Budget for fiscal year 22 will be vibrant: Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman said on Tuesday that the budget for fiscal year 22 will be “vibrant” enough to sustain the economic reactivation after the Covid-19 interruption. Public capital spending will be increased and the divestment program “will gain momentum” from now on, he emphasized. Emphasis has also been placed on state banks raising capital from the market, he added.

Speaking at an Assocham event, Sitharaman said: “Something that will certainly be a feature (in the budget) is that we will definitely keep the momentum of public spending on infrastructure going. That is the only way, we ensure that the multipliers will work and the reactivation of the economy will be sustainable. “

“Recognizing that this is an unusual year, indebtedness has absolutely remained at levels where we can quickly reinvest the money in capital expenditures, etc. The emphasis on public spending on infrastructure through public sector companies (CPSE) will definitely be maintained ”, said the minister.

After falling behind in the first and second quarters of fiscal 21 due to Covid-19 disruptions, CPSEs’ capex has covered a lot of lost ground in the third quarter, he said. The minister has also indicated that the National Investment and Infrastructure Fund (IFRS) is taking measures to mobilize funds from abroad, including sovereign wealth funds.

The Center, the states and the central PSEs among them will likely spend Rs 7.5 lakh crore on equity investments in the second half of this year, 80% more than such spending in the first half, according to an FE analysis, based on projections. and official information. collected from different sources. The expected increase in public capital spending in the second half would mean that a recovery in the fixed investment rate that was visible in the second quarter will gain further momentum in the second half of the fiscal year, giving strong support to gross capital formation. .

On divestment, Sitharaman said the slow divestment was due to liquidity problems in fiscal year 20 and Covid-19 in fiscal year 21. “The pace of divestment will now pick up a lot of momentum, and those who have already given Cabinet approval will be taken seriously. Furthermore, banks should also be able to base their values ​​on the market and should be able to raise money from the market, even that emphasis has been given. She said the corporatization of the Defense Research and Development Organization (DRDO) labs is also underway.

The government had budgeted an ambitious divestment target of Rs 2.1 lakh crore for fiscal year 21, hoping to raise a substantial portion of non-tax revenue to partly offset a smaller than expected increase in tax collection. , even before the pandemic spread its tentacles. . However, the divestment income so far has been about Rs 10,900 crore or 5% of the fiscal year 21 target. While there is likely to be a substantial deficit compared to the divestment target, the government is confident of the divestment strategic BPCL retail and fuel refiner, which could reach around Rs 70,000 crore. Recently, the government received expressions of interest from potential buyers for its 52.98% stake in BPCL and 100% in Air India.