Rajasthan Patrika Op-Ed
It is common knowledge by now that in preparing a “growth oriented” Budget the Finance Minister has given a major push to infrastructure. But, what may not have been apparent at first sight - is the holistic approach adopted by the government in devising the infrastructure strategy. These have been done at two levels - 1) Strategic Framework and 2) Multiple Impact Areas;
Generally, infrastructure is associated in the public mind with physical assets like roads, bridges, railways, airports etc. Traditionally, these have been the key levers of development. However, what is unique about this Budget is that it views Infrastructure as an instrument for the citizen’s quality of life - touching heath, education, wellness, as well as employment generation in addition to improving road and rail connectivity. In the past the latter have been the main area of focus and consumed most of the resource allocation.
As, father Covid-19, Health and Wellness has been rightly accorded the highest priority in this budget - let us look at this area first. The Finance Minister has set aside a large sum (Rs 64,180 crores to be spent over 6 years) for the PM Atmanirbhar Swasthya Bharat Yojana. Much of this expenditure will go into creation of 17, 788 Rural and 11, 024 Urban Health and Wellness Centres, Public Health Laboratories in all Districts, Critical Care Hospital Blocks in over 600 Districts. Another major initiative is supply of clean water in over 4,000 urban bodies and nearly 3 lakh crores urban tap connections under the Jal Jeevan Mission.
In Education, understandably, the emphasis will be to make our children and younger generation “future ready” in a Digital World. So, apart from setting up new institutions and Universities - such as in Leh - the mantra is “Digital First”
Similarly, keeping in mind employment generation, amounts have been earmarked for setting up Mega Textile Parks, Fishing Harbours and Fish Landing stations along in-land rivers and water-ways.
The government had already launched a National Infrastructure Pipeline (NIP) in December 2019 which included nearly 7,000 projects. There has been considerable progress in recent months under the NIP - particularly under the Bharatmala Priyojana. However, this needs to be stepped up radically if India has to achieve its target of becoming a USD 5 trillion economy. However, accelerating Infrastructure Development would only be possible if there is a supportive ecosystem and institutional structure. It is here that Nirmala Sitharaman’s Budget is different from earlier ones both during the Modi era and before.
The most significant provision is the creation of a Development Financial Institution (DFI) with a capital outlay of Rs 20,000 crores but ambition to raise funding of Rs 5 lakh crores in 3 years. This can prove to be a game changer. The second innovative step is the “Asset Monetisation’ BluePrint - which lays down the framework of raising finances through a PPP mode in Roads, Railways, Airports and other Infrastructure Assets like Warehouses and Sports Stadium. Though this has attracted some criticism from political quarters - such as RJD and Trinamool alleging it is a “sell-out” of national property - that is the way to go for rapid development in the modern world.
The third pillar remains a disputed area - where successive governments have a poor track record is of divestment of loss making PSUs. However, the government has little option but to pursue this with determination as it will otherwise jeopardise all its grand plans. A number of transactions namely BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited among others would be completed in 2021-22. Other than IDBI Bank, we propose to take up the privatization of two Public Sector Banks and one General Insurance company in the year 2021-22.
Equally, as a fourth pillar the government is looking at a more effective mechanism of stressed assets management through new asset reconstruction companies. This will relieve the Public Sector Banks of the dead weight they are carrying and facilitate their recapitalisation for which Rs 20,000 crores has been ear-marked for this financial year itself.
Needless to add the real boost will come from the higher outlay in governments own capital expenditure. The Finance Minister has proposed a sharp 34.5% increase in capital expenditure taking it to a record Rs`5.54 lakh crores over Rs 4.49 crores estimated for the ongoing fiscal year 20-21. These expenses will obviously go into basic areas of roads, highways, railways, Urban and Rural Infrastructure projects. But, a significant deviation this year are the plans for the Power Sector - particularly the ailing and inefficient Discoms (Power Distribution Companies). A revamped reforms-based result-linked power distribution sector scheme will be launched with an outlay of `3,05,984 crores over 5 years. The scheme will provide assistance to DISCOMS for Infrastructure creation.tied to financial improvements.
The intentions are obviously pious and thinking both progressive and ambitious. The Finance Minister’s confidence must have also been boosted by the increase in tax collections and the V -shaped recovery being predicted with a GDP growth rate of around 10%. But, the success of the plan will depend not just on implementation but also political management - which often becomes an obstacle in governance.
The Hindi version of this article was published in Rajasthan Patrika on February 3rd, 2021
#Budget2021 #FinanceMinister #NirmalaSitharaman #NarendraModi #Infrastructure #NationalInfrastructurePipeline #NIP #PublicSectorBanks #PSBs #PublicSectorUnits #PSUs #economy #IndianEconomy
