The Union Budget has sought to give a demand push to the economy as the additional expenditure on capex will have a multiplier effect, create demand for a variety of inputs and products, generate jobs and attract private sector invesment, said Commerce & Industry Minister Piyush Goyal. In an interaction with BusinessLine, the Minister explains the fine print of the Budget. Excerpt:

Q

The Budget has announced several supply side measures but is there enough demand stimulus?

The whole budget is about demand stimulation. After all, when we spend ₹10-lakh crore on capex, here is a huge multiplier effect, about three to four times. All of this will lead to demand impetus. The demand for steel, cement, electronics, sanitary ware, machinery for rail construction, etc.,will all go up. It will create jobs. A large number of boys and girls will get employment. The MSMEs, too, will see a demand push. All this will also lead to private sector looking at investing in new capacities to meet the demand generated. It is absolutely a demand stimulus budget.

Q

There has been a lot of tweaking of customs duties, with a number of exemptions being removed. At the same time, customs duties on some other items have been reduced. Could you explain the rationale?

The products that you are asking about are largely related to the capital goods sector. Our idea is that we should support the Indian domestic capital goods sector. Wherever India has abilities to supply any capital goods, we are looking at more and more indigenisation. That is a part of our Atmanirbhar Bharat spirit.

Wherever high technology capital goods are required, we will reduce import duty to an average of about 7.5 per cent, which will not increase the project cost too much but will provide incentive for domestic manufacturers. Apart from that, there are some embellishments which are required in sectors such as textile, leather, and footwear that have to be imported to complete the product for export. The FM has allowed their import to encourage our export production.

Q

What are the changes that are being considered in the SEZ legislation?

The SEZ Act is being made more inclusive, involving States. Basically, the idea is that instead of having a focus only on exports, there should be a focus on industrial development and service sector development. So we are going to gradually make SEZs into plug and play infrastructure which can be used for both exports and domestic industry. The large infrastructure, the land, the readymade sheds and readymade buildings are to be made available to expand economic activity.

The SEZ Act is being made more inclusive, involving States. Basically, the idea is that instead of having a focus only on exports, there should be a focus on industrial development and service sector development. So we are going to gradually make SEZs into plug and play infrastructure which can be used for both exports and domestic industry. The large infrastructure, the land, the readymade sheds and readymade buildings are to be made available to expand economic activity.

The existing SEZs will continue to get the benefit they are getting. We are looking at easing things for them by taking measures such as allowing them to sell in domestic market after application of appropriate levy to create level playing field.

Q

Were you expecting more measures for boosting exports?

Our exports are at an all time high and we are well on track to achieve the target of $400 billion this year. We had already announced all support well before the budget including the RoSCTL scheme for textiles and the RoDTEP scheme. Exports are standing on their own leg now. We are satisfied in terms of support we have been receiving from other Ministries.

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