Budget for FY22 to be vibrant: Finance minister Nirmala Sitharaman : 16-12-2020

Finance minister Nirmala Sitharaman on Tuesday asserted that the Budget for FY22 will be “vibrant” enough to sustain economic revival in the aftermath of Covid-19 disruption. Public capital expenditure will be stepped up and the disinvestment programme will “gain momentum” from now on, she stressed. Emphasis has also been laid on state-run banks raising capital from the market, she added.

Speaking at an Assocham event, Sitharaman said: “Something which certainly will be a feature (in the Budget) is that we shall definitely sustain the momentum on public spending in infrastructure. That is the one way, we assure the multipliers will work and the economy revival will be sustainable.”

“Recognising that this is an unusual year, borrowing has been kept absolutely at levels with which we can quickly put the money back in capital expenditure and so on. The emphasis on public expenditure for infrastructure through the public sector undertakings (CPSEs) will be definitely kept up,” the minister said.

After lagging behind in the first and second quarter of FY21 due to Covid-19 disruptions, the CPSEs’ capex has covered a lot of lost ground in the third quarter, she said. The minister has also noted that the National Investment and Infrastructure Fund (NIIF) is taking steps to mobilise funds from abroad including from sovereign wealth funds.

The Centre, states and central PSEs among them will likely spend Rs 7.5 lakh crore on capital investments in the second half of this year, up 80% over such expenditure in the first half, according to an FE analysis, based on official projections and information gathered from different sources. The expected surge in public capex in H2 would mean that a recovery in fixed investment rate that was visible in Q2 will gain further steam in the second half of the fiscal year, giving a strong support to gross capital formation.

On disinvestment, Sitharaman said the slow pace of disinvestment was due to liquidity issues in FY20 and Covid-19 in FY21. “Pace of disinvestment will now gain a lot of momentum, and those which have already given cabinet approval, will be taken up with all earnestness. Also, banks should also be able to base their values in the market and should be able to raise money from the market, even that emphasis has been given.” She said corporatisation of the Defence Research and Development Organisation (DRDO) labs are also being done.

The government had budgeted an ambitious disinvestment target of Rs 2.1 lakh crore for FY21, hoping to garner a substantial chunk of non-tax revenue to partly make up for a lower-than-expected rise in tax collection, even before the pandemic spread its tentacles. However, the disinvestment receipts so far have been about Rs 10,900 crore or 5% of the FY21 target. While there will be likely a substantial shortfall compared with the disinvestment target, the government is banking on strategic disinvestment of fuel retailer-cum-refiner BPCL, which could fetch about Rs 70,000 crore. Recently, the government received expression of interest from potential buyers for its 52.98% stake in BPCL and 100% in Air India.

Source : Fianancial Express