In 2013, Subramanian Swamy, the Bharatiya Janata Party’s (BJP’s) Harvard-educated economist and Member of Parliament, had told Fortune India about his suspicions about the Tata investment in AirAsia, his investigations into the telecom 2G spectrum sale, and why he believed income tax should be abolished. A lot has happened since then. And while income tax is still intact, the Rajya Sabha MP is critical of the functioning of the finance ministry of the Narendra Modi-led government in a chat with Hindol Sengupta. Edited excerpts:
In 2013, you mentioned a whole bunch of suspicions about the AirAsia deal. Where does the case stand today?
Well, I did file a PIL (public interest litigation) in the Delhi High Court. It has undergone several hearings. We are now at the final stage, starting this July. The question is what is wrong about the AirAsia, and Vistara, deals? Starting 1996, the stand of the government has been that no foreign direct investment will be allowed in the airline industry—cargo, yes, but not in passenger (airlines). In 2012, following my intervention in the 2G case, and the cancellation of the licence of Etisalat (the Abu Dhabi-based telecom major)… they came up with the idea of opening (up) the skies for investment through the Jet-Etihad deal. In September 2013, the Indian Cabinet passed a law that allowed foreign airlines to own up to 40% in an existing Indian airline. But the problem is: AirAsia in India is not an existing airline. They created an AirAsia India company in India and started operating. So that’s my fundamental objection on AirAsia and Vistara.
You also had concerns about the Jet-Etihad deal. The deal was concluded in tandem with India raising the allotment of seats to the U.A.E. from 13,600 to 50,270 per week over three years.
Yes, in that case the issue was the selling off of the Indian skies. It is not an issue of illegal foreign direct investment. The idea is that Etihad can mop up traffic from inside the country. We cannot do it because the U.A.E. is so small. It is all loaded against airlines from India.
Let’s talk about the sale of Air India. This has practically been abandoned.
Good.
There was a lot of enthusiasm about the sale within the government.
You railroad something and then a man like me stands in the way and the whole thing collapses. The point is: Air India was started at a time when it was a pioneering airline. So it acquired ground facilities, which are impossible to get today. They were not evaluating that. They were only evaluating the aeroplanes. It is totally rigged. You should have an Indian evaluation committee. Otherwise, I said I will go to court. So they went on adding conditions, and finally nobody wanted the company.
The opposing argument to this would be that the Indian taxpayer has already paid so much money to keep Air India alive. You are an economist...
No, wait. Since when has Air India been losing money? Since 2004… (when the government) gave away all the profitable routes to foreign airlines. So naturally it will make a loss. Air India can be turned around at any time.
Do you believe Air India can be turned around?
Absolutely. Ask the prime minister to give it to me. I will turn it around in four months.
There seems to contrasting views within the BJP. One is the free-markets view and the other is the Swadeshi Jagran Manch view. Do you sympathise with the latter?
No, no, I am not a doctrinaire swadeshi. I believe in a level playing field. When I was commerce minister, I opposed the entry of big companies into retail. They told me—we thought you were a free markets man. I said I am a market economy man, but it has to be based on fairness. You (The foreign giants) get money at 2-3% and you come here and use the cheap labour. Our poor trader gets money at 12% or 18% and he has to compete with you for labour, which will now become more expensive. He is hit both ways. They said so is there a solution? I said yes, you let Indian companies go and borrow cheap money in America and bid for projects in America, taking with them Indian labour. So they said, oh there will be immigration problem. I said well that’s your problem, not my problem.
And this argument has been given within the government...
The problem is that economics is a specialised subject. You need to be an economist. No one in this government is an economist. The subject has become so complicated. Everything is interconnected. Raghuram Rajan isn't an economist. He was an IIT guy (Rajan studied electrical engineering at the Indian Institute of Technology in Delhi) who went to business school (Rajan studied at the Indian Institute of Management, Ahmedabad, and the MIT Sloan School of Management). He kept raising interest and small and medium businesses were shutting down. I just want (a) level playing (field).
You have said that income tax should be abolished. Do you still stand by that?
I don’t change my views so easily. In fact it is even more necessary today. GST (goods and services tax) is a torture. Income tax is a terror. People are depressed. You give me a chance and I will improve the climate. I have been proved right on GSTNL (Goods and Services Tax Network Limited). It was a private limited company. Alone I stood in Parliament against this. Today the prime minister has accepted my view. (The government is understood to be contemplating making GSTNL a 100% state-run entity.)
You make no bones about wanting to be finance minister.
I was told I was becoming finance minister. The night before the announcement, I was told to be ready. In one night, I am not sure what happened.
But on the other hand, you speak openly on issues against your party and the government. Isn’t there a contradiction?
Not at all. It is a democratic party. I am (a) very popular person... probably the second most popular person in the party (he means after the prime minster.). Everywhere I go, I speak for the party. But if I see people are not applying their mind, I have to speak.
You know that politics is about consensus.
I got along with Rajiv Gandhi, I got along with Chandra Shekhar, (and) I got along with Morarji Desai. But some people are scared of my existence. They spread canards about me not getting along with people.
What according to you has gone right or wrong in economic policy in the last four years?
I would have printed six times the number of Rs 100 notes being withdrawn and kept it ready. So that people don’t have to wait. Also—and I suggested this to the prime minister but the finance ministry made a mess of it—we should have told people that you can deposit the entire amount of cash that you have into your own bank account. 20% will be taken away as tax, 20% you can withdraw for your cash needs and the rest will be on fixed deposit on 2% rate.
What about GST?
GST is the most stupid conception I have ever come across. First of all, you don’t (have enough) computers, which can take the load. Not one form, but six forms. We are not ready for it. Originally it was sold as one place, one tax. Now we have six. And all kinds of variation. Even today the money they’ve collected, they have not been able to distribute. They don’t have brains or what.
What could go wrong for this government in the next election? They say finally it is economics...
Rubbish. If that were true, Vajpayee would have won and Narasimha Rao would have won. Sentiment is the key thing.
You are closely interconnected to the RSS. Do you think the RSS’ viewpoints on economics are changing?
They have a broad parameter. They don’t want the country to be sold to foreigners but otherwise they accept globalisation, they accept that incentives are better than coercion—these are broad principles. (On) technical economics, they don’t take a stand.
