Nirmala Sitharaman: 'Focus Of Budget Was To Keep Stable Growth Going'

'We kept this Budget on a larger plank, rather than on one incident, however serious.'

The India-US trade deal, had it come a little earlier, would not have made the Union Budget any different, Finance Minister Nirmala Sitharaman tells Asit Ranjan Mishra, Vikas Dhoot, Nivedita Mookerji and A K Bhattacharya on Wednesday afternoon at her Parliament office.

Part 1 of a 3 part interview:

What has been the central focus of this Budget? And had the India-US trade deal happened earlier, would the Budget have been different?

I have always been realistic while making the Budget. So, at no point in time has it been an incident-dependent or one incident-based Budget.

For instance, at the time of the pandemic, we didn't think we were going to anchor it only on Covid.

Or, after that, we didn't think we were going to anchor a Budget only on post-Covid revival.

So like that, we kept this Budget on a larger plank, rather than on one incident, however serious.

To your question on whether the reduction in tariff from a punitive 50 to 18 per cent, coming soon after the Budget, could have influenced me had it happened one day earlier, I would say no, not at all.

Even beyond this event, there are uncertainties looming today.

Could you talk about the central point in the Budget?

As the prime minister pointed out at the beginning of the session, this is the first Budget of the second quarter of the century, and that the second quarter would include the goal of reaching Viksit Bharat in 2047.

So, I have to show the direction towards that for more than 20 years.

Then, I also start the new Finance Commission cycle and need to plan for the next five years.

This is the first of the five years. From that perspective, it's a very critical Budget... There was no space for me to be going in one extreme or the other, and therefore the focus of this Budget has been to keep the stable growth going.

Do you agree that you have been more conservative in terms of the disconnect between the nominal growth and your actual collections? Could you have gone in for a lower fiscal deficit target for next year?

I agree with all that, but a lot of global uncertainties are still around.

Having given the income tax and the GST relief (earlier) -- both of which I strongly believe will help people to have more money in the hands and enable consumption opportunity -- the primary focus should remain growth.

I didn't want to be left with no room for some flexibility in case that's required.

I have reached the destination without failing any one year. Can I now have that little space -- that was my thought.

So, you are hopeful of giving a positive surprise at the end of the year?

No, just for me to have that cushion because you don't know what's going to happen globally, as many challenges are still active and alive today.

After the recent conversation (referring to the interaction between Prime Minister Narendra Modi and US President Donald Trump),

I can probably say the funds, looking at the weathercock, are likely to come back.

There was expectation of a comprehensive Customs duty rationalisation. Some steps have been taken but can more be done?

I could have done it all during this Budget.

But unlike income tax, Customs has so many different dimensions to it, not just the duty, the scanning of goods which come into the country, the diligence which exporters and importers will have to adopt, the health standards and testing labs, electronics and semiconductors (it's a complex area on its own merit), and we didn't want to hurry.

We will give it, maybe even during the treasury amendments. Some of it could also be packaged all together a bit later. But it will happen soon.

'Industry Will Have To At Ways To Participate In Growth Story'

Do you think private capex will finally kick in? Are there any specific measures that could help?

There's no specific measure. I've given the corporate tax reduction already. We made it easy.

In income tax also, the slabs have been rationalised already... So I think industry will have to look at ways to participate in the growth story of India.

You have promised a lot more on divestment... What is the plan?

It will go as per the approvals received from the Cabinet. It will happen.

Global uncertainties still remain, but the external challenges are less now, after the US deal is done.

As things settle down, is it time to focus more on internal issues?

It should settle. But the first announcement (on the deal with the US) is on the punitive tariff rates imposed on us that's come down to 18 per cent.

The joint statement will tell us what the details are.

But even otherwise, I don't think I've made the internal issues wait till such a time I address the external.

I'm simultaneously working on them as well. So if the external is all sorted out, many things may still remain.

In one of your post-Budget interactions, you said you will look at expanding the direct tax base. Can you elaborate please?

The Central Board of Direct Taxes has already started a nudge movement (by interacting with assesses as they fill their forms).

We are also creating a lot more awareness, saying "You're better off taking part in this exercise of paying what is due to the country".

It will be a bit of a slow process but we will work on that.

In the Part B of your speech, you listed a number of steps that give tax certainty. That's very good, but there's also a perception that by changing the capital gains structure of the sovereign gold bonds, it's a virtual retroactive tax. How do you respond to that?

Not at all. And I think it's not fair... It was very clearly launched with an intention of having people invest in it.

At the time of the launch itself, we were clear that it had to be held till maturity. There were two bookends to it -- you come into the primary market issue and hold it...

It's natural to assume that the benefit reaches you, but both these bookends have to be met or it would slip off like the book.

Another instance is picking up from the secondary market and getting out -- in all fairness, you cannot get the benefit, and that's what we've said.

'The Domestic Investor Is Not At Disadvantage'

Domestic players in the data centre-cloud service space are curious to know whether they are going to get the same tax holiday. Do you think a clarification is required there?

If a clarification is required, we will issue it. But I want to give a pointed answer. That is, there is a level-playing field. The domestic investor is not at a disadvantage.

Quite a lot of thought has gone into this. We have not put the domestic investor or the domestic operator at inconvenience.

There's no unfair treatment being offered to him, not at all. I'm quite happy to issue point by point narrative to say why this applies to all equally. It applies to all equally.

After the US deal has been done, do you think the growth assumptions in the Budget will change?

As I said, it depends on the agreement, the details of which will have to come.

I'm not saying I'm going to have to change because the agreement has come through. Let me at least see what is there. I repeat that a Budget is not made depending on one or not depending on one (event or development).

• Part II: 'I Don't Want To Let Down The Economy...'

• Union Budget 2026

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