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"My view always has been that you need a tax regime which is low, stable and predictable over a long period of time. And that will generate revenue on its own over a period of time. I'm talking about direct taxes, indirect taxes, GST, everything," said former NITI Aayog CEO and India's G20 Sherpa Amitabh Kant.
Speaking to The Quint at the 'Sushma Swaraj Bhavan' in Delhi, which serves as the G20 Secretariat, Kant first spoke extensively about his new book — 'How India Scale MT G20' — talking about the success of India's G20 presidency between 2022-2023.
The New Delhi Leaders' Declaration that was accepted by the member nations, is considered to be one of the strongest diplomatic resolution on key issues such as climate, international trade, and global peace. But achieving concensus on the declaration, in the shadow of post-Covid global slump and the Russia-Ukraine war wasn't easy.
"That whole year, I was thinking that it's going to be impossible," said Kant.
But while India scripted a success story with the summit, economic challenges remain at home.
In its recent predictions, the government of India has estimated growth for FY-2025-2026 at 6.4%, which is lower than RBI's initial predictions, the lowest estimate since the pandemic, and something many are calling 'not ambitious enough'.
With Modi government's Union Budget set to be presented by Nirmala Sitharaman, will it be able to meet growth challenges? In such a scenario, can the middle class expect relief in taxes? What must the government do to boost consumption? On 'Badi Badi Baatein', Kant shares his views.
A very big achievement for the country was the way India scripted the success of the G20 summit under his presidency, the way the New Delhi leaders declaration was signed. First of all, heartiest congratulations on the book - 'How India scaled Mount G20'. The Sherpa of G20 was something quite different than what you had done before. Was this the toughest peak that you yourself have scaled in your career?
No, This was very tough. It was also in another area. I had worked in domestic administration, I had run a district, build tourism, I had driven industrial policy, I have done the aspirational district program, the Startup India. But this was a totally new field for me. The art of diplomacy , your ability to bring 20 countries together, it required skill of a totally different kind. And it was extremely challenging because at that point of time it was the post-Covid era. Vast segment of population had gone below poverty line across the world, lots of people had lost jobs. There was a huge climate crisis. The Russia - Ukraine war was going on for three years. So, you had huge challenges. And food, fuel, fertilizer - all were getting impacted. Plus, there were several other challenges which India had to confront when they took over the presidency. And therefore, it was a challenge of a very different kind.
After the success of the summit, there was praise for you from across the spectrum - be it political or bureaucratic. Some people labelled you as the master of diplomacy. How do you personally see your success when it comes to being the Sherpa of the G20?
See, I was the Sherpa to the prime minister. The leader was the prime minister. He was the leader of G20 during the course of that year. And I was his Sherpa. Now, it would have been very difficult to pull off a G20 if the leader did not have, great leadership ability, if he did not have charisma, if he did not have good equation with political leaders from across the world. If he had not given me the freedom... if he was not willing to go be bold and risky... and if he was not courageous. He had delegated a very vast field for negotiation for me. So, he was confident, he was willing to go be bold, willing to be gutsy, and I think he was extremely calm. So, I think my leader deserves a lot of credit for this.
The New Delhi leader's declaration, from what we know, had at least 15 drafts. There were 200 bilaterals that went into it, 83 paragraphs. A lot went behind through the year to get a consensus on those. There were 60 meetings across the country but peculiarly, none of those meetings could achieve a consensus to put out a joint statement. There were countries that were having their own bilaterals, etc. At any point, did you feel this is way tougher than I thought it would be?
All through the year. That whole year, I was thinking that it's going to be impossible! It was the final bit of meetings in the last 12 days that we took the gambit, we took the courage, we were extremely gutsy. Drafts after draft failed, but within 30 minutes of that, we kept coming up with the new draft and we negotiated bilaterally with everybody. We knew everybody's red line. But we finally said - 'take it or leave it!' We also told them that if you are not willing to arrive at a consensus on key and critical issues confronting the world, challenges of the post-Covid impact, challenges of a slow sustainable development goals, challenges of climate... if the other countries are not willing to arrive at a consensus, there's a lack of responsibility. And in that case, the Prime Minister told me to clearly tell them that India would rather prefer to be a member of BRICS, a member of IPSA, rather than continue as a member of G20.
Speaking of consensus on climate, could you tell us what were the key areas when it came to climate and who was playing hardball on those issues?
So, climate (issues) were very complex. In fact, it was probably as difficult, if not more difficult, than geopolitics because there were different ambitions. G7 had the ambition of a1.5°C. They were not willing to commit on finance at all, whereas Global South ambition was on finance because they have not occupied the carbon space, the carbon space has all been occupied by G7. And then, you had Saudi Arabia, which was not even willing to discuss climate or fossil fuels. So, you had different perspectives, different canvasses, and it was tough to bring everybody together. So, we had to bring (them together), raise the ambition of UN finance from the G7 countries, which is reflected in a very strong document on the green development pact. And, we had to raise a little bit of ambition from global South on action to be taken. But we pushed for a doubling of renewable energy, we pushed for doubling of energy efficiency, we pushed for the biofuel alliance, we pushed for green hydrogen to make it a better world for all of us to live in. And only India could achieve that green development pact. Otherwise, it was impossible.
There was one very particular statement which caught my attention, which I would like to read out - "China opposed all issues where India lead terminology was used like Vasudeva Kutumbukam, life and women-led development were tactically opposed. Could you tell us in detail about that? What was their specific opposition and why?
So, our presidency was about one earth ,one family and one future which was Vasudev Kutumbukam. Now, Throughout the year China opposed us on the use of the terminology Vasudev Kutumbukam. They opposed us on lifestyle for environment. They opposed us on women-led development. We found it impossible throughout the whole year. But then we realised that you can't do G20 without taking China along. Therefore, we built up very good relationship with Chinese Sherpa. A colleague of mine called Ashish built up relationship with them. I built up relationship with their Sherpa. We worked very hard on it to get China around. And it was in the final round of the meeting of the Sherpas when we were able to get them to agree to everything. Every single request which we had made - Vasudev Kutumbukam, life and women-led development - China supported us on each one of them.
Throughout the negotiations, the G20 nations were very divided on the Russia-Ukraine issue. The G7, the US, allies of the US wanted Russia to be strongly labelled as an aggressor. China, on the other hand, and Russia of course, they wanted very strong mentions of sanctions by the West. And these two sides just could not meet eye to eye on that matter throughout the year. And then, for us to get consensus on those paragraphs, which were very carefully worded paragraphs, which could be interpreted by each of the sides...
That para, no other multilateral forum including United Nations or the Security Council has been able to arrive at. And now that has become the key para for every multilateral forum to follow.
You said how it's better than the UNSC as well.
It was master drafting of that para.
The government recently came out with India's growth estimates at 6.4%, which is lowest since the pandemic. It is also a little lower than RBI's initial predictions. Why do you think that is and do you think it is time for a little harder reforms now?
So, there are global challenges in terms of slowing down of global growth. The global growth according to IMF is going to be 4.2% - 1.8% for the developed world and roughly about 4.4% for emerging markets. So, global growth is going to be 3.2%. we are clocking about 6.5%, which is good enough, but to my mind, we should be more ambitious about going in for about 8.5 to 9%. And this would require three-four things. One is greater credit flow from financial institutions. We would need to ease up on doing business. Much more radical reforms and scrapping rules and procedures, etc. Make things easy and simple across ministries. And thirdly, we need to push manufacturing and agricultural productivity in a very big way. These three things, to my mind, are critical for sustained growth on a long-term basis. Because manufacturing will then enable you to push for exports. And exports are very critical. Every time India is growing at high rates, exports are critical. So that's important.
Picking up from the word 'ambitious'... The Prime Minister recently said that India will turn into a $10 trillion economy in the next decade. But India is also trying to be a $30 trillion economy by 2047. So, if we are to be a $10 trillion economy by say in the next decade, which is about 2035, that puts growth estimates somewhere between 6-6.5%. Many have read into it as estimates that are not ambitious enough. How do you look at this figure?
I think we should really target for a $30 trillion economy by 2047, which means that your GDP has to grow by nine times. Your per capita income has to grow eight times. Your manufacturing has to grow 16 times. And this would mean hard-headed reforms. And that is the vision the Prime Minister set for us. And each one of us has to push for private sector to play a very critical role. Because growth will come from the private sector with government acting as a facilitator. And therefore, you need to continue to scrap rules, regulation, procedures, acts etc., and allow the private sector to fly.
Many also read into that statement as that India would remain a country in the middle-income trap. From the point of view of per capita income, how would you suggest reforms should go?
See, very few countries in the world have been able to skip the middle-income trap. It's very important that India accelerate its pace of growth. Accelerating its pace of growth means that you have to manufacture, you have to urbanise. Urbanisation is important, it is a very big driver of growth. Exports are important. Agriculture productivity is important because we have too high a population dependent on agriculture. 46% of your population depends on agriculture, and therefore, you need sustained growth of 8.5-9%, and you need the eastern part of India to grow. You need Bihar, UP, Chhattisgarh, and Jharkhand - all to grow in double rates in the coming years.
We have the Budget coming. It is the first full Budget of Modi 3.0. Two key things are being sought from the Budget - one is either revision of the tax slabs for the middle class or hard-hitting reforms that boost consumption. Do you think these are the ways out of the slump that the middle class has been feeling?
My view always has been that you need a tax regime which is low, stable and predictable over a long period of time. And that will generate revenue on its own over a period of time. I'm talking about direct taxes, indirect taxes, GST, everything. For a growing economy, you need a low, stable and predictable tax policy over a long period of time. And secondly, my view has always been that we need to put greater resources into infrastructure and consumption will follow. Keep putting back more and more resources into infrastructure, create world class infrastructure. The private-public partnership of infrastructure needs to be revived, that's important. You need to put out many more projects for private sector to take up. And with private sector investment coming into infrastructure, you will have better maintenance and operation.
What next for Mr. Amitabh Kant? Is there a bigger role that we can expect?
Well, I will continue to read, I'll continue to write, I will continue to ideate. I will continue to do it by myself and all that...