Finance Minister Arun Jaitley sat down with News18 Network Editor-in-Chief Rahul Joshi for a comprehensive interview covering a multitude of topics including budget, politics, his influences and his charm. Jaitley dismissed the suggestion that middle class was short-changed in the budget and said he gave a relief of Rs 12,000 crore to them. He declared that it is a constituency that he feels very strongly about. On being asked about inflation worris, he said he has his one eye on the monsoon and the other on oil prices. Jaitley also rejected the idea of simultaneous polls as Constitution does not permit so.
Here is the full transcript of the interview:
ON THE GOVERNMENTS PERFORMANCE
Q) What is your biggest achievement as compared to the Vajpayee-led NDA government?
Jaitley: I think it is the fact that the Modi government has merged governance and economy into economic governance and has created credibility. When the government came to power it was at such a time that India was breaking in terms of power in front of the whole world. We were even considered a part of the fragile five. (There was talk of) policy paralysis; we were called a highly corrupt society. Some even said that we as a country were incapable of taking decisions. A reporter had asked, if ‘I’ (India) will fall off from BRICS. This is why the government decided to take bold decisions and we had a growth of around 8-9%. When there is a boom, anyone can progress, but we managed to do it despite that.
People used to worry about how the tax base would increase in the country. We showed them how it’s done. We are undergoing transformation from a cash economy. People used to wonder what if subsidies would be rationalised and if it would be for the poor… by using Aadhaar we showed them that it is possible.
People say that when policy rates are decided, inflation targets are in double digits, so 4% plus minus targets were decided, with law in mind. By making a monetary policy committee, by creating a union between the RBI and the government we made it possible. Earlier, banks were being looted, today we have given the creditor-lender relationship an IBC (Insolvency and Bankruptcy) code and changed the whole game. If you run companies like this then the day is not far where you get thrown out of the company and someone who can do better takes over you. This is the country’s asset. We did not just bring in the laws, we also made them functional. I think to suppress the country’s cash economy and to head towards digitisation is a challenge within itself.
Today, in the whole tax department, assessments have been made online, which I legalised during this budget. No one has to go and file the tax return… your assessment will be sent to you via mail, your refunds will be sent to home. We merged 17 taxes and 23 cesses into 1 tax (GST). One needs to only file the returns through the internet and assessment will come to them by the year end… there will be no different tax rates or assessments.
ON ECONOMIC GROWTH
Q) If you look at GDP, there was a growth of 6.4% and there are talks about 7-7.5% growth. How do you look at it?
Jaitley: GDP growth never rises by 5 percentage points. Every economy has a range. If you look at previous years, the economy has grown at even (in the range) of about 5 per cent. In the first year of our government, GDP grew at 7.1 per cent, followed by 8.2 per cent, 7.1 per cent, and this year, since there has been an effect of reforms like demonetisation and the GST, we expect to grow at 6.7-6.8 per cent. GDP should be analysed in a global context.
Q) According to the economic survey, growth will remain at 7-7.5% in the next year. Do you think we will ever reach a double-digit growth?
Jaitley: You can reach double digit growth on two conditions: if your revenue rates increase and if your system’s spending capacity increases, or if the global economy is undergoing a boom. If the economy is growing moderately across the world, then it will be hard. China grew at 9-9.5% for three years, so when China came to 6.5% then it is hard for any other economy to reach 10%. If we reach 8% it is a good achievement for the country as no other country in the world is able to even touch 7%.
Q) World economy is reviving. America’s condition is also better now. Can’t we look at a number better than 8%?
Jaitley: A little aggression has come into the economy. If there is a 3.9% growth rate in the world economy, then emerging markets will grow faster. Indian market will grow the fastest and we can then look at bigger targets. Global economy focuses on demands and exports, and if exports increase, they will contribute to the domestic GDP. We can see that the export sector which was in the negative has grown 14-15% over the past few years. If we cross 8%, then I will be very satisfied with myself.
Q) Do you see this happening in the next year?
Jaitley: There are certain parameters which will have to be taken into account. Some, which are known as green shoots in the language of business, such as business confidence level, PMI level, core sector growth… all indicators are good and we need to see what happens next. Monsoon is a factor for agricultural demand… I want oil prices to definitely not go higher than the current levels. We are buyers and buying expensive oil will be problematic as it will directly lead to inflation.
Q) Is inflation a worry?
Jaitley: We are definitely worried about this. Our one eye is on the monsoon and the other is on the price of oil.
Q) If oil price remains the same and if the monsoon is good, can the economy grow beyond 8%?
Jaitley: If such situations persist.
ON MIDDLE-CLASS FACING THE HEAT
Q) India's GDP grew by about 48% cumulatively in the past four years. If we look at the contribution of personal income tax, then it would be above 90%. The middle-class is tackling the heat and is feeling stressed.
Jaitley: If there is one group of people I feel very strongly for, then it is the middle-class. If you are to take this segment of taxpayers, I have consistently given some relief in some form or the other within the limits of my affordability in each budget. And the reason is as far as businesses and professionals are concerned, they have avenues for controlling their expenditure. The compliance level also raises a question mark. Salaried people constitute a bulk of people in the society and these are the honest taxpayers of the country. The system needs to come to their rescue.
In my first year, I raised the tax exemption limit from Rs 2 lakh to Rs 2.5 lakh. I raised the Section 80C limit from Rs 1 lakh to Rs 1.5 lakh. I raised the housing loan limit deduction from Rs 1.5 to Rs 2 lakh. The next year I raised transport allowance from Rs 800 to Rs 1,600. Then for every professional earning up to Rs 5 lakh, which is 90 per cent, don’t maintain books, 50 per cent presumptive income… Last year, the smallest category taxpayers had their rates reduced to half from 10 per cent to 5 per cent. In every year’s budget Rs 8,000- 10,000 crore relief has been given to the middle class.
This year, even though my affordability and fiscal debt are very tight, I have given Rs 8,000 crore relief in terms of standard deduction to the salaried class. There are 2.5 crore taxpayers who are benefitting from this. To the pensioners and senior citizens, I increased their avenues of investment. The first 50,000 rupees that they get will be exempted. Rs 50,000 will be medical expenses. Hospital bill of Rs 1 lakh will be tax exempted. That’s another Rs 4,000 crore. Even in this year’s budget I am spending on this class about Rs 12,000 crore, which is probably a little more than what would be spent on the health insurance scheme.
ON MIDDLE-CLASS BEING IGNORED IN BUDGET
Q) Still there is a feeling that the middle-class has been ignored in the budget.
Jaitley: Your segment (the media) also has a role to play in that because some of the channels didn’t get the ground to criticise the budget. We did something for the farmers and the poor as well. Now, they are questioning as to what we did for the middle-class? We have in any case given a relief of Rs 12,000 crore to the middle-class. But it is the anchor who sets up the debate.
Q) The Opposition says that your government is being a ‘suit-boot ki Sarkar’, whereas some say the corporates are just getting the ‘boot’. How do you respond to this?
Jaitley: I look at them as slogans. I just told you what all we did for the rural sector. We are giving roads and electricity to the rural areas. We are giving shelter and toilets as well. I feel in this country if there has been a social reform movement in the past 70 years, then it is Modi Ji’s Swachh Bharat campaign. You can ask me why. In 3.5 years, we have reached to 76% from 36% sanitation level. We will build another two crore toilets this year. This not only protects the dignity of women but also works towards abolishing the caste system.
Today, there are modern toilets in each household of our villages. This helps in infusing a sense of self-respect and improving the quality of life in our villages. We are giving stoves to 8 crore women… house, electricity, stove, toilet and roads. MNREGA funds have been increased to Rs 55,000 crore. Congress never took it beyond Rs 32,000 crore. We also worked on the scheme of ‘right to food’ which was the scheme of Congress era. They only allotted Rs 1.5 lakh crore to this scheme, in which they used to distribute poor quality food. So from employment to cereal, we have implemented pro-poor schemes.
Q) Is there something coming up for the middle-class?
Jaitley: When you try to reform the society, if there are highways covering lakhs of kms in the country, then the rich and the poor use it alike. People can now fly for just Rs 2,500. We have increased access to aviation. All that we are doing has and will benefit people of all sections of the society.
ON OIL PRICES
Q) With higher crude oil prices and higher MSP, inflation could become a bit of a headache in the coming months. Are you concerned?
Jaitley: Certainly, we are keeping an eye. Experts tell me that the impact of MSP would be there but it can be absorbed. As far as oil price is concerned, we are at the outmost periphery of comfort. Therefore, if it rises further, it throws up a challenge on inflation front.
ON TAX
Q) Contribution from personal income tax has nearly doubled to Rs 4.4 lakh crore, do you think the tax base has also widened?
Jaitley: I think one of the greatest successes of this government has been our campaign against black money. This has increased the number of tax payers and this has also increased the quantum of tax the tax payers pay.
Q) Day after the budget, the Sensex went down over 800 points, the sentiment has taken a little bit of knock because of the long term capital gains. Also, I think there was an expectation that you will probably withdraw the Securities Transactions Tax (STT) which did not happen? Any changes likely next?
Jaitley: No, not at present, the present structure will continue. I don't think I can lead to any speculation by saying that the idea of change did not cross our mind, after all STT existed even when short term capital gains were there.
Q) Our corporate tax is also amongst highest in the world. The industry was expecting a cut on the corporate tax rate, now with America settling the new corporate tax rate at 21%, do you think it could make India unfriendly for investment?
Jaitley: No, I had foreseen this. Therefore, 3 years ago, I had announced that we would gradually bring it down to 25% and waive off all the exemptions. Now, I have not been able to waive off the exemptions so far because there is a sunset clause in each of the exemption and advancing the sunset clause would be unfair to the people who have set up these industries under those clauses itself. I have been gradually stepping up the number of companies which come under the 25% category. Today 99% of the companies with Rs 250 crore turnover and below are all within 25% category. Our study shows that those above 25% category - that is a 30% category are 7000 companies left which are in any case paying just about 22% due to the exemptions. So they can live with the exemptions for sometime and as the exemptions die out, and get phased out, then the scope of further expansion will be there.
Q) So, your commitment remains?
Jaitley: Of course, I walk the talk. I made it Rs 50 crore last year and I made Rs 250 crore this year.
Q) So, we can hope that the trend continues in the coming years?
Jaitley: Yes, because I have set a roadmap.
ON JOBS
Q) Mr. Jaitley, you promised to give 1 crore jobs. This hasn't happened till now. So what steps do you plan to take towards making this happen?
Jaitley: India doesn't have any formal authentic job data. In the formal sector some notifications do come but in the informal sector there is no data as such in India which is available. I can do two significant things. One, as the economy moves fast and it is growing very fast, obviously jobs are created and second, all government schemes whether by way of taxation or bank credits are aimed in the direction of job credit. So, from the mudra scheme to the scheme which gives a little flexibility in the textile, leather sector etc, where jobs etc are - you try and make sure that jobs get created in those areas.
ON MODICARE
Q) The game changing offer of this budget is being termed as 'jumla' by opposition parties. Now, people are saying that you have spoken of Rs 12,000 crore. So where will these additional Rs 10,000 crore come from?
Jaitley: I have left a lot of leverage for additional budget measures in this budget. From a budget of Rs 24-25 lakh crore to take out Rs 10,000 crore isn't a big deal. I have given a provision of Rs 2,000 crore for the scheme to kickstart. But once if more is required, then we definitely will give that from the budget. Now, I am getting Rs 11,000 crore from the 1% cess which we have imposed. When the long term capital gain moves ahead, I expect another Rs 20,000 crore in the first year and I wish that in the third and fourth year as well. The exempted income will then increase. If the government wants, they can add to these schemes.
Q) How many people will benefit from these schemes?
Jaitley: Today, this country has 25 crore families. Out of 25 crore, the lower 10 crore, which is 40%, these can be arithmetically removed. And now through the means of Aadhaar and digital methods, these people can be directly contacted. It is not necessary that every family will need to visit the hospital every year. Earlier, whenever the poor went to the government hospital and was not treated, then in that case he/she waited for god to decide the fate of their lives, so now if we give the insurance card to this category of the poor and if our insurance scheme works out, then the premium will be given by the government. In fact the volume will be so high that the per capita insurance is generally less.
Q) So, are you trying to say that every poor man will get an insurance cover of Rs 5 lakh and this has nothing to do with government hospitals?
Jaitley: As far as private hospitals are concerned, a lot of world class hospitals have come to the country. In fact, these hospitals have surplus capacity. And see, as soon as this scheme will reflect and get executed, the business sector in terms of insurance will expand along with the health care sector. Today, the hospitals of this country are getting built around tier 1 and tier 2 cities. To take these hospitals to the rural cities and districts is how the people of this country will be able to flourish.
Q) One criticism of this government has been that it could not kick-start private sector investment.
Jaitley: But that has now picked up. The bank credit has picked up. The food credit has picked up, private sector has also picked up. After all, there was a global stress and the other reason specific to India was the health of the banking sector. That's also an area where we don't know how much to go further because there is a moral hazard. Some people have messed up with the companies and the taxpayers pay for it- after all, that's what recapitalisation really is. And, therefore, I feel there's a need to overcome the moral hazard and take decision eventually.
Q) Do you think bank reform came a little later and could have come a little earlier?
Jaitley: Could have. Because we were making all honest efforts and so was RBI. They wanted to make sure through their various schemes whether the restructuring etc could revive these companies but it looked a little too late.
ON STRUGGLING BANKS
Q) The Economic Survey has favoured shutting down some and merging some struggling banks. What’s your take on that?
Jaitley: I don't think shutting down is an option. Merging and amalgamation is always a good option. That good option will have a good time for it to be exercised. You can't merge a weak bank and a weak bank and have a mega weak bank. You have to strengthen the banks first.
Q) Then in that case shutting down could be an option for a very weak bank.
Jaitley: No, not that. You could merge a weak bank with a strong bank and therefore come out with a reasonably sized bank or you could merge 3 banks into 1. India doesn't need 30 public sector banks. Now you have 21 or so.
Q) Where do you see this settling?
Jaitley: Let me see. My priority is to strengthen the banks, once they get strengthened, of course some of the amalgamations of some of the banks will always be there.
ON GOVT'S RELATIONSHIP WITH RBI
Q) You know the finance ministry has made it clear that it wanted lower interest rates but the central bank has not played the ball, what is the relationship with the RBI?
Jaitley: We have a very good, functional relationship with RBI. After all, we have clearly defined functions. RBI is doing its job. The monetary policy committee is also doing its job- we recognise the area which is governed by the RBI, whatever we have to offer, we give it to them, and RBI takes its decision.
Q) So, demonetisation was a move towards a cashless society and to battle black money. How far do you think you have been able to achieve this?
Jaitley: I think there were three main objects which were behind the move: one, to reduce the quantum of cash currency in India; two, to increase the tax base, where we have succeeded; and three, to have much greater digitisation which was never a part of Indian economy's agenda. Today it has taken the centre stage.
Q) Do you think cash has come back to the system in a big way?
Jaitley: Today, I think a lot of people prefer not dealing in cash because that has its own consequences. Take organised sector of jewellery, take industrial goods transactions- starting from the film industry to the real estate industry- real estate industry is formalising itself. You see what is happening to the fly-buy operators. The organising sector in the jewellery industry is formalising itself. I think it’s a movement. You cannot have a stick all the time. You will have to use the nudging process to try and get people.
This year's budget, I have given a figure that if you add the people who now file income tax returns after all these tips, and those who have come in the TDS network which is indirectly in the tax network even without filing a return, is much over 8 crores now.
Q) So, you say that you will achieve about Rs 1 lakh crore this year through disinvestment and have put a target of Rs 80,000 crore for next year. But you know getting one PSU to buy the shares of another PSU is not really disinvestment. Your government is still struggling to close down companies like Scooters India Limited?
Jaitley: See, let's be very clear. The ONGC-HPCL (deal) was not one PSU buying another. This was not some last minute engineering that took place. This was announced in the budget last year because world over biggest upstream and downstream companies in the oil sector have been coordinating and therefore this is because of the business requirements of that sector. I think it is a mega-acquisition by the ONGC and therefore it is material, it is in larger interest of the oil sector itself.
Q) You mean companies such as Scooters India haven’t been able to close down?
Jaitley: There have been companies which have become realistic, and therefore I think there are a list of the companies that the NITI Aayog has decided and I am sure... the big one in the pack is Air India which everyone is looking at and we are gradually moving forward to it
ON AIR INDIA
Q) Will we see some action in Air India this year?
Jaitley: I do hope so.
Q) Any others which you would privatise?
Jaitley: There's a whole list which the NITI Aayog has handed over, I referred to it in my budget speech itself.
ON US BARRING IT WORKERS
Q) US has put up walls for Indian technology workers, there are discriminatory provisions for Indian companies, cost of H1B visa is going up, are you worried about the rising protectionism in America?
Jaitley: I am. Once this tendency picks up then all countries would try and play the same game. We have seen from our Indian experience, integration in opening out has helped us. Among the various things in the last two and a half decades that has helped the Indian economy is the fact that we have become more confident, we have become more open, we are open to investment, we don’t think that a foreign investor is coming here to the detriment of the Indian economy. Today, we see him as someone who is bringing in capital which will create jobs in India and so on.
Q) But then how do we react to this situation? For instance, China has banned Google and Facebook in favour of Baidu and WeChat. Don’t you think we could also look at some such measure?
Jaitley: Have we reached a stage for these kinds of measures or not, I don’t know. We haven’t applied ourselves really to it because India has not been thinking on these lines.
Q) Because you know it will lead to larger internet corps in India, more creation of jobs.
Jaitley: We must also remember we are one country in the world. Because of our large population and our large human resource talent that we have sent a very large contingent of Indian patriots almost everywhere in the world. Therefore, if you saw the cricket match in New Zealand today you found more Indians.
Q) No, I was only talking about it from the reactionary point of view because we are facing trouble in the US. Could we do something? Some counter measures?
Jaitley: I don’t think India is thinking on these lines at the moment.
Q) In the recent past a proposal to hold simultaneous Lok Sabha and State Assembly Elections was made?
Jaitley: It is highly unlikely.
Q) So, are you saying this idea wouldn’t be thought upon?
Jaitley: The government wants that the election take place together, but the date for Lok Sabha election will not be advanced. That is not necessary.
Q) You don't feel that elections will happen in November, December with the state elections
Jaitley: No. I don’t see that happening.
Q) Can it happen so that the state election dates are pushed back?
Jaitley: The Constitution doesn’t give us that approval. Till the time the Constitution doesn't change, till the time people agree upon it, till the time things don't overlap, it can’t be done.
ON GUJARAT ELECTIONS
Q) Modi ji and Amit Shah belong to the role model state, according to you, did you hope that you could win more than 150 seats, when you won 99 seats in reality? Do you feel the public sentiment is changing, what do you think is the reason?
Jaitley: I feel there was a setback in one region. We won in urban Gujarat, in the rural areas, in the south, central, north our performance was good. In Saurashtra, the farming situation was such that it became a setback for us and our seats that had reduced by 10-15%. It was because of that same reason.
ON BYPOLLS
Q) Even in the by elections in Rajasthan?
Jaitley: This is a topic of concern for us, I spoke to the CM and I told her, and she is examining as to what went wrong. There were some emotional reasons as well and if there’s a need for betterment then definitely the party is looking into it.
Q) This year there are three big state elections: Karnataka, Rajasthan, Madhya Pradesh. In Karnataka, Siddaramiah is fighting hard. There is anti-incumbency in Rajasthan and Madhya Pradesh. How confident are you?
Jaitley: Right now, the first elections are in Karnataka, so we are concentrating on it. We will win in Karnataka, no doubt about that.
ON JUDICIARY
Q) There are fissures that have emerged in the judiciary, what are your views on that?
Jaitley: I think this is not the first time that this has happened, it does not happen very often. I don’t think this is the last time this is happening, but I have great faith in our institutions and their resilience, I am quite sure they are competent enough to resolve it themselves.
ON 2019 ELECTIONS
Q) In 2014 your party got a historic mandate. What is your prognosis for the 2019 elections? In the big states like UP, Rajasthan, Madhya Pradesh, Gujarat you have won seats, but chances of losing seats is more this time?
Jaitley: There will be many states where we will gain a lot.
Q) Like?
Jaitley: We can gain in Odisha, West Bengal. Those states from which we didn’t win many seats. In Northeast, our party is gaining momentum, Modi ji has presented a corruption free government. The kind of performance our party has given, I am sure we will win the next elections on the basis of our performance.
Q) Most of your allies are also not happy with your party, Chandrababu Naidu (TDP) is not happy with the budget, Shiv Sena is saying they want to fight the elections alone.
Jaitley: The Maharashtra issue is different. The implementation of Andhra Pradesh reorganisation is being done, it has nothing to do with the budget directly, the packets not implemented on the basis of the budget.
Q) You feel you will be able to convince them, in the coming time?
Jaitley: Yes sure, what we promised to Andhra Pradesh's janta and the government we will fulfil it.
ON SHIV SENA-BJP SPAT
Q) What is the problem going on with the Shiv Sena? Do you feel they will fight elections separately?
Jaitley: I would want the NDA government to be united. Last time the Assembly elections were fought separately by all of us, there was a spat with the Shiv Sena on the allocation of seats. Shiv Sena wanted to be the senior partner and I know for a fact that we were ready to give them the senior partner's post, and also give them extra seats but they couldn't recognise the reality of how much was the limit. We fought separately and then we won enough seats without the Shiv Sena.
Q) You think if the elections are fought separately then you will benefit?
Jaitley: I am not saying that. I would want the NDA to be intact and all our allies to be with us.
ON RISING INTOLERANCE
Q) Recently, we have seen mobs indulging in violence, damaging property and India’s reputation. Why do you think there is this rising intolerance in the country?
Jaitley: To say there is rising intolerance in the country is an unfair statement, there could be stray instances. Because we are in the world of communication where even a small incident gets highlighted and understandably so. But I think, this kind of violence or unruly conduct itself can’t be accepted in a democratic system.
Q) If you could do something different today as FM what would it be? Do you have any regret?
Jaitley: Well, I think the only regret you have is what you are doing you want to do it much faster. Because just as India is becoming impatient, that impatience impacts us also. It impacts me personally also and we would like to see that for the first time in history that India sees an opportunity for itself in the world for becoming truly a global leader. After all the satisfaction of India being such a fast growing economy, recognised at various international forums, being given a place in every high international get together, we would like to get rid of the curse of poverty and see India transform into a developed country as soon as we can.
ON FM'S PERSONAL INTERESTS
Q) We have seen you as the FM and as a great leader of this country, we have seen you as a legal luminary, but not much is known about the personal side of Mr Jailtley. We know you as a cricket lover, a food lover, but what keeps you going? What excites you in your day-to-day life?
Jaitley: I lead a very normal life. Other than politics, I have a commitment to my family, my children. I deal with my close friends, I pursue what my passions are.
Q) What are some of them?
Jaitley: There are some which you don’t have time for. I used to take vacations, but now I don’t. I only travel for brief periods for work. I listen to some old music, I watch sports, I watch it on television, whenever I can.
Q) What kind of music?
Jaitley: I listen to old Indian music.
Q) Courtroom or Parliament, what really tests you sharpness more?
Jaitley: I enjoy both. To be fair, both are great institutions of the Indian democracy and I think both have a huge amount of resilience. I am not worried about the present challenge in the judiciary, I know it is resilient and they will get out of it. Parliament, I can tell you, is a great forum, unfortunately, what’s projected is only the song, noise and dance in the Parliament, but the seriousness of the debates that take place in the Parliament I think are also exemplary.
Q) Who is your inspiration?
Jaitley: I have no personal heroes in that sense. In politics, and when we were young we looked at tall leaders of various shades and I have seen from my student days a very large spectrum of political leadership in India. From Jaiprakash Narayan, to Morarji Desai to Vajpayee ji to Advani ji, we have worked with all of them. And we get a lot to learn from them.
Q) Who influenced you the most in your political career?
Jaitley: In politics, frankly, when we were growing up, within the BJP, Vajpyee was our tall leader for his ability to even rise above the party and think of the country is something that always inspired us. In organisational matters, and formulating policies we worked very closely with Advani and therefore the kinds of etiquettes and ethics that he practiced and the attitude and approach he had we learnt a lot.
Q) Any opposition leaders?
Jaitley: Well I have been among those who were on the other side of the fence. The person in parliament who impressed me the most was Mr Pranab Mukherjee. I have always said Mr Vajpayee and Mr Mukherjee are probably the two most charming politicians that I know.
Q) So you have picked up your charm from them?
Jaitley: Yes
Q) You lead a stressful life, how do you unwind?
Jaitley: The only recreation I get now is the walk early in the morning, and maybe some friends join me once in a while.
Q) What would you like your legacy to be? How would you want history to remember you?
Jaitley: I think it is important if you are in politics to have credibility and consistency that is extremely important.
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