FPJ Edit: Big spending plan with scarce resources

FPJ Edit: Big spending plan with scarce resources

EditorialUpdated: Wednesday, January 01, 2020, 09:36 PM IST
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Finance Minister Nirmala Sitharaman | ANI Photo

Finance Minister Nirmala Sitharaman launched an ambitious Rs 102 trillion investment programme on Wednesday. Termed the National Infrastructure Pipeline, it has identified projects across 23 sectors and 18 States and Union Territories which will be funded jointly by the Center and States as well as the private sector. Additional projects worth Rs 3 trillion would be identified soon, taking the total commitment to Rs 105 trillion. Thirty-nine percent each of the projects would be implemented by the Center and the States, while 22 per cent would be implemented by the private sector. Addressing a press conference, the minister said the NIP includes brownfield and greenfield projects by the Center, States and the private sector. Forty-three percent of the projects are under implementation, 33 per cent are at a coceptualisation stage while 19 per cent are under development. Power, including renewable power, railways, roads, urban development, irrigation, aviation, education, health, etc., are the major sectors for focus. She said the new investment would treble the Center’s capital infrastructure outlay from 3.5 trillion crores to nearly Rs 10 trillion crores. Meanwhile, fiscal deficit of the Union Government had already crossed 111 per cent of the target in the first eight months of the current fiscal. The gap between the Government’s revenue and expenditure at the end of November stood at Rs 8.07 trillion, 13 per cent more than the full year target. With the economy slowing down, revenue collection has contracted against the budgeted target while expenditure has spurted. The first victim of the stressed balance-sheet was the sharp contraction in spending for road building. Big-ticket spending on subsidies such as food and farm relief too have taken a hit. Fiscal slippage could be partially met from the expected dues from the telecom companies and a lower devolution than last year for the States. On top of the revenue crisis, there seems to be no evidence of the growth rate picking up in the coming financial year. A recent poll of leading corporate managers pinned their hopes on the next Budget to boost the growth rate. But given the constraints on public spending, the room for the Finance Minister to play Santa Claus is limited. Without providing incentives to business and industry and without putting more money in the pockets of the middle-income groups to increase the rate of savings, it will be hard for Sitharaman to present a growth-oriented, please-all Budget. But her dilemma is without such a booster Budget, the business sentiment will be hard to improve. Announcing big spending on infrastructure projects by itself will do little to spur growth.

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