With most tax reforms already done, what was your thought process when you sat down to prepare the Budget?

First, the message that stability is what we want to give in terms of tax administration. When I say tax administration, it does not include tax rates. Businesses want stability. They don’t want a disturbed environment. They don’t want frequent changes in the administration. They don’t want frequent changes in the tax rates. So, stability should not be disturbed was one of the principles. Second, having given up to ₹12-lakh tax exemption and having brought the rate down for every slab under the new tax regime, there wasn’t much that I could have done.

Second, GST also has been done and anyway there’s nothing that I can do on the GST in the Budget. So, having already given away on tax, there wasn’t anything that I could do except for simplification and making the process a bit more friendly. One comprehensive work which I had spent time on was Customs simplifications.

Budget speeches usually would be filled with homilies to the kisan and mention a laundry list of proposals to promote agriculture. But your speech this time was different focusing on manufacturing, services and so on…

No, I have said things for farmers as well, like agri value-addition, farmer-producer organisations, fishermen-producer organisations, continuing with the huge agriculture Kisan Samman Nidhi, continuing with the VB-GRAM G programme and also bringing in the new Mahatma Gandhi Gram Swarajya initiative, where all the local handicrafts, weavers will be brought together, one district, one product.

Other than seeing a farmer only as a farmer, we are also seeing activities which are allied with him. His family members may be operating many of the self-help groups. They are the ones who are going to get the SHE marts, self-help entrepreneur marts. So, we have not forgotten to say things on farmers.

But urban centres are the focus. Not only manufacturing, we also want to improve lives in cities, not just metropolitan, but even those with population more than five lakh.

We want the facilities to be improved and the amount being given for the programme is astonishing — ₹1,000 crore for each city, every year. That city can get ₹1,000 crore the next year again because the whole plan stretches for five years. So ₹50,000 crore in all, I think.

You’ve assumed healthy buoyancy in direct tax estimates despite collections being lower than the Budget estimate this year. What gives you the confidence that you will be able to meet the projections, especially in income tax?

Essentially, we have constantly been nudging taxpayers to also look at what they’re paying. By pre-filling forms, we are giving them the opportunity to recognise and acknowledge, and pay the necessary tax. Not just that, but we are also making sure that the tax-payment base widens. Lots of campaigns are happening, so we think all this will pay off.

So, you are confident that the projected 11.73 per cent growth in income tax will be met?

Personal income-tax collections will be met, yes. In fact, because of last year’s rate reduction, meaning exemption being provided up to . ₹12 lakh, I think there will be more people who will be encouraged to come in.

The revised capex estimates are lower than Budget estimates…

See, actually, much before you complete the question on that, I want to say again that some Opposition leaders have also commented, and also a former finance minister, that with compression of expenditure you’re able to bring your fiscal deficit under control and so on.

It’s not the intent from our side to reduce capital expenditure. It’s been given, but the process where, having received one tranche of money, the States are expected to send a utilisation certificate for us to release the next tranche. Till such a time the utilisation certificates don’t come, I can’t release. So, that will still be lying in my account.

That’s not “not spending it”. Before March 31, it can get cleared for all you know. So that is one explanation.  Please continue your question.

For FY27, Special Assistance to States for Capital Investment, are we going to have some more conditions for tied portion?

I wanted to keep more for untied and less for tied, so that States can spend a bit more because I want to nudge States to undertake reforms. If you see the tone and tenor of the Finance Commission report, even that is moving towards encouraging States to do more reforms. So, I won’t completely leave it untied. There will be an element of tied in it for nudging reforms.

On capital expenditure again, are we reaching a situation where departments and States are not able to spend?

States are spending. In fact, I speak very strongly in favour of the States’ capital expenditure, particularly the SAS key. They are willing to absorb two-three times more and they’re delivering also. That is why I’m encouraged this time to say I will give more for SASC. Every State showcases the signature projects they’ve completed, wherever I go. But to the extent that I wanted the tied portion of it where they would do some reform and take more, it’s a bit slow. States should come forward for that.

You’ve built the Budget on the old series GDP numbers. When the new one comes, what happens to the fidelity of these Budget numbers? Will they stay or…

You’ll have to see closer to the time. A lot of people are talking about it. Good that you’re asking. I couldn’t have said that I won’t do the Budget till such a time that number comes. Is it also right for me to ask MoSPI (Ministry of Statistics and Programme Implementation) to compress it all and give it to me in January?

Obviously not…

So, given these two possibilities, I had to come with the Budget with the existing base and see how it goes when the new series comes at the end of February 27 or something like that. So at that time, we’ll take a call. I can’t guess what the number will be.

At ₹95,692 crore, the allocation for VB-G RAM G is much higher than what you set aside for MNREGA last year. Plus, there is ₹30,000 crore as pending MNREGA reimbursement. So we are looking at some ₹1.6-1.7 lakh crore in all, if you account for the contribution by States…

VB-G RAM G has actually brought a system, which will be a lot more efficient. Address 125 days work, make sure that the Centre’s portion is not brought down at all. We are happy to say that the States can also participate in it. They will also have skin in the game. So, it is good that the system functions efficiently without getting gamed. MGNREGA, unfortunately, in many States, ended up being gamed. There were instances of men and women, who were not in the productive age or physically capable, who were shown working in the fields or digging sarovars, people who were well over 80 years, were shown as beneficiaries. Look at the comments which CAG is making on NREGA.

So, our attempt is to keep the commitment intact, but bring in an efficient system in which all stakeholders participate. It shouldn’t be the case that the utilisation certificates come in such a laid-back fashion that they do not stand scrutiny. And I’m giving money on it. A certificate which can’t stand scrutiny, which is going to get fiscal benefits. It is not anybody’s responsibility. So, we’ve proved our commitment to it by making the allocation here and the overhang which is there from earlier MGNREGA commitments. We’ve also apportioned money. Take that. Clear all your dues. We’re not asking you to sit with dues and we’re not dishonoring the commitments given earlier. But we need a system which is effective.

So, this allocation actually takes the wind out of the sails of the criticism…

That’s right, yes. We have not just brought in a law; we are putting our money where the mouth is.

When the Budget was made, this overall external environment, tariffs, threats from President Trump must have been a big factor in your calculations. Some of the import duty realignments, especially on stuff like almonds, walnuts and apples, and also nuclear power equipment, aircraft parts are all sectors where the US has an edge in supplying. Was that a factor?

No, not at all. Canada can also supply. That’s not the route I have taken. Customs duty reduction on these were driven by the need for energy self-efficiency. We’ve announced a policy for small modular reactors. If we want to keep our commitments for 2070 net zero, we cannot keep extracting coal. That is why we are rapidly moving towards nuclear options. In the process of going nuclear, till such a time as our domestic capacities increase in producing equipment for it, how will I match these two conflicting demands? Would we wait for domestic manufacturers to manufacture the equipment and then we will start small nuclear? It cannot wait. So till such a time I am able to quickly ramp up my capacities, till such a time that our fellows can produce, we will have to import. And that is why I have reduced duties. That is true for nuclear, and that is true for critical minerals. Because we need it for attaining atmanirbharta at the earliest in these crucial things, where supply chains can be disrupted for non-commercial considerations.

If trade considerations affect me, yes, I can understand it. For strategic reason, somebody stops. For friendliness, not friendliness, somebody else stops. Am I supposed to be sitting and watching all these vulnerabilities? We have to do something.

Markets didn’t like the securities transaction tax increase on derivatives. What is the thought process behind increasing? Obviously, it is not revenues…

Not at all revenues. What we’ve done is that we are not touching STT in general. We are touching only futures and options. This is an area where people are continuously calling us to say that the public is losing money. And those losing money are generally the ones who normally don’t have that kind of a spare cash to speculate. So, is the government supposed to sit and watch? We want to do what we can help to deter people from getting there. Of course, the market regulators will take care of other things which they have to do. That’s not my domain. But here, do I do something or not? We have not touched every cash transaction. I think the market will understand our intent. It is not some sweeping brush across the board. It’s only picking like a toothpick on certain specific areas.

Can you dwell on the Orange Economy which has got specific mention in your speech?

We are seeking assistance from the Institute of Creative Academy in Mumbai in setting up content creator labs in 1,500 schools and 500 colleges all over the country. Why do we want to do it? I was interacting with college students yesterday (Sunday). We discussed Orange Economy, animation, gaming, cartoons and games, and visual videos. This is the new era, in the sense that less people are going to theatres, less people are watching electronic news, but everybody wants to have Netflix at home.

The example that I took before the students is Ghibli, Japanese. What beautiful animation, outstanding cartoons. The drawings, they’re all hand-drawn. Now people are using artificial intelligence and creating it. I’m not against it, let them use AI. But that artistry which is required to create each expression and then to superimpose it on to the digital mode to make a lifelike image that you could relate to, that requires skill. That requires patience and that requires a certain kind of teaching as to how you achieve it. It is for that we have started this. I think some people did have confusion about the name ‘content creator’. It is not social media content creator, sorry, not at all. It is more the skills required for this highly specialised area of art blending with technology. And creating a medium of communication requires skills. Film-making required skills — whether it is in the South or Mumbai, a generation of informal gurus developed it. Now, we have a digital world. Every centre is Bollywood for Netflix. Look at the way people are creating TikTok, it’s happening everywhere. I am not talking about TikTok here, but I am talking more about AVGC (Animation, Visual Effects, Gaming and Comics). That requires skill. You need to have that artistic bent of mind. You need to learn, you need to understand the literature, epics, storytelling. We have a very big storytelling culture in this country. Every region has its own. That is the kind of Orange Economy skills we want to impart.

Your move to tax sovereign gold bond market transactions is a surprise. The government was caught in a bit of a spot because of the rise in gold prices. But taxing the secondary market transaction, is it meant to take back some of the gains?

It is not with that intent. When it was launched, those who came in, came with an intent of investing, to wait. Therefore, if you held it till maturity, you had the benefit. So, I have given them a word for something. We are not taxing them. You joined in at the time of initiation. And you took it at the original place of issue and you are holding it till maturity, you get the benefit. But you went through secondary market, you’re making a killing out of it. Why don’t I get something? And you’re not even holding it for maturity. Even if you hold it for maturity, you pick it up from somewhere else. Secondary market. So, I’m placing a bit of a premium on it. So if you obtained it, initially, but you are still not holding it till maturity, I am sorry, yes, I need to tax you. So we now have a four-fold classification – Point 1 and 2 addressed, no tax, Point 1 addressed but not 2, taxed, Point 1 and 2 not addressed, taxed. You start trading it in the market and then also want the tax benefit.

Can you give us some more details about the announcement on archaeological sites?

Every year, through one or the other route, we are supporting tourism, archaeology, epigraphy. And also getting these ancient antiques brought back to the country. And the PM has been talking with every Head of State and requesting them to give them back. There’s more to come from the US now, the Chola bronzes. So, while all this is happening and great tourism centres — whether Ajanta, Ellora, UNESCO recognition — are thriving. There are the Ramsar sites with preserved forest and so on, we wanted also to focus on archaeology, where excavation is actually happening. For our youth and for our country to understand excavation sites, today it is possible to have an experiential touristic approach. You can go to those sites. I was involved very personally with Adichanallur in Tamil Nadu, where we want to impart the benefit of going through this experience to people.

It is one thing to learn about archaeology from books, but it is quite another to see a well-excavated site. How is this excavation done? How are you digging things out? And what care is taken when some things are taken out and others are left? You can’t really extract it without damaging it and bringing it out. So, you leave it there. But it can still be an experience to see it. People can make their way down to see it without damaging it. That is the kind of experiential tourism we want to encourage. We are not talking about iconic sites — Ajanta-Ellora, Hampi, Elephant Caves. They have been excavated. What we want to promote is where excavation is happening now. We want to give a complete experience of going down and seeing how, with gentle brush, things are being taken out. In Adichanallur, much before the floods which affected Thoothukudi, we had done glass topping for all these excavated blocks. From standing on the block you could see what’s being dug out. So, it is for that experience I have named these sites.

But why did you choose Adichanallur and not Keezhadi?

There was a good discussion between the State and the Centre about which one to choose between Adichanallur and Keezhadi. The State government chose Keezhadi and we went ahead with Adichanallur. I am not blaming any one individual, but every possible hindrance has been created for Adichanallur work. Despite that, the Centre is working to get that done. The land was disputed. Then somebody took us to Court. The State government ‘tried’ helping. But never mind, we are going ahead. Why, is Adichanallur not Tamil Nadu? Only Keezhadi is Tamil Nadu? You, as State government, chose to go ahead with Keezhadi and we chose to go ahead with Adichanallur despite periodic obstructions being laid. You should also equally help us in developing Adichanallur.

What would the High Power Committee on the banking do? Can we consider this as a precursor to amalgamation and merger of PSBs?

No, not a precursor to amalgamation, I don’t know what the committee is going to say. I can’t presume. Even if I mention it in the Terms of References (TORs) and if suppose they say no amalgamation, will I go ahead with amalgamation? No. So I’ll have to wait. This is going to be a high-profile exercise because we want Indian banks to acquire a certain stature. We also need a number of banks for India’s comprehensive development. You need banks everywhere, you need big banks, you need NBFCs to be activated. They are doing well. But we need more NBFCs to work. Maybe sectoral NBFCs. I am opening up the entire gamut of banking in India. Banking which we need for 2047. Let the committee come up with the report.

And who will be the members of the committee, mainly from the industry?

I have not given that much of a thought. We want people who have a nose for banking. People who have had an experience in banking, who can set an agenda for us.

I wanted to tell you that you disappointed a lot of us journalists by not making any announcement for poll-bound States…

Every poll-bound State has got something. And non-poll bound States have also been mentioned. West Bengal has been given Dankuni East-West corridor. West Bengal will also have the benefit of inland waterways, and the link to the ports again because Howrah is congested. Kerala, Tamil Nadu both are getting rare earth corridor. Tamil Nadu has got defence corridor. It is now getting rare earth corridor as well. Would you thank Prime Minister Modi for it please? Both corridors are going there. UP had a defence corridor, but rare earth corridor is not going there. Would you feel happy about it? Because I get a sense that a select few politicians in Tamil Nadu derive satisfaction when they hear somebody else has not got it. Whether I get it or not. You’ve got it. Now both corridors are with you. Can I ask some other State to say I didn’t even get one corridor? There is high-speed rail. Is it not going to Chennai? And by now, how many high-speed trains and Vande Bharats have reached Tamil Nadu?

There’s the promotion of coconuts and cocoa which helps…

Yes, thank you for reminding. Every aged coconut tree, which has to be removed and a sapling given, this programme is going to cover it. Doesn’t it benefit coconut orchards, which were devastated in a cyclone? I went to Thanjavur district at that time. I saw in Nagapattinam, Thanjavur, all coconut trees were thrashed. This scheme is going to help all of them. Coconut farmers, particularly in Thanjavur district, will benefit. Kerala, similarly, gets coconut and cashew.

But these are general announcements, right? It’s not like ₹ xxxx crore are going to Tamil Nadu…

We never give that kind of money to anybody.

Last time, you gave for Polavaram to Andhra Pradesh…

But that was a statutory commitment given during the AP reorganisation act. So, I had to give them.

The 16th Finance Commission has retained 41 per cent vertical devolution, subject to some cesses being subsumed in the overall devolution kitty. So, now which are the cesses that you will agree to devolve to the States?

No, cesses are a constitutionally given right to the Centre. That right is with us.

But the Commission has recommended that…

You will get to know the details. Let me recall, we brought in the pan masala Health to National Security Cess. I voluntarily said public health is a State subject and even though that was a cess, which is entirely the Central government’s, I still said I will give a portion of it to the States.

So, that route is always available. And now, a lot of the well-performing States will benefit too…

Yes, because they brought in this contribution to GDP for the first time. As a result of which Haryana and States which contribute to the GDP, Southern States, Karnataka will always get a substantial sum.