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00:00Well, ladies and gentlemen, that was the prime minister speaking and giving an address to the
00:08nation ahead of the mega GST booster that mega GST exercise kicks off tomorrow. The prime minister
00:13gave a big pitch for consumption and manufacturing. He said the new middle class gets a bonanza and
00:18this perhaps is the biggest phase of tax reform since independence, since 99% of the products and
00:24services in the country will now be under the ambit of 5% GST tax. And in fact, he also stated
00:29that if we combine income taxes and GST relaxations, people will save two lakh, 50,000 lakh crores.
00:37That's essentially the figure that the prime minister gave out when making that pitch for
00:41GST. Remember that exercise kicks off tomorrow. Meanwhile, the other big takeaway as far as his
00:47address was concerned, well, the prime minister once again gave the pitch for self-reliance and a push
00:52was also given by him for Swadeshi goods. And this comes amidst geopolitical reset. We are hearing of
00:57protectionist policies by the U.S. administration, how U.S. is pushing for MAGA, making America great
01:03again. And that has really sort of thrown the global order in global geopolitical order in a
01:10turmoil, global trade in turmoil. In fact, the prime minister, while speaking about a push for
01:15Swadeshi, he said that the responsibility is also on MSMEs. He said that we need to give a push
01:20to indigenous production and manufacturing. So that's essentially what the prime minister said.
01:25And we are flashing some of the key takeaways from what the prime minister said just a short while
01:30back when he was making that pitch in an address to the nation today. In fact, joining us now to
01:36decode the prime minister's speech is Mohan Guruswamy. He's an expert commentator, writer on politics,
01:41economy and security. He's also a distinguished visiting fellow. Thank you very much for taking the time
01:46out, Mr. Guruswamy. First things first, the prime minister once again gave a pitch for self-reliance
01:50and manufacturing and manufacturing in India for the world. This, remember, comes in at a time when
01:55the United States continues its push for protectionist policies. Your first thoughts?
02:02First question I have is, why didn't they do it 10 years ago?
02:07For 10 years, the country's economic policies have been drifting without any goal.
02:14GST was high ever since it was introduced 2016. Those rates were there. They didn't
02:22tamper with it. We'll talk about that point. We'll talk about that point, sir. But let's focus
02:27on what the prime minister stated today.
02:29Prime Minister, frankly speaking, he had nothing to say except exhortation that we must buy Indian
02:36made in India. That was there always. But why didn't you do anything about it? Imports were
02:43coming in. The tariff structure was the same as before. We had trade imbalances with China.
02:49You didn't allow foreign... FDI started tapering off. And then you didn't have more production
02:56in India. The Chinese had trade surpluses. Why didn't you allow them to set up, invest that
03:01money? You said they can't invest. So they're taking the surpluses and going. So it's, it's,
03:09you know, when the shock hits you, American shock hits you, you wake up. And we spent so
03:15much of time chasing after quad and doing all kinds of things when we should have been focused
03:19on the economy and our own self-interest. Sir, Mr. Guruswamy, I have to interject you at this
03:28point in time, given the fact that Indian economy, if you see, you know, if you compare it to the
03:32other economies across the world, whether it's peers or our Western counterparts, Indian economy
03:38has remained resilient in any kind of shocks that the world has perhaps seen. And that is also being
03:44expressed by investors. That's also expressed by companies who continue to invest in India. We'll come
03:49to that point in just a bit, but let me also welcome on the broadcast, Mr. Enar Banu Murthy,
03:54Mr. Enar Banu Murthy is the director of IAM Rotak. Sir, I'll have to come to, I'll come to you in
03:58just a bit, but let's also give an opportunity for Mr. Banu Murthy to also express his thoughts on the
04:02Prime Minister's speech. Mr. Banu Murthy, go ahead. This was a strong pitch that was made by the
04:07Prime Minister as far as manufacturing in India is concerned, domestic consumption is concerned,
04:11and not just that. He stated that we need to make for the world. He also spoke about the quality
04:16of Indian products that needs to be kept intact so that we can sell our products globally. Your
04:21first thoughts on the Prime Minister's address today. Well, this is an important message that
04:27the Honourable Prime Minister is making on the year of the festival season, especially that, you know,
04:34when there's so many reforms I've been undertaking in the past three, four years. And GST 2.0 is
04:40definitely a major reform. It was work in progress for some time. And this is the right time, I think
04:47the government has come up with these reforms, especially when the globalization has almost broken
04:56due to various policies by the adverse countries. And I think the Honourable Prime Minister is making a pitch
05:03change for Indian revival of the Indian manufacturing sector. And we have also seen a lot of action on
05:12other front as well, especially factory market reforms. And I'm sure going forward, we'll be seeing
05:20many more changes in the factory market. And the whole, I think all these issues are coming up because
05:29of, you know, the kind of retreat that we had as part of the globalization. And what we have seen
05:38with the H-1B two days ago, I think it's going to put more pressure on Indian labor market. And there's
05:46only one way that we can address this Indian labor market issue by addressing some of the constraints
05:52that Indian manufacturing sector is facing. So it is part of the many reforms that have been
05:58undertaken. And I'm sure this will help a big way to revolve Indian manufacturing.
06:05Right. Right. Mr. Banu Murthy, you spoke of very pertinent points, but what more the government do?
06:12What kind of reforms the government must undertake after this exercise to tackle some of the challenges
06:18that the country is currently facing or will face as a result of the global geopolitical shift that's
06:23happening? We do understand that the government is looking at giving a boost to domestic consumption,
06:28we've seen the government consistently increase capex in budgets over the past couple of years.
06:33What more do you expect the government to do in terms of giving a push so as to ensure that the
06:39country can become a vixit Bharat by 2047?
06:42Yeah, you rightly pointed about domestic consumption. I think what is important is also to really focus
06:49more on the domestic production. And GST will help in domestic consumption. But I think, as I said,
06:57factor market reforms are a major area where we need to focus, particularly land markets as well as labor
07:05markets. And recently, I think central government also came up with incentives for addressing the land
07:11government issues. I do hope the labor issues also will be started going forward. And the Honorable
07:18Prime Minister spoke about the MSME sector. And again, this is one area we can focus more in terms of
07:26providing more incentives to help protect the MSME sector, because that is the backbone for Indian
07:34manufacturing sector. And similarly, we have seen some action on the monetary policy side.
07:41And there are many other areas where, you know, if you've heard the Prime Minister's speech during
07:50Independence Day, that we'll have something to, a committee to address, you know, the pending reforms.
08:00I hope that will be coming soon, so that we address all those structural bottlenecks that we're having.
08:07So, ultimately, we need to see structural transformation, where the care of manufacturing sector goes to 25%.
08:14Absolutely. And we'll discuss a bit more on what the government needs to do more so far as
08:21the manufacturing sector is concerned. We do understand that there are PLI schemes
08:26currently operational for at least 14 sectors. But, gentlemen, I'll have to ask you to hold on as
08:31it's time now for us to step into a very short commercial break. We'll be right back with lots more.
08:36And we'll continue this discussion right after this short commercial break.
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10:56Unmissable Prime Time, 8 to 11 p.m. Times Now. Action begins here.
11:16Welcome back, ladies and gentlemen.
11:18And we are, of course, discussing the Prime Minister's address to the nation just a short while back.
11:24He was speaking about the mega-GST exercise that takes effect tomorrow with the onset of the festive season.
11:30Especially in Navratra's, the Prime Minister stated that this exercise is going to give a boost to consumption.
11:35Especially as far as the new middle class is concerned.
11:38It will increase their purchasing power, thereby empowering MSMEs.
11:43And about this mega-GST bonanza, we're now joined by N.R. Banu Murthy and Mohan Guruswamy.
11:48Mr. Banu Murthy is a professor at the Madras School of Economics.
11:54He's the director, I beg your pardon, at I.M. Rotak.
11:56And Mr. Guruswamy is an expert commentator.
11:59He's a writer in politics, economy, security and distinguished visiting fellow.
12:03So, let me come to you, Mr. Guruswamy.
12:05The Prime Minister also spoke about manufacturing.
12:09How? Manufacturing in India, that needs to be given a push.
12:12And we need to not just make in India, but make for the world.
12:15Now, as far as India's manufacturing story goes, we have PLI schemes at least for 14 sectors.
12:21Some, in the case of electronics, for instance, they have done exceedingly well.
12:25Others, not as much.
12:26What more does the government really need to do if it wants to become a manufacturing powerhouse of the world?
12:34Well, first of all, you have to go to get the footprint of the government on industry, on investment.
12:40It's still, in Prime Minister himself alluded today in his talk about the number of regulations that have come into place
12:47and then impede fast implementation of ideas.
12:52But first of all, go to get the macroeconomic situation done.
12:55If your savings rate is coming down, if your household savings is coming down, taxation is coming down,
13:04foreign direct investment is coming down.
13:07So, where is the money going to come for investment, going to plan for investment?
13:11Allowing a GST cut, is there a drop in consumption?
13:16Have the number of motorbike sales come down, the refugiators come down?
13:19There's no indication of that.
13:21Property profitability is still good.
13:22So, you're addressing the wrong issues.
13:28At the time, you should be addressing other things.
13:30You should be looking at boosting investment.
13:32And we still haven't opened up our economy fully to foreign investment.
13:39And why is foreign investment coming down?
13:42Why is MDI coming down?
13:45It's been happening for the last two years.
13:47And suddenly, the American H-1B visa thing is not something which is such a big shock
13:56that, you know, we have to suddenly wake up and say we've got hit very badly.
14:01We've been hit badly for the last two years now.
14:04The growth rate has been coming down.
14:06So, I think we need to get a holistic view of what's happening in the country and, you know, the kind of expenditures the government has been incurring.
14:21And, you know, and see that we invest more in infrastructure, see that we invest more in manufacturing, create new, look at investment policies, look at special economic zones.
14:37We haven't done anything on that.
14:38Mr. Guruswami.
14:38Mr. Guruswami, when you talk about investments in infrastructure, the government has consistently for the past couple of years invested in infrastructure.
14:56So, it's not like the government hasn't.
14:58So, let's get the facts right here.
15:01But I'll come to you in just a bit.
15:02Mr. Banu Murthy, would you agree with the points that Mr. Guruswami is making essentially about the fact that the government is not really investing in infrastructure?
15:08That the government is not investing in manufacturing and this is not headed in the right direction?
15:16Mr. Banu Murthy, would you agree with what Mr. Guruswami is suggesting here?
15:20I slightly disagree with Dr. Mohan Guruswami, particularly on the public investment.
15:30And, as you rightly pointed out, for the past three to four years, consistently the government of India is allocating and spending more on public investment, particularly on infrastructure.
15:45And this is more and above what the FRBM Act has suggested.
15:49FRBM suggested only about 3 percent for the capital expenditure.
15:52Now, this year, the budget is somewhere close to 3.4 percent of GDP.
15:58And added to that, the government of India is also hand-holding the state by allocating 1.3 lakh crore on the capital expenditure through interest-free, 50-year interest-free loan.
16:11So, in a sense, the government of India has got it right in terms of balancing the fiscal numbers, particularly focusing more on the capital expenditure.
16:23But I think there are also some limits on how far we can go on public infrastructure, particularly when the domestic consumption demand was slowing.
16:36I think that is the point that the GST reforms addresses.
16:40And now, if you want to revise the total investment, you know, you cannot depend only on the public investment.
16:47And if you want to really revise the private investment for that matter, we need to have that demand happening in the economy.
16:55And that is what's concerning private investment for the past three quarters, three to four quarters.
17:00So, the GST that is happening from tomorrow, the reduction, would certainly have some impact on the domestic consumption demand.
17:09And I think that should revise the private investment cycle going forward.
17:15Right. Right. Absolutely, Mr. Banu Murthy, private investment cycle is one concern that has persisted for a quite, you know, long period of time.
17:25But let me also get in your thoughts on how this entire GST exercise will push MSMEs.
17:30How will it push manufacturing and how will it push, you know, the MSME sector in particular that the Prime Minister was speaking about when he spoke about manufacturing?
17:39He said that the responsibility lies on the MSME sector to give a push to manufacturing in the country.
17:46Yeah. See, as I said in the beginning, MSME is the backbone of the Indian manufacturing sector.
17:51If the overall manufacturing has to revive, I think MSME also has to be very strong.
17:57But GST alone is not sufficient enough to really revive the MSME sector.
18:05Having said that, if you look at the post-COVID period, we also had specific policies for reviving the MSME sector under the Atmanir Gulbaran.
18:14So, we have seen how those policies have helped, you know, MSME to survive even the big shock like COVID-19.
18:24But at the same time, I think there are many more micro-issues, particularly when it comes to MSME sector.
18:31In fact, at the state level, there are some issues where you cannot even identify who are these MSMEs on the back.
18:37So, I think that kind of exercise is undergoing right now.
18:42And I hope the GST 2.0 should, again, bring back the MSME sector through revival in the overall consumption demand.
18:56Absolutely, Mr. Banu Murthy, we'll have to see what kind of a demand push is this exercise going to give,
19:07the kind of consumption push that it will unleash in the country that remains to be seen.
19:12On that note, thank you very much, gentlemen, for taking the time out and speaking to us here on ET Now.
19:16On the Prime Minister's address, ladies and gentlemen, the Prime Minister said that 99% of the services in the country will fall under the 5% GST tax.
19:26Goods and services will fall under this tax, and that will unleash consumption in the country,
19:31given the fact that there is ease of doing business that's kicking in.
19:34And he also stated that people will end up saving 2,50,000 crores.
19:39Yes, that's the figure that he gave during his address.
19:42Let's listen in once again to what the Prime Minister stated as part of his address just a short while back.
19:50This reform will accelerate the growth story of the world's growth story.
20:00It will make the work and easy easy.
20:05It will make the new and new growth.
20:08to become a lesser ROI.
20:28It will make the new and new and the future will thus begin the new足.
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