Subhash Chandra Garg, secretary, department of economic affairs tells Moneycontrol in an interview that the group on crypto assets under his chairmanship will submit its report in the next two months covering the entire spectrum. Excerpts
By when do you expect the economy to touch 8 percent growth?
My sense is that by next year (during the later part of the year) we will have a quarter where we will have 8 percent growth. Then you will have a steady and higher annual growth of 8 percent. By 2019-20 we should have an annual growth rate of 8 percent.
The finance minister in his budget speech said that we will not allow cryptocurrency in illegitimate activity. Is there a possibility that a list of legitimate activity will come?
The expression now that we are using right now is crypto asset. We don't like the word currency. Nobody has the authority to issue currency or coins. So, these are misnomers, wrong expressions. We prepared to treat them as crypto assets. Once we recognise that these are assets and not allowed as currency or coins, then if it is used in making payments of illegal activities, is our next line of worry. We will do everything to see that the use of crypto assets into these kind of activities are eliminated.
And then you go on to identify what else should be eliminated, regulated or controlled. The group under my chairmanship (on crypto assets) is in the last stages of deliberation. We will come out with the government’s approach in the entire spectrum. We hope to finish first line of work in the next two months.
Is there a possibility that crypto assets can be regulated and become part of the legitimate financial system?
Crypto assets cannot move into the financial system as such. You can't prevent everyone from what they consider valuable. If somebody may call them irrational, consider that cryptoasset is valuable for them, then it is fine. But, people should not fall prey to such assets without understanding. It is government's duty to see that. That's why we issued an advisory. Crypto assets should not cause harm to gullible people.
Other big talking point of the Budget is health cover, which is expected to be far bigger than Obamacare. People are talking about it as Modicare. The Budget is short on the details of the scheme. Where will the money come from?
It is an emergency prevention medical scheme for major diseases. It is not all care kind of scheme for ordinary treatment. The objective is also prevent families to fall deeper into the debt trap because of unfortunate medical emergencies happening to them. Obamacare is more universal and the coverage is larger. This is a targeted intervention for the poor.
If somebody has an insurance scheme, will that person be precluded from the scheme?
This scheme will also be available, but the family would have a choice whether to continue with another scheme or not.
What about the finances? How will it work? How will you choose the beneficiary? Will there will be a health card?
The finance depends on the model we choose. There is a trust-driven model, the other one being an insurance company-driven model. Also, you give the states choice to adopt the model. The sharing of finances will be between the Centre and the states. Preliminary estimates suggest that there will be Rs 4,000 crore implication for the Centre. One should be able to work out a mechanism, where an existing identifier is used to target the scheme.
The other thing that is being talked about is government’s fiscal consolidation roadmap. We have already overshot the target. Is that not a matter of concern?
This aspect is slightly misunderstood. My sense is that 3.5 percent is what everyone had expected, even (credit rating agency) Moody's. We have issued additional borrowing requirements. I was told by every market participant they expected similar number (of 3.5 percent fiscal deficit) as there was lesser revenues etc. Therefore, 3.5 percent target is remaining on track. As per the fiscal policy statement, in 2020-21 fiscal deficit will be 3.1 percent of GDP. If situation permits, when we do the numbers for next year, it could be advanced.
There is a view that higher minimum support prices (MSP) will be inflationary. Analysts fear that government will turn out to be the biggest hoarder because of procurement. What are your views?
Let me assure you that the government will not be a hoarder. If the MSP price turns out to be much higher than the prevalent market price then there may be a situation where you might have to procure. In the Budget statement, it is clearly mentioned that we will have to ensure the demand-supply situation in the country. There might be other ways so that the government does not end up storing the commodity. The commodity should be available for domestic consumption, excess should be exported out. Therefore, hoarding concerns are misleading.
MSP could serve as the benchmark for the market and a higher benchmark would mean that the food prices would go up.
MSP may not serve as a benchmark where supply is in excess. Step one is to give good MSP, which is more like an income support scheme. Step two is to ensure that support is available to the farmer.
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