to be taken all over. At the moment, it is still not publically popular. All nationalised banks have come together and created this platform.
Do you think the situation will normalise after Q3?
Absolutely. The PM has also been saying it and he has been holding quite a few review meetings. How do you think this move will play out in the upcoming Uttar Pradesh elections?
In India, elections happen every year in at least a few states. A major step of this size and magnitude, which is going to affect the entire country, can’t be framed into this limited thing of Uttar Pradesh elections. Its impact will be felt by everyone in this country.
How will the government continue its fight against black money?
The fight against black money doesn’t stop here. One of the steps is that the Benami Act, which has been passed in parliament, has to be used and invoked wherever necessary.
Gold as a sector will be hit and is expected to receive attention. How will that impact the gems and jewellery sector?
We look at gold from the view of the Indian market which loves to buy more and more gold. But at the same time, when you look at the current account deficit (CAD) and balance of payment (BoP) situation, then you say we shouldn’t allow that much import of gold.
It always gets trapped between these two factors… When import norms become stringent, people always get gold through smuggling. Therefore…from the commerce ministry’s point of view I have favoured relaxation and free movement of gold.
Would the goods and services tax (GST) rollout get delayed because of demonetisation ?
We are firmly hopeful that the GST Bill will be rolled out from April 1, 2017.
That’s because we are still – even today – reaching out to the opposition and talking to them. We have given assurances of a discussion on demonetisation. Once that’s done, the opposition will play a constructive role is my hope, to be able to clear the GST Bill in the last few days of
New Delhi, November 29