Excerpts from interview with Haryana’s Finance Minister, Captain Abhimanyu.
Captain Abhimanyu Sindhu is only 50 years old but has had the privilege of wearing so many hats in his short career that can make anyone envious of his rich and diverse experience.
He has attended colleges from Haryana to Harvard, served in the Indian Army for six years, received Special Services Medal, got selected in the prestigious Indian Civil Services Exam but didn’t join so he could take care of the vast family empire nourished by his father, founded a daily ‘Hari Bhoomi’ and made it into one of India’s leading Hindi newspapers, managed some of the state’s top educational institutions and companies but left it all for the hurly burly of politics.
But it hasn’t been a smooth ride. Far from it. He lost to the Hooda father-son duo in 2004 and 2005 from Rohtak Parliamentary constituency. The Captain tried his luck in the assembly polls in 2009 but his electoral fortune refused to take a turn for better. But his star kept rising in the party. He was General Secretary of the state BJP unit for two terms before becoming National Secretary and National Spokesperson of the party. In the run up to 2014 general elections, he was appointed co-in charge of party’s affairs in Uttar Pradesh and worked as a part of Amit Shah’s team. Later that year, the BJP and the Captain stormed to power in Haryana riding on Prime Minister Narendra Modi’s coattails. The party entrusted him to set the finances of the state in order.
How has he fared? In an exclusive interview with Swarajya, the Captain listed various challenges he inherited, many firsts he introduced in his budgets, the initial success of UDAY scheme in the state, preparations for GST, what ails Haryana and much more.
Given below are excerpts from our conversation with the minister.
You have presented three budgets so far. When you assumed the office of Finance Minister, what were the major challenges before you and how have you dealt with them?
In October 2014, when people gave the BJP an opportunity to serve them – clear majority for the party for the first time in the history of Haryana – we did a diagnosis of the state’s financial and fiscal health. We came up with a first ever white paper on the state’s economy. The intention was to identify our strengths and weaknesses so that we could work on the opportunities that lay ahead and threats that loomed large. From that exercise, we realised that Haryana’s economic planning needed course correction.
First, on the fiscal front, we observed that there were a lot of fluctuations in the fiscal deficit and revenue deficit. There was no consistent pattern. We needed to take a definitive course to move in desired direction.
Second, our expenditure pattern was highly skewed in favour of revenue expenditure and the capital expenditure was continuously declining, hitting as low as 7 per cent of the total budget. This had to be corrected.
Third, tax incidence (tax to GDP ratio) was also reducing. The administrative machinery had slipped into lethargy unable to generate the revenue needed for the development of the people. Thus the state’s capacity to spend was also reducing.
Fourth, a lot of money on subsidies was not spent in the best manner possible.
Fifth, the functioning of Public Sector Enterprises (PSEs) was a challenge as they kept mounting losses. Sixth, the information technology was not being leveraged for financial management.
Today, after three years, I can say with tremendous satisfaction, that expenditure management is far better than before. We doubled the capital expenditure from about Rs 7,000 crore to more than 14,000 crore in this year’s budget. The government’s revenue has considerably increased. We seeded beneficiaries of various government subsidies with Aadhaar to check pilferage, spillage and leakage. As a result, we weeded out 2 lakh fake beneficiaries who were getting monthly pensions. Government school records revealed a fall of 5 lakh in the number of students. Where was all this money going? Now, it is being efficiently utilised. The losses of PSEs have also drastically reduced from more than Rs 3,800 crore to around Rs 800 crore now.
In our diagnosis of the economy, we also noticed that while the service sector was growing, industrial growth was slipping into negative zone. We came up with a new enterprise promotion policy, brought legislative changes in regulations. Consequently, within a year, our ease of doing business ranking in the country improved from 14 to top five.
In the first three years, we have laid the foundation for sustainable growth and have set the ball rolling in the right direction. Our focus now is to provide momentum for higher growth and contribute towards making 21st century India’s century.
There have been many firsts introduced by you in your budgets over the last three years such as fiscal policy institute (FPI) and asset management registry (AMR). What’s the idea behind setting up these institutions and how are they coming along?
When we took office, there was very limited information or research available on how to best manage the state’s finances and how to improve the overall financial health of the economy. We needed an institute that could guide us in formulating economic models keeping in mind the conditions unique or peculiar to our state. Hence, we decided to set up FPI. We have already acquired land for it and the institute will be a reality soon.
The reason behind setting up asset registry is that there are a lot of public assets which are lying unutilised and underutilised. There may be illegal occupants over these properties and these may be mismanaged. We felt the need to take a balance sheet approach, tabulating and profiling all the public and community assets and their health. If we have such information, these public assets can be leveraged or exploited for various development works by either selling, divesting, taking loans against them or putting them on lease and so on. The assets which are in bad shape can be renovated thus prolong their life by many years. For this purpose, we have also set up an asset rejuvenation fund. This initiative is also part of our commitment to have a sound financial management in place.
In this year’s budget, the Haryana government has allotted Rs 8,000 crore for central government’s UDAY initiative. How does the government gain from joining UDAY? Many people see it as a mere transfer of debt from Discoms to the state? And how does it benefit the Discoms?
This is very interesting question. See, there was an approximately Rs 35,000 crore loan on the Discoms in Haryana. Now that loan was guaranteed by the state government. If the Discoms don’t pay, the government will have to. The previous governments didn’t include it in their budgets. That doesn’t mean it wasn’t hanging on the heads of people of Haryana and their future generations. Being the trustees of people’s money, it is our responsibility to manage it wisely and that’s why we subscribed to UDAY, transferring about Rs 25,000 crore debt from Discoms to the government. Thankfully and fortunately, the UDAY bonds by the Haryana government fetched the best price in the country thanks to our credibility and financial health. Now the Discoms are saving Rs 2,800 crore every year on interest and the state government’s saving is around Rs 1,000 crore. Free from the burden of massive debt, Discoms could then focus on improving their health. In the last fiscal year, they reduced their Aggregate Technical and Commercial (AT&C) losses by 4.5 per cent (target was to reduce by 5 per cent) which is quite satisfactory. Due to this and other efforts of the government, the tariff has reduced by more than 1 rupee per unit of power. More than 600 villages (10 per cent of state’s villages) are now getting 24/7 power as they voluntarily joined Jagmag Haryana scheme. This is very good beginning.
Are there any governance or structural reforms being carried out to make sure that Discoms are run professionally and don’t slip back into losses?
First, we have done the modelling right. And this reform has paid off. Discoms are free of the burden of heavy debt. Consumers are getting benefited. Now there is complete alignment of interests of all stakeholders. As far as the execution part and the overall professional management of the power department is concerned, that’s going to be the next step and something we will have to follow up now.
Though the state has sufficient power, this is not reflected in the actual electricity the people are getting due to, for instance, last-mile connectivity and infrastructure issues with transformers etc. This problem becomes acute whenever there is unfavourable weather (rains, strong winds etc). Is the government investing enough in these areas?
As far as Haryana is concerned, last-mile connectivity of infrastructure is complete and the upgrading of infrastructure is a continuous process. Coming to the issue of unfavourable weather conditions, power outage is quite common even in developed countries. Now making power available for all is a matter of simple economics and the success of Jagmag scheme proves it. As more and more people start paying, people will start getting more power and that too at lower costs. Sense of collective responsibility towards these community assets needs to be strengthened. This will happen with responsible governance and that’s what we are trying to do by bridging the trust deficit between the people and the government.
One issue that you must be grappling with right now is GST. There were certain challenges before the states: they had no experience in levying and collecting service taxes, the need for robust IT infrastructure and the new challenges before the taxman of the state. How has the government dealt or is dealing with these issues?
The IT infrastructure is in place in Haryana to deal with all the requirements of the GST regime. Training of tax officials is also complete and we are again conducting a two-week computer training programme in July and August. As far as tax officials are concerned, let me tell you, they have handled much more complex tax regimes. GST by far is the easiest form of taxation system they have dealt with. Since everything is going to happen online, there is actually very little work for them to do.
Only 35 per cent of Haryana’s population lives in urban areas and this too is concentrated in big cities like Gurugram and Faridabad in the National Capital Region (NCR). The riches thus are also concentrated near the national capital. If we were to have big cities in the centre or develop districts like Hisar Rohtak into metropolis, this probably would’ve more spillover effect on the nearby regions, which otherwise have remained poor.
Having a major city doesn’t always mean that the neighbouring areas will be positively impacted. Take the case of Gurugram and its neighbour district, Mewat. The Per Capita Income (PCI) of the former is more than 11 times of the latter. Of course, a big city acts as a magnet, but such potential is limited. As far as transforming cities into metropolis is concerned, this happens due to some intrinsic factors associated with the cities.
Having said this, we certainly need to bridge the gap between development in NCR cities and others. Income disparity is the biggest reason for discontent in the society. It’s not the absolute deprivation but relative deprivation that hurts the man more. We are trying to address the regional disparity through enterprise promotion policy by providing various economic incentives to set up enterprises in industrially backward areas. We have submitted a proposal to the centre for Hisar international airport. The city is already well connected via highways and railways to other major cities in both Haryana and Punjab. This can act as one major growth engine which will help develop the Delhi-Hisar belt faster.
But perhaps the biggest challenge before us is that while the share of agriculture in the state’s GDP has fallen below 18 per cent, the share of population employed in this sector remains above 50 per cent. To address this, two things need to happen simultaneously: increasing the income of the agriculture and allied sectors and reducing the number of people dependent on these sectors. We are doing everything we can to achieve these objectives and make farming a profitable profession. One step we have taken is to make sure that farmers do not enter into debt trap or distress. In events of natural calamity in the state, we have made sure that compensation for losses to farmers is done in a timely manner. We have disbursed the highest and the fastest ever compensation amounting to more than Rs 3,000 crore in last three years alone when the total sum in the previous 10 years of previous regime was barely Rs 800 crore.
But the average land holding size in Haryana is only 2.2 hectares. Farming cannot be made profitable unless consolidation of farms happens. Legalising contract farming is one way to achieve this. Rajasthan has already passed a law towards that effect. How Haryana plans to achieve this?
Consolidation of farms makes economic sense. You gave Rajasthan’s example, but we have already passed a law legalising contract farming and leasing of land. It’s a pioneering effort. And we are further looking for more ideas on how we can make farming a profitable profession. I myself come from a farming family and well aware of all the problems looming large over the farming community. That’s why we have focused so much on making sure farmers don’t become distressed.
Since Haryana is an agrarian state, I wanted to ask you about our land-use policies. Capital plays a very important role in one’s prosperity. We have many poor people, especially farmers, who own some piece of land but find it hard to leverage it to take loans to invest further and grow their capital. Not having robust property title regime also aggravates the problem. What’s the situation in Haryana? Has the government taken steps to address these problems?
You have raised a very pertinent point. Let me clear a few things. First, in Haryana property titles are very clearly defined. As a revenue minister, I have taken a number of steps in the last two years, and today, I can say with pride that Haryana has zero pendency in mutation. We have entered and upgraded lakhs of mutation and jamabandi records and have put it online. Anybody can look up their revenue records online and they are constantly updated.
Second, in Haryana, and I believe throughout India, farmers are able to get loans at highly subsidised rates against their farmlands via the Kisan Credit Card (KCC). In Haryana, after our government came, we made the KCC loan available to farmers at zero per cent interest rate, reducing it from 4 per cent earlier, fulfilling one of our main campaign promises.
But the effort will not and must not stop here. We are now trying to take our revenue records to a new level by moving towards a regime of title guarantees wherein every property record is recorded in the form of clear title ownership. This guarantee will help banks to lend more freely and openly in the future.
In the Happening Haryana Global Investor’s Summit, MoUs worth Rs 6.2 lakh crore were signed. The realisation, however, stood at Rs 80,000 crore (as of presentation of 2017-18 budget). We see this pattern throughout the country. States find it hard to realise all the investment promises made during such summits. Where do you think the problem lies? And how can these be sorted out?
Global Investors Summit was the first ever organised by the Haryana government. It was the most successful summit in the country that year despite huge competition from other states. The commitment reached beyond our expectations rising to Rs 7 lakh crore. So far, Rs 1,40,000 worth of investments have been realised. Our success rate has been far better than the national average and other states. The hurdle in realising the investments is not just from the government side, it’s from the industry side too. The overall economic environment in the country and phased manner of investment preferred by some companies, are some other important factors.
Haryana is home to one of the world’s oldest civilisations. Rakhigarhi is the largest and oldest site of the Indus-Saraswati Civilisation. Kurukshetra is the site of Mahabharata war. Panipat has witnessed many great wars. Despite such rich historical past, tourism doesn’t match up to the state’s potential. Is Haryana government working to improve the situation?
Tourism is a great potential earner for any economy. It must be paid its due attention. I think Haryana has done well enough with limited natural tourist spots the state has. You mentioned Rakhigarhi - it’s one of the most important places in the history of humankind. Anyone interested in studying the evolution of humankind will have to study Rakhigarhi. So, there is a huge potential. The government is seized of the importance and value of developing this site into a major international tourist destination. We also wish to explore all the mounds of the site to discover further and understand more about the evolution of civilisation. We have already allotted a sum of Rs 25 crore to set up a museum in Rakhigarhi of international standards. It’s already under construction. Apart from that, the government is working on developing various other tourism circuits and important historical cities like Kurukshetra and Panipat.
As I have said before, the ball has been set rolling in every area of governance. We are now focusing on providing momentum to projects to push the state in the right direction.
To provide momentum, perhaps the most important aspect would be to enhance the quality of human capital in Haryana. Your thoughts?
Absolutely. The ultimate purpose of all the governments is to make sure that the benefits reach the last man. Value addition to one’s human capital is the most important benefit one can achieve. It has to start from the birth itself. That’s why we have given so much importance to registering birth of every individual and giving them Aadhaar card. That’s the recognition at the birth stage itself. This is the first step. From that day on, the entire vaccination, inoculation and healthcare information - everything is brought into the records of the government. We are in the process of developing a State Resident Database (SRDB) to monitor our human capital. First step, as I mentioned, is tracking health from the birth itself. Second step is getting these children into schools and then to colleges and imparting them with the required skills. Third, to make sure that they are gainfully employed. This is the exercise we have started and we hope to do much more in future to improve the quality of human capital in the state.
This article is part of Swarajya's special series of interviews with cabinet ministers and leaders of polity at state levels.
The bulk of India's governance happens at the state government levels and yet they receive very little media scrutiny..This series is an effort to address this gap and initiate a dialogue on states governance.