Budget 2019 India: On problems being faced by the banking sector, she said the government is addressing them through four 'R' strategy.
Union Budget 2019 India: As the government’s decisions not to allow a higher fiscal deficit in FY20 and curb the practice of funding government schemes through extra-budgetary resources (EBRs) have raised concerns in some circles that many key welfare schemes may eventually get under-funded, finance minister Nirmala Sitharaman on Wednesday asserted that even as she was committed to the path of fiscal consolidation, “public expenditure won’t be compromised”.
“Promotion of economic growth will be on top of our agenda. We would do it by bringing in more steps towards having greater investment drawn in this country,” she said, while replying to the discussions on the Budget in the Lok Sabha.
In fact, as a fraction of the nominal gross domestic product, the Budget size shrank to 12.2% (if one takes the provisional actuals for the Budget numbers and the provisional estimate of national income released by the Central Statistics Office in May) in FY19 from 12.5% in FY18.
The projected Budget size for the current financial year is higher at 13.2% of the GDP. However, the additional commitments on welfare expenditure in FY20 budgets like PM Kisan (Rs 75,000 crore provided against an estimated need of Rs 87,000 crore) raised doubts that some other schemes may get underfunded. For instance, the FY19 Budget outlay of 19,900 crore for PM Awas (Rural) was supplemented with about Rs 10,700 crore raised via EBRs. While the budget outlay for the scheme in FY19 is Rs 19,000 crore, Sitharaman hinted that there could be an EBR component too. “Funds for MNREGA and PMAY Rural and Urban can be enhanced later as both are demand driven,” the minister said.
She said although the Economic Survey has projected a nominal GDP growth of 11% in 2019-20 as against a 12% growth seen in the Budget, the actual size of nominal GDP is same in both the documents, at Rs 211 lakh crore. She said budget 2019-20 reflected the government’s commitment to substantially boost investments in agriculture, social sector, particularly in education and health, keeping the fiscal deficit at 3.3% of GDP as against 3.4% envisaged in the interim Budget.
She added that several steps including enhancing investments in infrastructure, liberalisation in the foreign direct investment policy and lowering of corporate tax are being taken to make India a $5 trillion economy by 2024-25 as stated by Prime Minister Narendra Modi.
On problems being faced by the banking sector, she said the government is addressing them through four ‘R’ strategy.
These are recognition of NPAs, recovery of bad loans, recapitalisation of public sector banks, and reforms.
She further said that the Insolvency and Bankruptcy Code would change the credit culture in the country and help in resolving the NPA problem in a holistic manner.