India’s social sector expenditure is too low by global standards, says newly appointed minister of state for finance, Jayant Sinha. According to him this makes it more necessary to spend the money well.
He says this, too, will be the focus of the government going ahead, with more measures like modified direct benefit transfer to make the money travel well. “We are looking for out of the box radical ways and you will see some of those, soon.” As an example, he points to the government picking up Aadhaar despite that being started by the previous UPA government. Another example he is proud of is the rapid approval given by the Modi government for a set of vaccinations for children. Those didn’t cost money, but were significant interventions which were pending for a long time, the former McKinsey employee adds.
In an interview with The Indian Express before taking over his new assignment, the Lok Sabha MP from Hazaribagh in Jharkhand — one of the poorest state — puts a lot of emphasis on the social sector spend. “Of course from the budgetary perspective there is a strong case to keep a tab on mounting expenditure but we don’t intend to cut social sector spending to reach there.” The best way, according to him, would be to push growth so there is surplus to put in the social sector envelopes. “Ours is not a consumption-led inflation story but that of investment-led growth.”
He says that the government was aware of the pressure points like the power dues for the state electricity boards and the recapitalisation of the public sector banks, which would put the fiscal deficit under pressure. “But there are two safety valves,” he says, pointing out these are the disinvestment receipts the proceeds from which he thinks could be massive including SUUTI.
The other is the uptick in foreign investment flows. They have a concomitant impact on tax revenues. A good percentage of the money, he says is coming in as debt which is an indication that foreigners are sound about the revival of the Indian growth story.
Sinha says that with a stable mandate for this government, these are strong support bases on which to build the Budget numbers. The finance ministry has already begun the Budget exercise.
“Give us time to clear up the pending issues that have been hanging fire for a long time, like the Insurance Bill. Remember it was the NDA government in 1999 (under his father, finance minister Yashwant Sinha) which brought in the Bill to raise the composite FDI cap to 49 per cent. We hadn’t moved much on it since then till this government came to power,” he adds.