Interview | Nirmala Sitharaman: The opposition lacks trustworthy statistics about unemployment

The COVID epidemic struck India and the rest of the globe six months into Nirmala Sitharaman’s tenure as India’s finance minister, thus her time in office has not been easy. Following that, the economy managed to avoid going into negative territory despite a worldwide recessionary crisis for two full fiscal years. Throughout the difficult struggle to keep India’s macroeconomic system afloat and on the upswing, Sitharaman remained at the steering wheel, and the country’s GDP emerged as one of the most respectable amongst major countries.

However, the burden of unequal, jobless growth became apparent later on and has emerged as the main issue of the Opposition’s 2024 election campaign. TNIE Editor Santwana Bhattacharya and Business Editor Dipak Mondal engage Sitharaman in a conversation where she takes on all the challenging concerns about the economy, handles controversy with her customary grace, and talks about the future of the BJP in southern India. Take-outs:

Elections seldom take much notice of economic matters unless they are presented in an understandable and clear manner. Emotional problems are what unite people and inspire them to cast ballots. The opposition is concentrating on problems like inflation and unemployment this time. Do you believe it will become popular?

These are merely talking points for the opposition, in my opinion. Strictly speaking, this administration has continuously maintained inflation within the RBI range since 2014. It may have crossed that once or twice. Thus, the evidence refutes the assertions made by the opponents.

You can see all of the mechanics there. A group of ministers handled the supply-side issues by continuously ensuring in advance that the goods we don’t produce were imported; edible oil and other pulses are two prime examples. Agricultural exports such as onions, rice, barley, wheat, and sugar were providing substantial revenue for farmers. However, we decided to impose an export embargo when necessary.

However, the opposition has consistently brought up the subject of unemployment.

Yes, but our labor market has undergone a total reset, which the opposition ignores. To increase the number of locations from which employment data may be gathered, work has been ongoing. It is a reality that the labor situation in India is not sufficiently reflected in the statistics that we have. Although we gather statistics on formal employment, it does not account for a significant portion of total employment in the nation. Today, the unorganized sector is growing in size and adding an increasing number of new employment. One of the most obvious instances of a sector that has seen exponential growth but whose data is not keeping up with the times is the gig economy.

This new data is being collected in some places. A new e-shram site has been introduced, allowing users to register with a designated trade. One such instance of data originating from an alternative source on the informal sector is the initiatives we have implemented, such as providing bank loans to recipients so they may grow or invest in their businesses.

You may get statistics on individuals in the urban informal sector, such as street sellers, under PM’s Swanidhi. In a similar vein, we investigate the source of the GST returns, whether it is to monitor product demand or the MSMEs providing it. The quantity of unregistered or tiny MSMEs that register on the GeM portal is another source of data.

Therefore, it is one thing for us to claim that employment is not increasing based on the same set of data from the same sources.

I don’t believe the opposition has any trustworthy statistics about employment. I am glad that the opposition is bringing up the matter, and I will respond if necessary.

The BJP has made winning elections in the South a top priority. Except for Karnataka, it has a history of being mostly rebuffed throughout the area. Is that going to change now?

I shall begin with a whataboutery, but don’t accuse me of practicing whataboutery. You often inquire as to why the BJP never plans to find a solution to the problem of Karnataka having just one stronghold. Tell me one location in our nation that Congress may now enter. I was born in Tamil Nadu and got married in Andhra Pradesh. Congress is where?

If my memory serves me well, Kamaraj served as the last Congress chief minister of Tamil Nadu in 1964. Following that, a national party such as the Congress was unable to enter Tamil Nadu, not even under the leadership of Indira Gandhi or Rajiv Gandhi. They formerly performed with the AIADMK or as second fiddles to the DMK. Without DMK backing, their candidates are still unable to run their campaigns. Would you want to know why the Congress was unable to enter Tamil Nadu? You pose this issue to the BJP, which undoubtedly exhibits indications of progressively broadening its reach across all domains. Is Andhra home to the Congress? Has the Congress established the Odisha government?

The issue of why state parties now dominate national parties like the Congress is crucial to understanding the nature of our democracy. India lacks a strong, national party to serve as the opposition, and the Congress is failing to provide that requirement.

Telangana and Karnataka are under Congress rule.

This type of disjointed reasoning is something you can always provide. We had power in Karnataka as well. We also had a few MPs from Tamil Nadu, so you can always strike a balance. More important to our democracy than your eagerness to demonstrate that the BJP is losing support in Tamil Nadu is the issue I have posed to you. No state disqualifies a party. There have been (our) people in Tamil Nadu since the Jan Sangh days. Not less than Pon Radhakrishnan was elected from Kanyakumari. Additionally, from 2014 until 2019, he served as a minister under both Modi and Vajpayee.

Therefore, let’s not get excited about the notion that the BJP has been rejected anywhere. If you have the guts, pound the Congress because they are losing states one after another. Along with others who yell separatist slogans, it is becoming into a fringe party, and they are content to be there. How unfortunate for a party that claims to have battled for independence.

So, where do you believe the conflict is intensifying the most among the southern states?

The BJP has a distinct problem in each state, in my opinion; in some, you’re attempting to establish yourself politically, while in others, you’re fighting to recapture what you already have.

The main characteristic of the BJP is its experimentation with new approaches, such as presenting a fresh slate of candidates or enlisting the support of longstanding figures, and ensuring that the discourse we want to advance in that state is clearly expressed. Therefore, you have every choice available to you, whether it be in Kerala, Tamil Nadu, Telangana, or Andhra.

It’s a really fascinating clash between Rajeev Chandrashekhar and Shashi Tharoor in Thiruvananthapuram. In a same vein, Suresh Gopi, who was defeated in 2019 (from Thrissur), continued to work quietly on the ground. Alappuzha’s Sobha Surendran is another one of our very dedicated hardworking employees. I believe that Anil Antony’s (Pathanamthitta) candidacy has a ton of promise. And once again, K. Veteran BJP leader Surendran in Wayanad.

Karnataka and Kerala have both appeared in court on the State-Centre relationship problem. The opposition has been accusing the Center of acting like a stepmother to states that they control. What are your thoughts on this?

First off, I can’t argue that states shouldn’t file cases before the Supreme Court; they have every right to do so, and I’m pleased to provide them whatever information from the finance ministry they want. And because our prime minister was a chief minister under the UPA and had firsthand experience with stepmotherly treatment, I’m sure this holds true for every department in our administration. With that background, Mr. Modi, who is now the prime minister of the country, is aware that India’s growth would suffer if states do not get funding on schedule. Even if you may disagree politically and compete in polls, it is not the duty of any government to impede the development of any state.

Much before Kerala went to court, I had said in a public forum there that I would provide all the information there, which is exactly what I did. I also stated that I would be delighted and prepared to present the information to the Supreme Court should they so choose. We were delighted to display the records. In the Kerala case, the court has not informed us that we are incorrect. The court made no mention of the need to provide an interim remedy. Naturally, the court has sent it to a constitutional bench to inquire into borrowing and other matters.

Another thing about Kerala is that, under the FRBM Act, every state may borrow up to 3% of its gross state domestic product (GSDP) without any restrictions. This is true for every state. Due to the borrowings made outside of the budget, the CAG severely penalized not just Kerala but also many other states. Kerala received the same punishment as everyone else who had been severely criticized by the CAG for borrowing money that wasn’t in the budget and needed to be reconciled. They have four years throughout the reconciliation procedure to reintegrate the funds into the system.

In fact, I personally phoned Kerala’s finance minister well in advance of the state’s legal proceedings to suggest that we postpone the reconciliation process for an additional year if the state is indeed facing financial difficulties that year. Not only a unique favor for Kerala, but extended to other states in a similar situation. The court acknowledged that as well.

Before I get to this specific issue, I would want to make two or three points about Karnataka. The current administration has made some completely unfounded remarks suggesting that Karnataka was doing better before the introduction of the GST since its indirect tax revenue was increasing at a rate of 15%. Data indicates that Karnataka’s pre-GST revenue growth was about 11.60% CAGR, and its post-GST revenue growth is comparable at 11.35%, even with COVID affecting two of the state’s fiscal years (2020–21 & 2021-22). Therefore, the Karnataka government is using fake statistics to fully deceive the public.

The second accusation is that Karnataka’s compensation cess obligations were not met. Karnataka has not received any unpaid compensation; in fact, the state received Rs 1.06 lakh between July 2017 and June 2022.

I posed same question in reverse in Karnataka in response to their complaint that they pay one rupee but get just 29 paise. Bengaluru is the city in Karnataka that pays the most taxes. Bengaluru, could you just state that we pay this amount, give me the whole amount, and leave Bellary, Chitradurga, and other places penniless? Thus, they are deceptive, separatist claims.

The last complaint is that cess and surcharges, which belong in the divisible pool as well, are being collected by the Center. According to the Constitution, in addition to taxes, cess and surcharges are also collected. States also get a portion of the money. This is a cruel method of deceiving the public, then.

Regarding the latest Supreme Court case, if my understanding is right, it concerns NDRF money that must be allocated to the state’s drought-affected regions. The Election Commission has been notified of the situation. The money will be disbursed and the high-level committee will convene if they approve it.

In the South, there is fear that they will be punished for outperforming other states, being more industrialized, and developing more quickly. How would you respond to this issue?

These are very real worries. Here, I don’t see any changes. Additionally, I am aware that some notable advancements have been achieved in some areas, and I agree that they shouldn’t be penalized for it. However, the Finance Commission is in charge of handling it; the federal government is not. It is my responsibility to follow the Finance Commission’s proposal if I get one. Thus, instead of politicizing the matter, raise those, I repeat, valid concerns with the Finance Commission.

How do you feel about the sections of the Congress manifesto that deal with the economy? They are discussing a single-slab GST that exists in a few other nations. Is that something we can do here?

The fact that they want to recommend changes to the GST really makes me laugh. Those who dubbed it the Gabbar Singh Tax and threatened to repeal it if they were elected are now referring to it as GST 2.0 and claiming they will need to make changes. When the GST was first introduced, Arun Jaitley Ji, the finance minister, publicly said that a single rate would not be equitable in a nation like India where there are such wide disparities in economic well-being. Right now, I’m not making an argument against it. But it’s obvious that what Jaitley ji said at the time is still valid now.

I’m not sure whether they have gotten a good enough view of the economy to make a meaningful remark. They are showing off their financial prowess by promising to provide Rs 1 lakh to every (poor) household. However, they have not disclosed where they plan to get the funds. Their stance on the economy is less deliberate and more instinctive.

You bring up the nation’s economic inequities. According to a recent Inequality Lab analysis, inequality in India is at an all-time high and dubbed the last ten years the “Billionaire Raj.”

It is one thing to point out what is occurring in India to a foreign research. About a few of these overseas studies, I have my own reservations. Even though we have been giving out free food grains to 80 crore people for the last five years and will continue to do so for the next five, India is rated lower than some of our neighbors on the Hunger Index, where individuals who must wait in line to get even rotis are seen to be in better financial situation than us.

Regarding economic inequality, our efforts to provide basic utilities like as housing for everyone, toilets for all, clean drinking water, and the Swachhata Abhiyan have had an effect. According to the World Bank report, India has seen a significant reduction in severe poverty when it comes to multi-dimensional poverty, which is also supported by the findings of the NITI Aayog evaluation. Saying that poverty persists in the face of financial accumulation is one thing, but we are also helping individuals escape poverty.

The topic of electoral bonds has been making news. What is the strategy for political finance after the Supreme Court’s judgment, and how can we bring openness to election spending?

In its wisdom, the Supreme Court has dismissed electoral bonds. We must obey the command because we respect it. However, compared to the previous system, electoral bonds were an improvement. Before, you didn’t have a structure to operate inside. Here, at least, you use a bank account to buy and redeem the bonds. Donors sought secrecy, of course, and that was spelled out in law given the banking restrictions and the manner in which campaigns were funded during pre-election bond days. Even the bonds’ beneficiaries are now labeling the Supreme Court’s ruling as a swindle. Can you be a chameleon to any extent?

But the issue of genuine quid pro quo remains, regardless of which party accepted funds. How do you respond to this accusation?

In terms of quid pro quo, you are drawing conclusions and stating that this is a quid pro quo. These are funds that are moving between bank accounts. We tried to make electoral finance more pristine. For this reason, we switched to bonds, a decision that was authorized by Parliament after discussion. The BJP is dedicated to ensuring that there is far more openness in electoral finance.

Now let’s discuss another extremely political accusation leveled against the BJP: that it is pressuring members of other political parties to join the party by utilizing the ED, CBI, and other agencies against them. Additionally, they are essentially free of those fees once they join your party.

Individuals have switched between parties, returned to the first one, returned to the second party they left, and so on. The courts are the ones who award clean chits, not political parties. Members of some parties lose faith in their own parties’ abilities, making it difficult for them to keep their own flock. They leave because they believe they are in the wrong place and see a prime minister who works nonstop, around-the-clock, and a party that is inspired by that sort of leadership. People are leaving parties that are based on caste and family. Because the BJP demonstrated how those who were pasting wall posters or working at booth level are ascending to become someone, they saw hope in the party.

However, what about claims that the opposition is being treated unfairly, with bank accounts being blocked before to elections and incumbent chief ministers being detained?

In 2021, the first tax notification was issued to Congress. They hadn’t even submitted the evaluation paper when they didn’t reply. A political party just needs to submit an assessment in order to avoid paying taxes. You’re then brought before the courts, where you are found not to have paid while others have. Additionally, your accounts were not blocked; rather, a lien was placed on the amount of money you owe the Income Tax Department, requiring your permission to use it. You expect to be treated differently because you have disregarded the law of the nation and the rule of law. Eight summonses were given about the arrest of chief ministers, but you did not show up (before ED). Just before the Gujarat elections, didn’t the Prime Minister and the Chief Minister appear before the CBI? He went and responded to every query. However, this is becoming a significant issue. I believe that in our nation, it has become profitable to incite victimization and pity in order to claim that the administration is terrible.

The official statistics from India has come under fire lately. It seems that the reason for not publishing the results of the last home consumption survey was unfavorable statistics. There was no census taken in and of itself. Without these fundamental data elements, how can you undertake economic focus and planning?

There is no doubting the importance of data, especially the kind that only the government gathers and that it gathers from a wide range of sources. As a result, data collection is essential for developing policy and for encouraging individuals to do more economic study.

Building appropriate teams that can do this work—statistically sound work—takes a great deal of effort, so I anticipate that they should be prepared as soon as the next administration takes office. Furthermore, I categorically deny the claim that the results of the most recent consumption survey were withheld because they did not support our position. That is just incorrect. Methodological issues were present. And so they were forced to keep it.