Demonetisation drive won’t hit FDI inflows and Make In India initiative, says Nirmala Sitharaman
Commerce & Industry Minister Nirmala Sitharaman has said the Election Commission of India (ECI) needs to look into the proposal for state funding of elections to combat the influence of cash and black money in polls. In an interview to The Hindu, the senior BJP leader said her party was open to discussions with the ECI and other parties on the issue. She said the demonetisation exercise would neither hit FDI inflows nor impact the Make In India initiative. Edited excerpts:
What are your top priorities to address the pain caused by demonetisation at least in the short-term?
The short term issues have gradually got eased out. I spoke to all the Export Promotion Councils (EPC) after the demonetisation announcement, and all of them welcomed the move. Due to the currency crunch, the labour-intensive sectors felt at that point of time that the weekly ceiling on cash withdrawals needs to be relaxed because they are dealing with migrant labourers and workforce who did not have a bank account. However, subsequently I have not heard anything from them. Tea plantations were provided with the arrangement that the District Magistrates will accept deposit of money by the tea garden owners (towards workers’ wages) in an existing bank account of the district administration, and then ensure its disbursal to workers by the tea garden owners.
With the elections seeing a major influence of black money, will the government and the BJP push the proposal for state funding of polls in the interest of transparency and to curb corruption?
That is a larger issue and it certainly has implications on cash transactions. The Election Commission of India has a big role to play (in addressing this issue and the proposal for state funding of polls). They (ECI) have to come in, have this debate and look into its implications, have its nuances well laid out and see what contours they have to fix. If the political parties are called to discuss the issue, the BJP will definitely go.
Do you think the government’s promotion of digital transactions will help casual labourers, hired without a legal contract, to show payments made to them (towards wages) by employers through bank accounts as ‘proof of employment’, and demand that they be regularised and made eligible for statutory benefits?
Being with the Commerce and Industry Ministry, I cannot be talking about regularising somebody’s employment as it is not my terrain. To those people who benefit as members of the Commerce Ministry-supported Export Promotion Councils (EPC), I am suggesting that they will first have to ensure that accounts are opened for all workers, and then make sure the wages are deposited in those accounts. When the exporters were facing difficulties, the government had come to their rescue through many incentives to help them better promote their products and boost their exports. Now we expect them to shift to non-cash modes for their transactions. Within my ministry, every body will now shift to non-cash payments. Kendriya Bhandars and government canteens here have been provided with POS (Point of Sale) machines to accept non-cash payments. It has been communicated that at least from January 1, 2017, the (Commerce & Industry) Ministry and the EPCs will ensure that they or their members cannot afford to pay cash for their transactions. But there is no written order.
The Centre has been referring to the large market in India to attract FDI. But with the domestic demand set to take a hit due to the demonetisation exercise, do you think the negative perception will impact FDI inflows and the Make In India initiative?
Why will it be hit? If anything, we are giving them an economy where only institutionalised transactions that are traceable, are going to happen.
We are providing them an economy that does not entertain parallel running of unaccounted wealth. It is going to be clear that every operation will now have to increasingly be non-cash.
We are moving to a less-cash economy. People should now believe that India is really being open and transparent about its dealings and measures. It cannot discourage.
It can only encourage people to know that we are making it possible for them to operate in a cleaner manner.
Is the government considering any stimulus package to help the economy recover from the demonetisation shock, to revive demand?
No. Industry might have raised demands including reducing corporate tax rates during their meeting with the Finance Ministry. From our side, all banks have been told to ensure that the currency crunch eases.
The U.S. had concerns on India’s ‘tariff and non-tariff barriers’, especially in the Information & Communications Technology sector — that it termed ‘barriers to digital trade’. With the Indian government keen on building a digital economy, how will you address these concerns?
As much we have engaged with the Obama administration, we shall also engage with the Trump administration. After he takes charge on January 20, 2017, there will be a formal attempt from our side to brief his team on India’s concerns, including those relating to the pharma and IT sectors, U.S. visa fee and the absence of a bilateral totalisation (social security) pact for which talks have been going on for a very long time. Given the size of the Indian economy, its huge and growing middle class, the strategic position of India, and being the only economy and democracy in which the growth is sustained at over 7 per cent, I can’t see any administration ignoring our concerns.
Source: http://www.thehindu.com/