I complement the FM not only for a very balanced and credible Budget, but more so for being able to keep the basic direction and objectives without diluting the macro framework of fiscal consolidation...
By Vijay Chibber, former secretary, ministry of road transport and highways
I complement the FM not only for a very balanced and credible Budget, but more so for being able to keep the basic direction and objectives without diluting the macro framework of fiscal consolidation. This is even more creditworthy given the serious challenges faced by the global economy, the commitments on non-plan spend on salaries, OROP, defence and the over `2.23-lakh crore allocation for subsidies.
While the focus on agriculture and rural infrastructure is patently visible, the more important outcome for me is the sustained attention to investment for the creation of physical infrastructure as reflected in the substantial step-up in outlays for the Railways, National Highways, shipping and ports as well as rural roads. I say this because such spend improves the quality of investment and will positively impact not only by way of efficient logistics,but create significant direct and indirect employment. This represents a significant philosophical shift from that of the previous government with its focus on ensuring a social safety net. Improved physical connectivity will unleash economic forces, which alone can sustain a growth trajectory for such a vast country.
The step-up for the Railways, Highways and rural roads during FY16-17 is substantially accounted for by the enhanced cess on petrol and diesel which was raised from `2 per litre in January 2015 to `6 per litre by Feb-March, 2015.
The moot question, however, is how this level of spend on physical infrastructure can be sustained for at least the next 4-5 years, assuming that the cushion provided by soft oil prices may not be available for an extended period.
The National Highways sector is relatively well-placed, having developed a robust road-map for securitisation of toll-revenues. Given the fact that a large number of highway projects are being rolled out on public funded EPC mode, such sale of completed projects should be commenced early so as to generate adequate revenues for the next fiscal,assuming that the buoyancy provided by cess revenues will gradually fade over FY16-17. The challenge, therefore, is how such stepped up levels of spend on other infra sectors like the Railways and rural roads can be sustained?
This, therefore, takes me to what I believe is the only missed opportunity of this Budget, that is, subsidies. While the prices of petroleum products are now market driven, the subsidies on food, fertilisers and kerosene have been retained at a huge cost. Lastly, a positive signal has been given to encourage production of electric cars, which is a desirable objective if we are serious about our global commitment towards a cleaner planet.