‘When people face hardship, they feel nothing has been done by the government’

first_imgIn the middle of his government’s mega voter outreach programme seeking a second term for the Bharatiya Janta Party (BJP)-led coalition government, Chief Minister Devendra Fadnavis takes time out to talk to The Hindu on the current economic meltdown and why he thinks India has what it takes to accelerate demand and get back on track. The stimulus announced by the Central government and packages to the construction industry by his government are more than just political patchworks. The “unprecedented situation that India has not faced in last 70 years” as described by Niti Aayog vice- chairman Rajiv Kumar is only limited to select sectors which face a credit crunch owing to the IL&FS crisis. Though not an economist, he says he can safely forecast an economic recovery. Edited excerpts from a chat on board his convoy while crisscrossing the Jalgaon and Dhule districts.Niti Aayog vice-chairman Rajiv Kumar describes the current economic slowdown as “unprecedented in the last 70 years”. But you are telling the people that Maharastra is in the middle of an economic boom, with record investment, and the core sector going from strength to strength. Are these not two disconnected realities, and how does one reconcile them?As far as talks of a slowdown are concerned, I think they have started only in the last three to four months. However, I am confident that Monday’s announcement by Union Finance Minister Nirmala Sitharamanji, will help us catch up on the economic front. I do not think there will be a problem in the long run because only a few sectors seem to be facing a crunch. Their troubles are largely borne out of a new tax regime adopted by the Government. Some people who never cared about paying taxes and were out of the tax net for a long time are now facing the heat. Secondly, a credit crisis was created after we adopted the Insolvency and Bankruptcy Code, 2016 (IBC), bringing the same people — who were misusing regulations and unscrupulously siphoning off money — into the tax net. All of this created a disruption. Now, with the stimulus measures and the injection of ₹700 billion of additional capital into State-run banks, the credit crisis is only short lived. Additionally, the monsoon has been good and will result in accelerated trading and a cascading effect of increased demand in the economy. This [slowdown] is a temporary phase.The Niti Aayog v-c has claimed extraordinary steps need to be taken but there is a concern that measures announced by the FM are a mere political patchwork? I am not an economist and there are better economic advisors to the Government who have formed the basis of the measures announced by the honourable FM. As of now, I can only say the measures are sufficient and likely to give the sectors facing the heat a definite stimulus. You see, the basic problem was a result of the crisis in the Non Banking Financial Companies (NBFCs), which led to a slowdown in retail advances. But we hope that that will be taken care of with the measures announced by the FM. The Indian economy is such that once a demand is created, it starts accelerating, it comes back on track. Moreover, the linking of the repo rate with the interest rate will give further impetus since so far the banks did not pass on the benefits of an unprecedented reduction in repo rates to consumers. These rates will now come down and you will see the housing sector — facing a slow down — getting a major boost from this linking. So does the same logic (consumer benefitting from reforms) apply to the fiscal incentives announced for the real estate sector here by your Government?For the last five years, I have been telling the real estate community that the future is in affordable housing and not premium. They have now understood this reality. The developers building premium homes have seen their interest cost increase over the actual cost of the house, while those focussed on affordable housing have sold 1,000 flats in less than three days. We believe the market has understood there is no scope for premium housing. From our side, we have incorporated a sunset clause in the fiscal package, ensuring that some concessions stay for two years and others for three, depending on how the market responds, and if it stabilises to pass on the incentives to the people, matching demand and supply. If that does not happen, we will discontinue this package. However, you are talking of abrogation of Article 370, instead of a job generation plan, or whether the flood situation has worsened the economic crisis? The job losses are visible in sectors like automobiles where the basic problem was the policy shift to BS6 by 2021, resulting in anticipation of price increase in future. This has resulted in an inventory pile-up at dealership level of unsold BS IV vehicles, becoming a problem for the sector. Overall, the floods too may impact on the economy but a major brunt will be borne by the sugar industry which may face a problem with disposing stock. We may have to reschedule their debts in the near future.There are also question marks on the government’s management of the floods? The criticism is unfair. Sometimes when people face hardship, it is natural they feel nothing has been done by the government. Fact is, the water in the region rose in just two days after an unprecedented 700% rainfall in seven days. Nobody could have anticipated that the water would rise like this. We are experiencing a fallout of real climate change. Having said that, the rescue teams too could not reach the affected areas since the highways were cut off and the planes could not land. After two days of trying to get them to land, I spoke to Union Defence Minister Rajnath Singhji who provided Dauphin aircraft from Rajasthan, which could land in marshy conditions. We then created a green corridor without losing a single life to the floods, excepts the deaths resulting from a boat capsize. There is also criticism over handling of the general law and order under your leadership, while the police force appears divided. Is that a fair comment?You see, even though certain things may have happened within, the force remains united. These stray incidents cannot be used to label the force as divisive. Last five years, there have been no report of lobbies active in the police, including some lobbies that had in the past held allegiance to the underworld as well. Ultimately, there are people who have egos or different convictions, but we have the right men in place for the right job. The postings are happening on merit now as opposed to the past when they happened only for considerations. What about government’s efforts in maintaining ecological balance when speeding up development? There is a fear that it is happening at a cost: tress, pollution and displacement. And then, there is the High Court’s scathing verdict on the coastal road.This hype created around [development happening at a cost] is totally wrong. If you see the Metro 3 project at Aarey, the Supreme Court has held the area is not a forest and there are no exotic trees inside it. Even then, we have treated every tree as precious and the amount of carbon footprint for Metro 3 is the equivalent of two crore full-grown trees. That much mitigation is happening for this project. As a city, we want clean and efficient systems but do not want a single tree to be cut. That is not possible. On the coastal road, I respect the verdict of the honourable court but when we started planning it, there were no regulations for such a project. We just followed what the Centre told us to do, we never had any wrong intention to not follow it. As a State and project lead we are ready to make any violations, if at all, good. If today a signature campaign is started, 99% of Mumbai’s citizen will vote in favour of coastal road. Despite the pace, why is your government pushing back the deadline for big-ticket projects, first it was 2019 now 2021? And then there are the flamboyant ones such as the Pune-Mumbai Hyperloop and Mumbai-Ahmedabad bullet train projects. Some of the projects are getting delayed due to unnecessary litigation. For example, for the Metro 3, the honourable court took time to adjudicate on two petitions objecting to work during the day and at night time. While we were not doing either. It took nine months for this to resolve and there was a cost escalation of ₹600 crore. The two projects you mentioned are not only of interest to us. When the Japanese government invests ₹1 lakh crore with 0.5% interest rate and a 20-year moratorium, who do you think will benefit? Who will they buy cement from? Who will they employ labour from? It will only lead to a push for the economy. These are just misconceptions. Let me tell you, only one per cent of travellers were using flights when we started building airports. We will fight these misconceptions against all odds.last_img

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