WION EXCLUSIVE: Finance Minister Nirmala Sitharaman talks economy, COVID-19 policy, growth projections

As the coronavirus disease (COVID-19) takes lives and bleeds economies all over the world, the global leaders face a dual challenge -- to save lives and livelihoods. In an exclusive interview with Union Finance Minister Nirmala Sitharaman, WION managed to address a few of these challenges in the form of questions. Here are experts from the interview, from the sets of the show ‘Straight Talk’: 

What about the current task at hand, given where the COVID-19 situation in India stands?

Nirmala Sitharaman: At the very least challenging and as it is in India every issue or every policy decision has its own complexity when in comparison to any other country. India because of its diversity, because of the uneven spread of wealth and because of the levels of literacy, every policy becomes all the more complex when you try to implement it here.

India went through four rounds of lockdown and might be looking at a fifth. Where do we stand today and have we been able to achieve what we set out to and at what cost?

Sitharaman: As I said it was the first lives of people we wanted to be sure at a time when we had about just a hundred cases. The approach and the clarity with which one had to deal with this kind of a pandemic was unclear to many. India went through without a break one, two, three lockdowns, and so on whereas there are some countries that have lifted the lockdown and then gone back to it all over again.

At what cost is a very big relevant question. Yes, it has meant that the economy had to take a big beating. How much is it, we'll have to wait and see but whatever it is the government is very clear that we'd stand by our industry stand by our entrepreneurs stand by our farmers we need our economy to be supported and we should support them for your job in this situation.

Are the positive growth projections likely only for India and China?

Sitharaman: If there are engines of growth for the global economies all across - emerging, developed, not so developed economies, it's only two countries and they are India and China. What gives me the confidence to say that this holds good even now are our macro-economic fundamentals and it is on the fact that our fundamentals are strong we are able to face a lockdown which is fairly severe.

What about the budget estimates and the plan of a five trillion dollar economy?

Sitharaman: “Let me put it this way, the budget estimates of first February 2020 will now have to be relooked. None of my assumptions will hold good. I don't think anyone of us understood to what extent and even now I think we are not very clear to what extent the impact of this pandemic will be on the economy. I'm not going to be stuck on my assumptions of 1st February 2020 and now every option is kept open because ultimately we want the economy to be up and going so yes things are changed from the last budget we have to see how it goes

Do you see a threat of hostile takeovers of distressed assets in India by foreign firms?

Sitharaman: That's certainly a worry in that with the valuations being cut so badly and with the lockdown and the entire world being upset because of the way in which demand some drastically fallen movement of people being affected There is definitely this risk of companies getting into a distress mode and the market being market that'll be the best time for people with deep pockets who want to come and buy and that's a reality. We have to take care that businesses that have been built by the sweat and toil of Indians and which have had a great brand value cannot be picked up by people who are just looking for an opportunity so that is a factor which all of us are worried about. We will certainly do something to ensure that Indian industries don't get picked up at a throwaway price because we want them to be able to run their business once everything is normal.

On FDI norms being changed recently to prevent hostile takeovers, what are the steps that are being looked at?

Sitharaman: We are also making sure that the regulators will be able to look at various existing options through which they can ensure that distress companies are not going to be picked up easily. Regulators will also keep a watch in fact they have been fairly active in getting to know about even the secondary market operations through which companies are getting picked up or their shareholdings are getting drastically changed. I would think it'll be a combination of the government and the regulators to keep an eye on the developments.

Your views on countries practicing economic distancing from China and creating an ecosystem for companies to shift from China to India?

Sitharaman: It is certainly an opportunity, but it cannot be a reactive thing alone. I think it should be a larger approach of anyone shifting from anywhere should find India attractive and your attractiveness is not dependent purely on the taxation incentives. There are factors that either vitiated or helped the kind of environment which can draw investments and I would want to play a lot on them to make sure that it need not always be targeted on an incentive-based approach to the drawing of industry. It should be a blanket approach.

So the GDP figures for the last quarter of the last financial year have come 3.1% and the coal industry’s data for April is a 38% decline in growth, is this what you expected?

Sitharaman: 3.1 for the last quarter, a quarter where we thought we started seeing green shoots because the way in which through the bank's credit was pushed between September, October, November and that is one of the reasons why the budgetary estimates were made the way it was made but if the contraction that you're talking about in core sectors about 35% that is in April, which is into this financial year, by which time the coronavirus hit us. So the 3.1 is actually given the fact that by February we started having some kind of an impact of the pandemic, therefore gives me the feeling that revival was happening but unfortunately, the Hand of God was at play.

Most agencies are projecting a contraction of 5%. What's your estimate?

Sitharaman: I said I shall not do an estimate. I shall wait to see how it pans out. I am watching and hearing agencies tell us about what extent to which this contraction is going to hit India as I said it's my duty to be prepared to face the situation and be ready to help, rather than spend time now on what will be the expected contraction.”