'Let's Not Scare Foreign Investors'

How does it feel to have the most important ministry?

I don't know why you're calling it the most important ministry. Every ministry is important.

Why does swadeshi clash with reforms if, as the BJP says, it doesn't mean protectionism?

Swadeshi means competition. And the rules of this competition have to be clearly defined. The BJP has always been in favour of internal liberalisation: an end to the licence permit quota Raj, cutting bureaucracy and replacing government control by self-control or autonomous regulatory bodies like the Telecom Authority. That the licence raj is far from over is clear from the fast-track power projects. They don't move at all. The basic difference lies in sequencing of reforms. We feel we should have allowed a lot of domestic competition before we allowed foreign investment in freely. The Japanese car industry was first developed at home. If we want our industry to compete with world-class products on Indian soil, then we also owe it to Indian industry to give them world-class infrastructure, and interest rates and procedures comparable with the rest of the world. We have chained their feet and told them to swim.

How will you change the reform process?

We'll carry internal liberalisation forward, create a competitive environment at home within a timeframe, and do away with monopolies. Now this is regarded as anti-foreign investment. We have clearly said that FDI should be channelled into high-priority areas, like infrastructure, high technology, export production etc. Foreign consumer goods companies are coming to exploit the Indian market and the consumer. These goods are for personal satisfaction and do not have any cascading effect on the economy. They also create a consuming class leading to social tensions. So nobody will be allowed to come here and produce tomato ketchup or potato chips or just sell some services which we can do as well. The argument against this is that by shutting these producers out, the Indian consumer is deprived of quality and price advantage. But actually, this is a result of better competition and not only foreign competition. Also, the question of throwing out those that are already in doesn't arise. The problem with the reforms has been that they have been elitist. Unless they reach our talukas and villages, they are meaningless. That is what we want to do.

And on foreign direct investment?

The media is painting a wrong picture of the BJP being anti-FDI. We will have a very positive approach towards FDI, encouraging it to come into our core sectors.

Can we afford to tell the foreign investor where he should come in?

The foreign investor doesn't want to come in because of the hassle factor, because a fast-track project can't get cleared in seven years. If you have a transparent regime of time-bound clearances, investments will come.

About WTO, don't you think it's a fait accompli and the question of renegotiating it, as the BJP manifesto says, doesn't arise?

We're not saying that India should walk out of the WTO immediately. Just that India's case was not negotiated properly by the government of the day. Why does the World Bank decide what is good governance? All our fears are now coming true, in the case of basmati or roses, or our extensive bio-diversity. We don't want India's sovereign right to take its own decisions to be compromised by any nation or trading bloc. Why should globalisation be at our cost? At the same time, we believe that internal liberalisation will increase the pace at which we can reach global standards in everything we produce.

India being a marginal player in global trade, its efforts to strike out have not been very successful.

That may be, but we are a large country and full of potential. That is why developed nations are so eager to make it fall in line. Take the case of textile quota. Why does it have to come at the end of the 10-year period and why do intellectual property rights have to come at the beginning? For developing countries, everything is front-loaded.

Is industry justified in crying the previous governments didn't do enough for them?

Yes, it is. The slowdown is a direct result of cut in plan expenditure, of lack in infrastructure investment. It started in the final year of Manmohan Singh. Neither was he able to cut the fiscal deficit, nor could he keep the economy going. Especially the revenue deficit, which went sky-high. The difference between the revenue and capital expenditures has become horrifying. I don't blame Chidambaram for not working miracles in two years, but Manmohan had five long years. Chidambaram should have realised that the economy was slowing down and tax cuts were not going to help. To get the economy going now, there is no other way but to give it a kick-start by investing in infrastructure.

How do you get the money?

That is something that we have to decide. We have to go in for greater revenue collection, rationalise some import tariffs. As for savings, with proper policy, it's possible to take it to 30 per cent to sustain a GDP growth of 8-9 per cent. We have to cut public sector losses. And household savings is not only in banks, but also postal savings and the capital markets.

How do you propose to cater to the Bhagidari sector?

By designing policies to promote and strengthen large unorganised sectors in rural and urban areas, and the tiny and small sector. We have to encourage more and more people to take up self-employment, there's so much scope. We have to think of growth from the village upwards. Agriculture has remained weather-dependent because we have not been able to develop the irrigation system. And it's possible to develop irrigation through small and medium projects within a two to five-year timeframe.

A lot of groups are uncertain since the BJP is an unknown quantity.

There'll certainly be a directional shift in reforms. All the policy shifts will come in the budget. Everything will be clearly defined. Let's not scare the foreign investors more.