November 25, 2018
Freewheeling chat with Dr Amit Mitra
A freewheeling chat with Dr Amit Mitra, the Minister of Finance, Commerce, Industries and IT, West Bengal Government
On current political scenario in India:
In terms of political economy, the country is going through dangerous times. I would submit that this is a (Central) government that has many kinds of failures. In psychological terms, it’s a government of bravado — chest-thumping, hit-and-miss processes, and disastrous decisions taken without consultation. The impact of this has been severe on sectors of the economy and people. On demonetisation, one senior BJP leader told me, ‘We are going to shift base — from the traditional RSS base of small traders to the poor… Demonetisation will bring antagonism between the poor and the relatively better off.’ The notion was to create a vote bank of the poor by antagony… between the relatively better-off and the working class.
On silence of corporates on demonetisation:
A very senior corporate person told me the other day that he has 31 cases against him. He is known to be transparent. Today, there is a psychosis of fear not only among corporates but also among chambers of commerce. ASSOCHAM had initially said that demonetisation was dangerous. But the next day the secretary general said, ‘Demonetisation was fine.’ I was told that the secretary-general was called from the appropriate office and told that ‘From tomorrow, no minister would go to any programme of ASSOCHAM.’ That meant the chamber would not be able to hold policy events. He was also told that international delegations would not visit the chamber. He cowed down. And within a month, he was removed.
In one chamber of commerce meeting held in Kolkata behind closed doors, I said, ‘The GST has an arrest clause. Why doesn’t the chamber stand up and talk about it?’ Not a single body has said the clause is a problem… The fear psychosis emanates like rays, one of which has hit the corporates, and another the chambers.
On cooperative federalism:
The Centre collects taxes from states and then returns a part of it. That’s a part of federalism. The devolution was raised from 32 per cent to 42 per cent by the 14th Finance Commission. But the same year, the Union Budget cut off (funds for) 58 projects (fully sponsored by the Centre), which includes police training and the Integrated Child Development Services. There is another category of projects where states have to pay a proportion. In 28 such projects, the proportion has been increased. On the one hand you give 10 per cent more in devolution, on the other, you take away.
Also, there is a council of states. It held a token meeting about six months ago and a proper meeting about two years ago… Then there was the Planning Commission, where we used to go and argue about allocation (of funds). Now the Commission is not there. That’s the federalist structure that is missing.
Today, Bangla has bills worth Rs 10,000 crore to be paid by the Centre. If these bills are not cleared in time, we will have to borrow from the market and the debt will go up. Bangla Chief Minister Mamata Banerjee has written a letter to the PM about the problems that need to be addressed. According to a DIPP (Department of Industrial Planning and Promotion)-World Bank study, Bengal was number one in the ease of doing business. After some time, our ranking went down. We found out that they (the Centre) have introduced a new process in which 50 per cent of the weightage was on surveys done among businesses in the state… We were not consulted.
On new investments for Bangla:
We have had four Bengal Global Business Summits. About Rs 9.5 lakh crore has been proposed as investment. Approximately Rs 4 lakh crore is in process now. Today, Bangla has become a cement hub. Five cement companies including JSW and Dalmiya India have invested Rs 700-1,000 crore each.
Tata Hitachi has recently closed its Tatanagar factory and shifted their capital equipment to the Kharagpur Industrial Park because of the ease of doing business in Bengal… Today, TCS is employing 40,000 people in Bangla. Now they have taken another 20 acres where they will employ another 15,000-20,000 people. Last year, export from Bangla was worth about $ 9.5 billion. As a result, we had to create an export policy.
On work culture in Bangla:
Holidays and work culture are different things. Europeans take holidays up to 90 days. Does that mean they don’t work? Other states in India may not have (so many holidays) but they will soon follow suit. When we came to power (2011), 76 lakh man-days were lost due to strikes in the previous year. Mamata Banerjee announced that we will not allow bandhs… She said that if someone failed to come to office on a bandh day, he or she would lose the day’s pay and the retirement age would also go down by one day… In the first year, we lost 5,552 man-days. In three years, the loss became zero.
The Tatas are employing about 40,000 people in Bangla. The Tata Motors project was in the courts for about eight years. In the end, the Supreme Court said that the Bangla government had acquired land illegally. The court ordered the government to conduct demolition and hand over the land to farmers in 90 days.
Mamata Banerjee did not fight with anybody initially. Only when one group of farmers refused to accept cheques, she supported them. But does that mean the Tatas have run away from Bengal? Not at all. Every Tata company in the state has grown in size.
On land for industry in Bangla
The government has a few strategies with regard to industrial land. First, we have planned to develop more industrial parks so that corporates don’t have to approach private entities for land. The Kharagpur Park has become a model park. It has a 20,000 square feet common facility centre including a bank, food court and parking for trucks. Another freight corridor, along with an industrial corridor, is being built from Punjab to Bengal. We have allotted 2,666 acres of land in Raghunathpur for this project.
The other strategy is the creation of a land bank. For example, the animal husbandry department had large tracts of land in Kalyani which were never put to proper use. From this, 300 acres of land were given to Bangla Industrial Development Corporation. Here Flipkart has taken 100 acres. In North Bengal, we have land from different departments where industrial parks are being built. There is no shortage.
On electoral alliances:
It is a question that Mamata Banerjee would be in a better position to answer. But let me give you my version. Just a few days ago, Chandrababu Naidu was in Bangla. Both the leaders said, ‘We are going to work together and all of us are going to be part of the leadership….’ So this is a matter that is working on the principle that everybody has to come together because democracy is at risk. As I said earlier, there is a fear psychosis. Institutions are being undermined. Look at the circus going on with the CBI and RBI.
I don’t think the BJP knows what Bengal culture is like. My father was condemned to death by the British. In jail, he was not only singing Rabindra Sangeet but also songs of Kazi Nazrul Islam. People don’t know that Kazi Nazrul Islam was the greatest songwriter of Maa Kaali and was also a worshipping Muslim. You cannot divide communities in Bengal, but that seems to be the agenda of this government… What people do not understand is that there is an underlying messaging system from the top which has percolated to the bottom creating lumpens, who are taking the law into their own hands. So what is more important than the question of who will align with whom is why are they coming together. And in that Mamata Banerjee has a major role to play because she has been in Parliament for seven terms… She obviously knows people in politics very intimately.
On Mamata Banerjee as the PM candidate:
She has repeatedly said that this is a collective leadership. I don’t think she has looked for getting a chair. I left everything in Delhi, my international network, and went to Kolkata because I sensed that she has been fighting for 34 years for a cause with which I agree. Somebody has to take up the cause and sacrifice the way she has done. She is consistent in saying that the communal disharmony being spread in India is very dangerous.
On allegations of syndicate:
It is something that Mamata Banerjee has spoken about very openly and without any hesitation. Just a few days ago, she said in a party meeting, ‘I have come to learn that some people are taking money. If I come to know the specifics of it, you’ve had it.’ That’s a message from the top and then it percolates to the ground. The CPM created syndicates during their rule. How can a structure, built over 34 years, change overnight? But there is sincerity in the efforts of the TMC leadership.
I think it’s very important to understand that political violence happened only during the CPM rule. After winning the election, when everybody was ready to take revenge for the killings of the 34 years, Mamata Banerjee took a very important decision. She ordered Rabrindra Sangeet to be sung everywhere and gave the slogan: ‘We will build the state rather than take revenge.’ That was a moment when there could have been mass riots.
On student activism:
I think that is completely wrong (that he is Right Wing). I was perceived first as being for democracy. In the US, I was the convenor of the Indians for Democracy (East Coast) during the Emergency. The group brought together all kinds of people — from the RSS, CPI… I don’t think that anybody perceived me to be with the Jana Sangh or the BJP. I didn’t know any of their leaders.
There was no Jana Sangh then in Bengal. There is currently no RSS in Bengal. When I went to the Delhi School of Economics, I fought the Left. My own professors — Amartya Sen, Sukhamoy Chakraborty, K N Raj — were in varying levels with the Left. Manmohan Singh, who had then just come back from Oxford, was neither Left nor Right. There was Jagadish Bhagwati who was an extreme trade liberaliser. Subramanian Swamy, who had then come back from Harvard, considered himself a liberaliser… I fought against my own professors, ideologically… I had no connections with the RSS or the Jana Sangh because they never had a presence in Bangla.
On minority vote bank politics:
Minority vote bank is not the issue. Capitalists maximise profits and shareholder value. According to James Buchanan, who received the Nobel Prize in economics, politicians in democracies must maximise votes. As they have to serve the people, they must have their support. That is the political process in a democracy. So, in the US, the same conversation is happening with the Latino or African-American population. In Europe, a similar conversation is happening with migrants. This is happening everywhere. So this is not vote-bank politics. If you do not serve the community, you will be voted out. You are not doing anything special. You are just ensuring that all communities get what the government offers as a part of its activity.
If Trinamool comes to power at Centre…
We have learnt lessons from the schemes that our government led by Mamata Banerjee has initiated. People have been talking about the Beti Bachao, Beti Padhao Yojana, which has a budget of Rs 100 crore for the entire country. But Bengal’s Kanyashree scheme was allocated Rs 1,200 crore from the (state) budget. I also think the anti-federalism attitude has to be fixed. That’s why Mamata Banerjee had called for a federal front. The fundamental constitutional provision of India is federalisation and the (Central) government is destroying this.
The other element where I think there will be obvious consensus is institutional building. Today there is a problem with the CBI, RBI and CVC. These institutions are imploding from the inside because of lack of governance. The Gujarat Chamber of Commerce and Industry has recently said that 40 per cent of their small and medium-size manufacturing industries are shutting. The government has killed small and medium enterprises, and destroyed the informal sector.
I will give you an example. The PWD has built 23,000 km of roads in villages. As soon as these roads were constructed, farm produce could be sent to the nearby market in small vans. This immediately opened up opportunity for those at the bottom of the pyramid.
When I was in the empowered committee (there was no GST Council at the time) of state finance ministers, the BJP was not in power at the Centre. Then two BJP-ruled states — Madhya Pradesh and Gujarat — had said that they will not allow GST. The same party comes to power and turns turtle. Now they have become big votaries of GST. I was fighting for GST because, in 2009, Mamta Banerjee had put in the manifesto that GST was a requirement for small and medium enterprises.
I had told the council to delay the launch of GST as a trial run had not been conducted. Was the GST network ready to process as many as 300 crore invoices? As I was working with them closely, I was aware that they were not even close to ready… So the failure is the government’s inability to understand the GST process…
In 2015, the growth rate of India was 8.16 per cent. Following demonetisation in 2016, it fell to 7.11 per cent. In 2013-14 and 2014-15, there has been an upward curve of growth of GDP. When the growth rate falls from 8.16 per cent to 7.11 per cent, the loss to economy is Rs 1.5 lakh crore. When 2015 and 2017 data are compared, one would find a loss of Rs 2.5 lakh crore. The growth rate has fallen now to 6.68 per cent. Due to demonetisation and GST, the total loss is nearly Rs 4.75 lakh crore… Someone must take the blame.