The government’s reinforced focus on infrastructure investments would ensure sustained high economic growth for a few years and help crowd in private investments, finance minister Nirmala Sitharaman said on Saturday. Even as capacity utilisation levels are still low, the minister said increased aggregate demand would soon necessitate new capacity creations and urged Corporate India to take advantage of “the relocation of global value chains” in the post-Covid world.
“The government has not given up its infrastructure investment commitments. As such public spending is going to have a bearing on the core industries directly. So, I would call upon industry to ensure that we don’t lose this opportunity for India to reach a higher level of industrialisation and manufacturing,” Sitharaman said speaking at a post-Budget event organised by industry body CII.
She said the Indian industry should strive to be a key player in the global value chain given the country’s potential with a large English-speaking and skilled manpower.
The minister said the policy prescription outlined in the budget focuses on a healthy capex spend to boost sectors through a multiplier effect and create assets for the 21st century.
The Centre’s budget capex for next fiscal is pegged at Rs 7.5 lakh crore, up 36% from the revised estimate (RE) for the current year even though its total expenditure is budgeted to grow by a very modest 4.6%, signifying a desire to improve ‘quality’ of spending. The fiscal deficit in FY23 is projected to be 6.4% of the GDP, down from 6.9% in the current fiscal against the 6.8% originally budgeted.
“India needs all the expansion and capacity and it is that which is going to kick off the virtuous cycle,” she said, adding that there is immense potential for the old fashioned industries, the new wage industries and the sunrise sectors.
She highlighted that the government extended the last date for commencement of manufacturing or production by a new manufacturing unit by one year to March 31, 2024, to avail the concessional tax rate of 15% (plus surcharge and cess). In September 2019, the government had announced a new tax regime to promote new manufacturing companies. To be eligible for the lower tax rate, the company has to commence manufacturing on or before March 31, 2023.
Speaking about the challenges of the pandemic, she said it allowed the government to clean up the budget. “(We brought) on board very many things which earlier were under the carpet (off-budget) and that exercise continue even now.”
Such off-budget liabilities were over Rs 3.65 lakh crore until the government cleared food and fertiliser subsidies worth Rs 3.15 lakh crore in FY21.
The government’s outstanding off-budget loans, typically garnered through public-sector entities to fund welfare expenditure, are less than Rs 50,000 crore now and even these would be cleared up at an opportune time, finance secretary TV Somanathan told FE on Wednesday.