Finance minister Nirmala Sitharaman on Tuesday asserted that the Budget for FY22 will be “vibrant” sufficient to sustain financial 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 place, she added.
Speaking at an Assocham occasion, Sitharaman mentioned: “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 mentioned.
After lagging behind in the very 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 mentioned. The minister has also noted that the National Investment and Infrastructure Fund (NIIF) is taking actions to mobilise funds from abroad which includes from sovereign wealth funds.
The Centre, states and central PSEs amongst them will probably devote Rs 7.5 lakh crore on capital investments in the second half of this year, up 80% more than such expenditure in the very first half, according to an FE evaluation, primarily based on official projections and information and facts gathered from diverse sources. The anticipated surge in public capex in H2 would imply that a recovery in fixed investment price that was visible in Q2 will get additional steam in the second half of the fiscal year, providing a sturdy help to gross capital formation.
On disinvestment, Sitharaman mentioned the slow pace of disinvestment was due to liquidity troubles 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 mentioned corporatisation of the Defence Research and Development Organisation (DRDO) labs are also getting accomplished.
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 income to partly make up for a reduce-than-anticipated rise in tax collection, even prior to 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 probably 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 possible purchasers for its 52.98% stake in BPCL and one hundred% in Air India.