Yes, employment is a major focus area but the budget is also beyond that. It announces a package of five schemes, which will contribute towards generating more employment and of better quality. There are schemes which are more immediate. There are also schemes that are more for the medium term and to make youth ready for jobs. And then there is the scheme that will give people exposure for more private jobs in the real sectors.
The budget speaks about firming up an economic policy framework to pursue next-generation reforms. What would it entail and when would you come out with this?
The policy framework will essentially present the overarching approach to economic development. It will set the scope of the reforms from a longer-term perspective to boost job opportunities and sustain high growth. We hope to come out with it before the next budget (in February 2025). We are not developing a sectoral policy, but an economic framework to determine how the policies for different sectors of the economy should be decided over the next decade or so. And states will be taken on board. We will come out with a draft, have consultations, etc. We will undertake a significantly large exercise to put such a framework in place.As far as reforms are concerned, the budget gives a significant amount of ideas about land reforms, both in rural and urban areas. When it comes to urban land, there are states which have done reasonably well or very well in firming up policies, but there are others where rigidities still exist today.The rural land reform will depend on how fast Agri Stack can be rolled out. When land registry and farm registry are talking to each other and when that entire information is made available to service providers, that’s the UPI moment for rural land and the farming community. Many states have put in place decent IT systems for farm records but in the urban areas, very few states have built good systems.Would you make land acquisition easier for companies to set up units?
See, reforms around land in our country were generally thought of as land with the tiller. So, let’s not get into it. I am talking about reforms relating to land as a factor of production. Land acquisition is one thing-where the state, using its sovereign power, acquires land. But there are more efficient ways of handling it, and some of the states have shown it. There is something called “town planning” where the government can be a facilitator. Under this method, hundreds of acres of land have been developed where land remains with the owner until they decide to give it to a user rather than a developer.
The availability of land and the use of that land…all have to become more efficient. If any of the states in India have done it beyond the pilot stage, that is doable elsewhere.
Gujarat, for decades, has done good work in urban areas. They have done their infrastructure through town planning skills. Haryana followed a different model wherein a developer acquired the large pieces of land and then the government or urban development authorities provided trunk infrastructure.
The budget talks about heightened focus on the reduction in debt ratio from FY27. Does it mean you would be announcing a debt reduction target annually?
We are talking about an approach where, instead of looking at putting a limit on the flow (net accretion) of debt, we would be looking at reducing the stock of debt in proportion to GDP. And, as long as we are in a position to bring down the debt ratio, we will be in a position to serve the twin objectives of debt sustainability and building buffers to meet any exigency.
It is not a shift from the fiscal consolidation path. We are saying it is a different approach. Rather than targeting a particular deficit number annually, one will keep on reducing the debt ratio. An economy that is growing at a faster pace has the ability to sustain a larger amount of debt.
Given the fiscal discipline, what kind of response are you looking for from rating agencies?
The government has followed the path of fiscal prudence while at the same time meeting all priority and essential expenditure commitments. We do expect it should be seen in a very positive manner by the credit rating agencies. Please see the fiscal consolidation track record over the past four budgets after the pandemic. We gave a commitment to bring down the fiscal deficit to 4.5% by FY26 and we will lower it below that.