The Intrepid Firefighter
Nirmala Sitharaman,Union Minister for Finance and Corporate Affairs
Thirty six hours after Prime Minister Narendra Modi imposed the nationwide lockdown in March 2020, the first cabinet minister to hold a press conference was Nirmala Sitharaman. The entire country was eagerly waiting for her to unveil the government's thought process as equity indices had crashed a day before and the economy was about to take a body blow due to the pandemic.
Both "lives and livelihoods" had to be taken care of, Finance Minister Nirmala Sitharaman tells Fortune India one-and-a-half years into the pandemic and many more initiatives later. India's 28th finance minister recalls that phase and 18 months after that as the most challenging period of her career.
"We do not want anyone to remain hungry," Sitharaman said at that eagerly awaited press conference on March 26, 2020, the second day of the nationwide lockdown that began at 00:00 hours on March 25. With the announcement of the ₹1.70 lakh crore Pradhan Mantri Gareeb Kalyan Yojana, or PMGKY, a direct cash and food grain scheme, Sitharaman made the government's resolve clear. One part of the fund was for cash transfer to the needy. The other was for providing them food security.
The jury for Fortune India's Most Powerful Women awards was impressed with the far-reaching impact of Sitharaman's immediate initiatives on the vast majority of Indians.
"On livelihood, it was a sorry thing for any Indian to see migrant workers walking with families and possessions. The government immediately combined nearly 16 central schemes and addressed districts where these workers had migrated," says Sitharaman. About 25,000 migrant workers had already reached over 118 districts, she says, adding the central government issued instructions that the schemes must get saturated, that is, the entire amount exhausted in those districts before October 2020.
The food grain scheme, originally meant to end in June 2020, is now in its fourth phase, ending in November. It provides 80 crore beneficiaries under the National Food Security Act additional five kg food grain per person per month, free-of-cost, over and above the usual entitlement. Government has so far allocated nearly 600 LMT food grain under PMGKY's four phases. Nearly 82.76% of the allocation had been lifted till September 15, 2021, indicating demand as well as need for the scheme.
Weeks after providing immediate succour to the poor, in May 2020, the prime minister announced the ₹20 lakh crore Atma Nirbhar Bharat package to reverse the impact of the lockdown on the already slowing economy. The finance minister explained the details of the package in a series of press conferences. She also announced second and third legs of Atma Nirbhar packages in October and November last year.
The long process to put the economy back on track had started in earnest.
The next focus was on rescuing the many micro, small and medium enterprises (MSMEs) from the impact of the lockdown. For this, the government launched the Emergency Credit Line Guarantee Scheme (ECLGS) under the Atma Nirbhar Bharat Package. The scheme has helped over 1.15 crore businesses meet operational costs and restart businesses amid disruptions brought about by the pandemic.
Loans under the scheme had crossed ₹2.86 lakh crore as on September 24, 2021. The government has extended the scheme till April 31, 2022, or till guarantees for ₹4.5 lakh crore are issued, whichever is earlier. "I have expanded it with another ₹1.5 lakh crore just to make sure that anyone who still wants it can get it," says Sitharaman, who takes pride in monitoring the scheme down to the bank branch level. The extension of ECLGS was part of the ₹6,28,993 crore stimulus announced by Sitharaman on June 28. The other measures announced that day included credit guarantee scheme for microfinance institutions for lending up to ₹1.25 lakh crore to about 2.5 million borrowers, a scheme for the tourism sector, additional fertiliser subsidy to farmers and infusion of liquidity in Export Credit Guarantee Scheme over five years to strengthen export insurance cover by ₹88,000 crore
That's not all. In fact, even as the first wave of Covid-19 peaked in September last year, the ministry came out with measures to tap pent-up demand ahead of the festive season. These included novel ideas such as encashing unused LTC benefits and reinstatement of festive advance to government employees.
In November came Atmanirbhar Bharat 3.0 with schemes such as the Atmanirbhar Bharat Rozgaar Yojana promising establishments which register with EPFO subsidy for new employees. The announcements covered the launch of the second phase of ECLGS, including for the 26 sectors identified by the K.V. Kamath Committee, ₹1,46 lakh crore production-linked incentives for ten champion sectors, ₹18,000 crore for PM Awas Yojana, tax relief for home buyers/developers and ₹65,000 crore for fertiliser subsidy.
Covid, Slowdown Double Whammy
When coronavirus smashed healthcare infrastructure to smithereens the world over and engulfed the global economy, India's position was even more vulnerable. Its economy had started slowing down way back in FY2017. From a peak of 8.2 per cent in FY2016, GDP growth had come down to 6.8 per cent in FY2019, and touched a low of 4 per cent in FY2020.
It was between this slowdown and the incoming pandemic that ace BJP spokesperson Nirmala Sitharaman took over the reins of the finance ministry in May 2019. She was a member of the National Commission for Women during the Atal Bihari Vajpayee government and held key portfolios like commerce and industry, corporate affairs and defence in the Modi 1.0 regime. Her years in public life (she joined BJP in 2008), her academic training (MA in Economics) and professional exposure as senior manager (Research & Analysis) at PWC, were soon put to test, all together.
Sitharaman had to start firefighting just after the din of BJP's stellar electoral victory in May 2019 general elections subsided and the economy slipped into the sub 5% GDP growth territory in subsequent quarters. Her first game-changing decision in October 2019 was a mega cut in corporate tax rates in order to make industry more competitive.
This was followed by the launch of a special window for funding stalled affordable and middle income housing projects, with a corpus of ₹25,000 crore, in order to benefit at least
1,500 housing projects comprising at least half a million units stalled for over a decade. The government also set the ball rolling for strategic disinvestment of oil giant BPCL in November 2019.
By this time, the 'most stony' adversary was preparing to rear its ugly head in Wuhan, the capital city of Central China's Hubei Province. By mid-December of 2019, Wuhan had become the epicentre of the pandemic, which spread to over 200 countries. The disease came to India at the end of January 2020, culminating in an unprecedented lockdown, leading to massive decimation of the economy. Under the heavy weight of the pandemic and the lockdown, Indian growth rate further plummeted — GDP contracted 24.43% in Q1 of FY2021 and 7.3% in entire FY2021.
The relief and stimulus measures, spearheaded by the finance ministry under Sitharaman, seem to have turned the tide, though. The economy grew 20.1% in Q1 of FY2022, though on a low base of last year. The second quarter of FY2022 is also widely expected to throw up a decent GDP growth number.
Ease of Doing Business
Another important initiative which stands out in terms of its wide-ranging impact is increase in speed of income tax refunds by the Central Board of Direct Taxes (CBDT). Amid the pandemic, these refunds have brought succour to a large section of the society. As per the CBDT data, the government issued refunds of more than ₹2.62 lakh crore to 2.38 crore taxpayers between April 1, 2020, and March 31, 2021. This is 43.2% more than ₹1.83 lakh crore in corresponding period of the previous financial year.
The year 2021 will also go down in history as the year when India finally buried the ghost of retrospective tax demand which had led to major international litigations and dented India's image as an investment destination. Late Pranab Mukherjee, the former finance minister and the architect of the measure, used to often remark that despite its criticism, the retrospective tax law brought by him had not been overturned. However, on August 5 this year, Sitharaman introduced the Taxation Law Amendments Bill, 2021, for withdrawal of retrospective amendments to tax laws made though the Finance Act of 2012. Rules under the law have been notified. The affected parties are likely to use the provisions to settle legacy tax demand disputes with the government. The amount paid or collected in these cases shall be refunded.
There is no doubt that the period since the onset of the pandemic has been tumultuous for those in public life and especially for those in charge of the country's economic policy. Between the first press conference after the announcement of the lockdown on March 26 and now, the finance minister has been leading India's valorous fight against the pandemic. The second wave of Covid-19 has subsided, India has given over 100 crore vaccine doses and GDP growth is back on track.
Pushing against economic whirlwinds ever since taking over as finance minister, Sitharaman unwinds with classical music – Indian, mostly centred around Lord Krishna, and sometime western. It's in music that she finds her solace and peace of mind.