Finance Minister Nirmala Sitharaman on Tuesday said the Union Budget for 2021-22 would have emphasis on sustaining high public expenditure on infrastructure to revive the economy which contracted in the first two quarters of the current financial year.
“Something that certainly will feature is we shall definitely sustain the momentum on public spending on infrastructure because that is the one way we are sure that multipliers will work and the economic revival will be sustainable,” she told industry at a virtual event with Assocham.
Recognising that this is an unusual year, borrowing has been kept at levels so that the government can quickly put the money back in projects, Sitharman said. “This emphasis that the public infrastructure spending should have to be kept up has been fully recognised,” she said.
The finance minister said capex provisioning allotment for capital expenditure couldn’t be undertaken in the first two quarters of the current fiscal year due to lockdown and absence of migrant workers. But during the ongoing third quarter, many of them were made up for.
She said the government had raised the borrowing target in the current fiscal year so that expenditure doesn’t suffer. As of date, the government borrowed Rs 9.05 trillion from the market (68 per cent higher than what it borrowed in the same period a year ago). The total borrowing provision for FY21 is Rs 12 trillion.
Sitharaman said she conceded that there were still some economic difficulties now. “But likely vaccines give us more confidence that the pandemic is behind us,” she said.
Other than public spending on infrastructure, the minister said the National Investment and Infrastructure Fund (NIIF) is also doing its best to attract foreign money, particularly sovereign funds that have been showing keen interest. Besides, the national infrastructure pipeline, NIPs which are spread across the states have been given priority.
On slow disinvestment process, she said in the past two months, it picked up pace with two major disinvestment activities underway along with those where the government has to bring down its stake. “By the time we addressed the concerns of liquidity in 2019, we moved to Covid era, but now the pace of disinvestment has gained a lot of momentum and those which have got the Cabinet approval are taken up with all earnestness,” she said.
The Budget for FY21 aimed for Rs 2.1 trillion from disinvestment. That time, the negative economic impact of the coronavirus pandemic hadn’t come to light.
She said the government had been emphasising on corporatisation of banks along with other sectors. Apart from this, FM said several measures have been taken to deepen the debt market even though they are long-term measures.