‘We have spent, spent, spent’

Sitharaman defends accounting of govt expenditure while stressing that revenue statements have become a lot more transparent.

Finance Minister Nirmala Sitharaman tabled the Union Budget for 2021-22 emphasising six pillars on which the Budget rests. “The Budget proposals for 2021-22 rest on six pillars — health and well-being, physical and financial capital and infrastructure, inclusive development for aspirational India, reinvigorating human capital, innovation and R&D, Minimum Govt and Maximum Governance,” she said. Later, addressing the post-Budget press conference, the Minister said the government has been absolutely upfront with the fiscal deficit which has been pegged at 9.5% of the GDP and so “We have spent, we have spent and we have spent. That’s why fiscal deficit has reached this number”. Edited excerpts from her speech and the post-Budget press conference:

Big on infra

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If there are two important features of this Budget, it is that we chose to spend big on infrastructure which spans across roads, power generation, bridges and ports. The Budget comes at a time when all of us decided to give impetus to the economy and that impetus, we thought, would be qualitatively spent and give necessary demand push if we choose to spend big on infrastructure. As a second feature, I looked at the healthcare sector and even there, capacities for better health management had to be brought in due to what we had gone through last year.
We have taken the approach of widening new opportunities for growth, new openings for our youth, a new high to human resources, develop new regions for infrastructure, walking towards technology & bring in new reforms with this Budget.

Emphasis on agriculture

We are bringing in Agriculture Infrastructure Development Cess through restructuring without consumers having to pay more. In no category has the consumer ended up paying more after this cess. That we have done only because we wanted to be sure that in order to improve agricultural infrastructure, we have a dedicated amount coming out of the Budget rather than that going it to the consolidated fund. It might still go but we know what is going to be used for agriculture infrastructure.

Financial Sector reforms

We have come up with a formulation to clean up NPAs in banks. Development Financial Institution is being brought in to fund infrastructure requirements. This DFI will be used to raise about Rs 5 lakh crore in the next 3-5 years. We see the future where the government DFIs will be competing with the private DFIs. Equally important are the reforms that we are bringing in the financial sector. We have made some progressive steps in the financial sector. …We need more efficient banks in economy, can’t be sitting with laggardsWe ensured repeated review of capital expenditure and ensured that spending was encouraged and not delayed. Our fiscal deficit which started at 3.5% during February 2020 has increased to 9.5% of the GDP, so we have spent, we have spent and we have spent. At the same time, we have given a clear glide path for deficit management. We have made brave decisions to keep government accounts open and transparent. The provision for extra-budgetary resources in Budget 2021 is zero, and for unidentified contingency, it is Rs 30,000 crore.

Disinvestment will continue

Other than IDBI Bank, we propose to take up the privatisation of two public sector banks and one general insurance company in 2021-22. This would require legislative amendments and I propose to introduce the amendments in this session itself…The ministry will take a call on which banks to be privatised and what manner. The disinvestment/strategic disinvestment policy aims at minimising the presence of central public sector enterprises, including financial institutions, and creating new investment space for the private sector.

Gross market borrowing

The gross borrowing from the market for the next year would be around Rs 12 lakh crore. We plan to continue with our path of fiscal consolidation, and intend to reach a fiscal deficit level below 4.5% of GDP by 2025-26 with a fairly steady decline over the period. …To ensure that the economy is given the required push, our BE estimates for expenditure in 2021-22 are Rs 34.83 lakh crore. This includes Rs 5.54 lakh crore as capital expenditure, an increase of 34.5% over the BE figure of 2020-21.

Recites again from Thirukkural…

For the second year in a row, Nirmala Sitharaman recited a couplet from the Tamil classic Thirukkural during her Budget speech, on the characteristics of a ruler who creates wealth. Last year too, she had recited from the popular classic, penned by saint poet Thiruvalluvar. Thirukkural is considered the gold standard of various principles of life by the Tamil people. In her 110-minute long speech, she quoted the Tamil kural “iyatralum eettalun kathalum katha vaguthalum valla arasu,” and went onto explain what it meant.
“A king or a ruler is one who creates or acquires wealth, protects and distributes it for common good,” Sitharaman said.

However, DMK president Stalin, who was critical of the Budget, saying it offered an “illusionary lollipop” to the poll-bound Tamil Nadu, pointed out to her about another couplet from the classic that defines a ruler. “It is regrettable she did not consider the ‘kural’ which says delivering (to people) what is required for a good life, being compassionate, giving a just rule and safeguarding citizens brings more laurels to a government,” he said, referring to the kural “kodayali sengol kudi ombal nangum udaiyanam ventharku oli.”

…quotes Tagore too

“Faith is the bird that feels the light and sings when the dawn is still dark,” she quoted Rabindranath Tagore. “Now, just it happened after the two world wars, There are signs that the political, economic and strategic relations in the post Covid world are changing. This moment in history is the dawn of a new era. One in which India is well-poised to truly be the land of promise and hope,” she said.

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