Rediff.com  » Business » Govt readies plan to boost demand with infra spend, cash transfer

Govt readies plan to boost demand with infra spend, cash transfer

By Arup Roychoudhury
Last updated on: June 11, 2020 13:50 IST
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This includes an infrastructure push which may lead to the government spending more than its budgeted capital expenditure for 2020-21. There are also discussions on increasing the scope and quantum of direct cash transfers to the beneficiaries who need it the most.'

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Illustration: Dominic Xavier/Rediff.com

With the economy opening up again and activity re-starting, the centre is discussing measures to help boost demand.

This includes an infrastructure push which may lead to the government spending more than its budgeted capital expenditure for 2020-21, Business Standard has learnt.

 

There are also discussions on increasing the scope and quantum of direct cash transfers to the beneficiaries who need it the most, two senior officials have said.

“With activity picking up, the priority now is pushing demand. There are talks on infrastructure.

"Any boost there will help create jobs, which we need right now,” said one of the officials.

“The National Infrastructure Pipeline is already in place, and that will serve as a starting point for our efforts.

The official did not rule out the centre spending more than the FY21 budgeted capital expenditure estimate of Rs 4.12 trillion.

The idea, as is the case in slowdowns, is for the centre and PSUs to boost capex to encourage the private sector to start spending.

There are also steps being taken to attract more foreign direct investment.

“The budgeted fiscal numbers don’t hold anymore. Revenue is stretched and we are depending on higher borrowing. If the need arises, capex will be increased,” the official said.

The final report of the National Infrastructure Pipeline was submitted to Finance Minister Nirmala Sitharaman in late-April.

The report was projecting total infrastructure investment of Rs 111 trillion during the period FY 2020-25, of which 40 per cent will be borne by the centre and the states each.

The report is now being slightly amended to reflect the reality of the current severe slowdown due to the COVID-19 pandemic and the just ended nationwide lockdown.

“The finance minister had said that the pipeline will be frontloaded and most of the investment will happen in the first two-three years. That commitment has not changed,” the second official said.

Earlier this month, the Cabinet had approved setting up of an “Empowered Group of Secretaries (EGoS) and Project Development Cells (PDCs)” in various Ministries and Departments for attracting investments in India.

“This will make India a more investor-friendly destination and to handhold and further smoothen investment inflows into the country.

"It will give a fillip to our domestic industries and open up immense direct and indirect employment potential in various sectors,” the centre had said.

There have also been discussions to boost demand by increasing cash handouts through direct transfer to Jan Dhan accounts, the second official said.

As part of the PM Garib Kalyan and Aatmanirbhar Bharat packages, the finance minister had announced a one-time cash transfer to senior citizens, women and divyangs, in addition to increase in quantum of pay undet NREGA and expediting PM Kisan transfers.

“There are discussions being held on increasing the cash transfers. They will be extended beyond June,” said the second official.

The official said that while the centre has put in place strict measures regarding spending, including no proposal for new schemes expect the ones under the Aatmanirbhar Bharat package, there will be no impact on infrastructure schemes and projects, as also existing rural and welfare schemes.

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Arup Roychoudhury in New Delhi
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