Saturday Interview | ‘Fiscal deficit should not bother us’

The Managing Director of the Transport Corporation of India (TCI), Agarwal has possibly the distinction of being the first head of a logistics company and one of the youngest industry captains to be appointed as the president of a leading chamber of commerce in India.

Saturday Interview | ‘Fiscal deficit should not bother us’


The new ASSOCHAM president, VINEET AGARWAL, is said to have given a new direction to the country’s industrial transportation sector. The Managing Director of the Transport Corporation of India (TCI), Agarwal has possibly the distinction of being the first head of a logistics company and one of the youngest industry captains to be appointed as the president of a leading chamber of commerce in India.

He is the founding national president of the Young Leaders Council (YLC) at the All India Management Association (AIMA) and has been associated with various international institutes and industry forums. As the TCI head, he transformed the organisation towards value-added services in the area of supply chain management and multimodal logistics.

In an interview with VIJAY THAKUR, he spoke on a range of issues relating to the economy and the upcoming Union Budget in the shadow of the Covid pandemic.



Q. The entire world is passing through a very tough phase in the wake of the Covid-19 pandemic. India too has been hit badly by the pandemic.The Modi government is going to present its first Union Budget in the wake of the pandemic. What are the industry’s expectations from it?

A. Union finance minister Nirmala Sitharaman is going to present the Budget under extraordinary circumstances. The entire world is passing through a once-in-a-hundredyear kind of crisis. Even the most developed economies are grappling with the human and economic costs of the global health emergency.

We have proved wrong many experts from the Western world who were projecting that India would take a long time to recover from the pandemic. But in fact, we recovered very fast and are now stressing about the future. And a part of the credit goes to the immediate steps taken by the government including fiscal incentive to the industry and by giving support to common people by giving foodgrains.

Coming to the Budget, the entire industry expects that the Modi government would take a bold step to put economic recovery in the next gear. I am of the view that the Union government should remain at the forefront of the Expense Budget with increased investment in infrastructure, mainly road building, rural infrastructure, and a special focus on the healthcare sector across the entire value chain in the public and private sectors.

Any money spent on infrastructure will show three times its effect on ground zero. It is obvious that the fiscal deficit is going to shoot up. But this is no time to think about the fiscal deficit. Under the given circumstances, fiscal deficit of 7-8 per cent of the GDP or even higher should not bother us as long as we spend on productive sectors. The fiscal deficit numbers should not be compared with the past, at least for the next couple of years.

Q. But don’t you think the government has already taken a series of steps to boost the country’s economy?

A. To a great extent, the government has already taken several measures to boost manufacturing within the country, under the ambitious Atmanirbhar Bharat programme. Schemes like productionlinked incentives for over a dozen sectors are already attracting international investors. The industry is expecting that such initiatives will get more leeway in the Budget.

There is no reason why India cannot become a global manufacturing hub for electronics, telecom equipment, something on the line of the pharma sector where we have emerged as a global leader. ASSOCHAM has submitted a detailed presentation to the finance ministry on tax and non-tax measures — the broad expectation is that consumption-driven demand would get a boost which would automatically lead to re-emergence of private sector investment.

In the meantime, the government has to do heavy lifting with help from the Reserve Bank of India. Sectors like real estate, agriculture, agro-chemicals are expected to get a fillip. Besides, industry hopes government would give top priority to the sectors that have been worst affected by the Covid-19 pandemic, mainly sectors like hospitality, transport and aviation.

Q. Covid-19 has severely affected the small and medium sectors. What government sops would you suggest to bring the MSME sector back on track?

A. While the government has already taken measures to lift the MSME sector, it should give them a further lift in terms of regulatory and fiscal support. The schemes like credit guarantee and mortgage-free loans should be broad-based.

While a lot has been done to ensure that their bills are paid expeditiously by the PSUs and government departments, the MSME sector needs further cushioning and a liberal banking regime. There are indications that India is moving towards a V-shaped recovery. However, to continue industrial growth, we need consumption-led demand to balance supply-side measures and investment-led demand coming in from the government to create a multiplier effect.

Q. You said the government should increase investment in the infrastructure sector. Could you elaborate?

A. Industry is hoping that the finance minister would significantly raise the budget allocations for the ministries dealing with infrastructure sector like roads, highways and rural development. A big leg-up is also expected in the healthcare sectors across the entire value chain.

The Rs 110 lakh crore National Infrastructure Project Pipeline, with projects right across energy, healthcare, railways, ports, airports, roads and highways and rural infrastructure should take India towards a modern and a stateof- the-art economy.

Increased infrastructure investments are also coveted as it can help address the urgent need of job creation, create a multiplier effect in the economy and also enhance the country’s competitiveness to attract investments. We expect the industry and the government to work in close coordination for sustainable economic growth. These efforts would need the support of the

RBI which has played a pragmatic role in managing interest rates. ASSOCHAM is happy that its longstanding recommendation to create an Infrastructure Bank, to fund port, road, and power projects, has now gained significance. Such a Bank will help the country enhance spending on productive assets.

Q. Apart from your Budget expectations, what else do you expect from the government to boost growth and demand in the Indian industrial sector?

A. One issue which industry expects from the Modi government is to rationalise things like GST. There are some sectors, which are asking for the higher slab as they want higher input credit, at the same time there are some sectors that want to lower the GST slab since they do not want input credits.

Now the government should rationalise GST as per industry demand to give benefits to all. The rationalisation of GST would help many sectors. Consumption-linked demand would also get a boost due to the rationalisation of GST. We are very hopeful on these short-term measures.