IMF calls for thrust on infra investment in Budget
Washington: Ahead of India’s annual budget presentation next week, IMF’s chief economist Gita Gopinath has favoured the extension of the pandemic support measures, thrust on investment in infrastructure and expanding health sectors programmes like Ayushman Bharat, and a very credible divestment path for commercially viable companies.
The Indian government has provided a lot of schemes for small and medium enterprises, most of which is in the form of liquidity support, Gita told PTI on Tuesday.
“And you want to revisit it and see how effectively that is working and see whether additional support may need to be provided,” Gopinath said while responding to a question on her recommendations to Finance Minister Nirmala Sitharaman, ahead of her presentation of the annual Union Budget on February 1.
It would be a good time for banks and Non-Banking Financial Companies (NBFCs) to raise capital given the attractiveness of financing conditions at this point, she said. “We have to also keep in mind that as these pandemic measures are lifted, there would very likely be an increase in non-performing loans. Even the RBI (Reserve Bank of India) has projected that,” Gopinath said.
But there might also be a need for the capital support to be provided by the government for public sector enterprises. That has been long on the table which is to improve governance of public sector banks, she said. bserving that there is a need for more public infrastructure spending, she said that the government has expressed an intention to do that.
“There are needs to make more public investment. That would be another area that would require thrust,” she said, adding that health is another sector which needs renewed focus.
“In this pandemic, there has been spending but if you look at the health needs of the country, health capacity has to be increased. We can also see an argument for expanding Ayushman Bharat programme for instance and also increasing the number of medical personnel,” Gopinath said.
She said that there has to be progress made on the GST (Goods and Services Tax) collections. There seems to be a gap with compliance which is an important area to fix. GST collections surged to an all-time high of over Rs 1.15 lakh crore in December, 2020 as economic activities picked up after lifting of stringent lockdown restrictions.
At Rs 1,15,174 crore, the collections were 10 per cent more than the mop-up in the previous month — the biggest growth in monthly revenues in the last 21 months. Gopinath said that another area which has been long-standing is divestments.
She said that due to Covid-19, India’s informal sector, like many parts of the world, has been hit hard along with unemployment in small and medium enterprises, micro small and medium enterprises.
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