Budget 2018: Finance minister Arun Jaitley informed that in 2018-19, for creation of livelihood and infrastructure in rural areas, the total amount to be spent by various ministries will be Rs 14.34 lakh crore, including extra-budgetary and non-budgetary resources of Rs 11.98 lakh crore.
Budget 2018: Budget 2018, for infra, recognises two realities — agrarian distress and the last year before the general elections. It seeks to address both these realities. On agrarian distress, it proposes a slew of rural projects encompassing link roads, grameen markets, agro-processing centres, food parks, micro irrigation, Wi-Fi hotspots, toilets, affordable housing, health and wellness centres, upgrading district hospitals, district-level skill centres, and fishing and animal husbandry infra funds. Clearly, no other Budget has done as deep a dive on identifying and providing for such a diversity of rural projects. Finance minister Arun Jaitley informed that in 2018-19, for creation of livelihood and infrastructure in rural areas, the total amount to be spent by various ministries will be Rs 14.34 lakh crore, including extra-budgetary and non-budgetary resources of Rs 11.98 lakh crore. This is indeed a humongous figure and leads to the apprehension of the well-known ‘transmission loss’ from New Delhi to panchayats on such disaggregated low-value projects to be implemented at local levels. It would be difficult to demonstrate real achievements on the ground from now to mid-2019, and so the announcements themselves should be the grameen mood-lifter for the time being.
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On the second reality — this being the last year before the general elections — the FM has been prudent in not announcing any new mega infra projects or programmes. In fact, he went to significant lengths to reassure his audience that his government was on top of the situation on monitoring the timely execution of ongoing projects like Bharatmala, Smart Cities, BharatNet, Railways, et al. He did mention that the Prime Minister personally monitors the progress of flagship programmes on the PMO’s Pragati Review Platform. The message is clear. In the run-up to elections, it made little sense to announce any mega initiatives; but made a whole lot of sense to focus on timely execution of ongoing projects and be able to demonstrate real action on the ground to the Indian people. This is not to say that the foot has been taken off the ‘public expenditure-funded infrastructure development to prime up the economy’ accelerator. The emphasis has been maintained. FM informed that there has been a 21% increase in the outlay for infrastructure sector with Rs 5.97 lakh crore being proposed for 2018-19 vis-à-vis Rs 4.94 lakh crore expected to be spent in 2017-18. So, the show goes on energetically without any fresh item numbers.
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The question uppermost on people’s minds is where the FM is going to find the resources for all this. Clearly, the 3.3% fiscal deficit objective gives him some headroom. Also, he is banking on tax buoyancy arising both from better economic growth as well as more entrants into the tax net. However, he still needed to allude to the need for off-budget sources for financing infrastructure. These relate to sources like tax-free infra bonds, asset recycling (monetising state-owned operating utilities), bilateral and multilateral funding, and private capital coming in through PPP formats, etc.
Considering, therefore that off-budget financing is now an important pillar of fiscal policy, one would have expected a greater degree of discussion on such options in the Budget speech. The only reference was to the disinvestment target. As with all Budgets, there was a basket of expectations on areas that would see mention. These were coastal economic zones (to kickstart job creation in labour-intensive export-oriented products), the stress in power sector, particularly the health of discoms, creation of land bank corporations and specific measures to bring back the mojo in PPPs (a la the Kelkar Committee Report on Reviving and Revitalising PPPs). However, none of these featured — and one can only hope that much will still be done outside the budgetary framework.
Overall, it is a realistic Budget that recognises the agrarian distress and the huge infra deficit in rural areas, and sensibly pushes ahead aggressively on already announced mega projects without yielding to the temptation of announcing any more.
Chairman, Feedback Infra