The Budget gives some broad directions on the government’s focus areas for its next term. Can we expect more action points in the identified reform areas in the full Budget likely in July?

Definitely, you can expect more details. But it’s too early to say what they will be, as things will evolve between now and then. It’s a matter of timing between the new government taking charge and the presentation of the Budget. The fiscal outlook is not likely to change substantially, but the composition of programmes or scheme expenditures may change. But nothing can be ruled out. It is, after all, a vote on account and not a full Budget. So, who am I to preempt any decision that could very legitimately be taken? We have made fiscal projections with the information, policies and data available to us today.

The plan to lower borrowings and tackle the fiscal deficit has surprised many. Is there an underlying message to Mint Street?

Unlike monetary policy communication, where communication is itself a part of the policy, our Budget is not intended as a message to anyone, whether it is bond markets, rating agencies or the central bank. It is a communication of the substance of government’s fiscal policy, and the direction it wants to take for our own long-term welfare and benefit. It may have implications or inputs for others in their decision making. That is for them to take into account. There is no intention to use this to communicate anything — that is a burden this statement cannot bear — it can only bear the burden of being a truthful account of what we expect fiscally. That is all it is.

But would easing monetary policy help the broader aim to spur investments and jobs?

That is a matter for the Reserve Bank of India to decide because they also have to keep an eye on inflation. The balance between growth and inflation is a delicate one. It’s not as if inflationary risks are totally absent. I don’t want to be prescriptive on that.

The goal to take central government debt to 40% of debt was set before the pandemic. How do we recalibrate the target?

Personally, I feel the legitimate aspiration would be to see a gradual decline in our debt to GDP ratio. Beyond that, one should not be unrealistic. Internationally, the remedy of rigid, statutory fiscal targets is getting discredited. This is not unique to India. Almost no one any longer seems to adhere to a rigid, long term fiscal target — neither the European Union nor many other countries. There are almost no exemplars for that model anymore, and perhaps its continued relevance is questionable. A more nuanced and realistic approach to debt sustainability and fiscal responsibility is required.

Actually, our debt levels are not very high by global standards if you look at other G-20 economies, and we have a very high nominal growth rate which is likely to be sustained for a long time. Our growth-rate interest-rate differential is quite favourable compared to many economies. We have high growth, so sustainability is better. This fixation with a single number doesn’t work anymore.