New Delhi: Putting aside the hope of a strong fiscal stimulus to pump prime the economy, Finance Minister Nirmala Sitharaman said on Monday that the Budget gave a macro treatment to the economy rather than addressing sectors separately and put infrastructure spending as the highest priority while taking a fiscally prudent route.
“The attempt is to show that we have had complete thinking-through and are taking the most fiscally prudent route. In today’s situation, people may want the government to ‘pump-prime’ the economy. We are willing to spend if we have to. But we will not repeat past mistakes of splurging. We are spending now with a clear picture of asset creation,” she said.
Addressing the National Executive meeting of the industry association Ficci after the Budget, Sitharaman added that money being spent in the Budget is for asset creation.
“We are putting money where assets will be created; when the government is putting money into infrastructure, it would have a cascading effect. The money garnered from the divestment target would not go into a revenue expenditure item, but would create infrastructure for the economy and this would have a multiplier effect,” she said.
The minister said announcements about strengthening and deepening the bond market are exceptional to this budget.
In the Budget, she had proposed a set of reforms to deepen bond market. The steps include raising FPIs’ corporate bonds investment limit, and letting non-resident investors buy select g-secs. The Budget has taken steps to allow better access to Indian bonds, allowing unlimited investments in some bond categories.
The government has said it will borrow a net Rs 5.36 trillion from the market in 2020-021, buy back Rs 300 billion rupees worth of bonds and switch Rs 2.7 trillion worth of debt. The revised fiscal deficit target of 3.8 per cent for the current fiscal year and 3.5 per cent in the Budget for the next are largely in line with expectations.
Sitharaman said the funds from the disinvestment will be channelled to infrastructure development.
“We are putting the money into creating infra for India which will have a multiplier effect for the economy. The Budget 2020 shows government is putting money where it is needed most but with fiscal prudence,” she said. The government aims to raise Rs 2.1 trillion by stake sales next year.
“The Budget may not have given anything sector-specific, but it was a macro blueprint. Govt actions are drawn from ground reports & on-ground experiences.. the proposals are not delinked from ground realities, not theoretical,” she added.
Taking a dig at the critics of government not sharing data, she said: “Government is very transparent where money will come from and where it will go.”
The Finance Minister also said that she has told the tax authorities not to keep obsessing over targets and harass taxpayers.