The next budget could continue to focus on infrastructure development, Finance Minister Nirmala Sitharaman said on Saturday, stressing the importance of a coherent tax system.
The Minister of Finance, speaking at the Hindustan Times Leadership Summit 2021, said that infrastructure development is one of the main areas of government intervention and that “the focus on infrastructure spending under a form or another “will continue.
Sitharaman said the robust recovery of India’s pandemic-affected economy is due to the government’s focus on supporting micro, small and medium-sized enterprises, increasing investment in infrastructure, ease of compliance and the consistency of direct and indirect taxes.
âIf the decision making is complicated, long and cumbersome, it can’t help. Thus, the ease of doing business and the burden of compliance are reduced, âshe said, noting that the government is continually making political decisions to make doing business easier.
On fiscal consistency, the finance minister said the government cut corporate taxes in 2019 to boost investor sentiment and the policy move helped the economy recover more quickly after the two waves of the Covid-19 pandemic hit the economy – the first in March 2020 and the second in April-May of this year.
The Covid-19 outbreak last year and the 68-day strict lockdown since March 25, 2020 has had a devastating impact on the economy. India’s gross domestic product contracted 24.4% during the first fiscal quarter ended June 2020. The economy plunged into a technical recession (negative growth for two consecutive quarters) as it sank. ‘is contracted by 7.4% thereafter in the second quarter of 2020-2021.
The economy then experienced a V-shaped recovery against a backdrop of ??A 2097.7 trillion dollar stimulus package and several policy reforms announced since March 2020. Positive growth of 0.5% was reported in the third quarter, followed by a 1.6% expansion in the fourth quarter ended. March 31, 2021.
The Indian economy started the current fiscal year with a record expansion of 20.1% in the first quarter, signaling a strong recovery in business activities. The latest official data released on November 30 shows growth of 8.4% in the second quarter ended September thanks to increased public spending, exports and agriculture.
Speaking about the importance of certainty in tax rates to vital business decision-making by companies, she said, âBoth direct and indirect taxes should have a level of predictability. “
On a question about achieving divestment goals, Sitharaman said the sales processes are complicated and dealing with several technical and procedural issues takes time. She said that âsorting out the detailsâ in various departments âconsumes its own timeâ. âAnd that’s what we’re trying to speed up. “
With about three and a half months remaining in FY22, the government is a long way from meeting its budgeted divestment target of ??1.75 lakh crore, and its divestment revenue is less than ??10,000 crores ( ??9,329.90 crore according to official data).
She gave the example of Air India’s divestment, which was done transparently even during the pandemic. âThe same approach [is adopted] to deal with the rest of them, âshe said, adding that the Air India ownership transfer was to be completed by December 31.
The hint that infrastructure spending will be one of the budgetary considerations is no surprise. High investment spending and infrastructure development are expected to be the main drivers of growth in 2022-2023, which will build on the ??111 lakh crore National Infrastructure Pipeline (NIP) and PM Gati Shakti, the integrated digital platform for infrastructure development that has the potential to reduce logistics costs by 13% to 8% over the next four to five years.
The Gati Shakti Platform was launched by Prime Minister Narendra Modi in October to ensure integrated planning and implementation of infrastructure projects over the next four years, with a focus on accelerating works on the ground, cost reduction and job creation.
The integrated approach is in line with the government’s plan to increase investment spending to revive the economy. Sitharaman, in his February 1 budget speech, announced a ??5.54 lakh crore capital expenditure plan in the current fiscal year. In August, she unveiled a ??6 lakh crore plan to monetize existing central government assets in four years, coinciding with the ??111 lakh crore PIN.
The PIN was announced by the Minister of Finance in December 2019 with 6,835 projects. The pipeline has now grown to 7,400 projects. Of this total, around 217 projects worth ??1.10 lakh crore has already been completed.
The Ministry of Finance regularly monitors the progress of infrastructure projects. When reviewing the capital spending of the highways, petroleum and steel ministries last month, Sitharaman suggested officials should anticipate capital spending in the third quarter of 2021-2022 and the first half of the year. year starting in April 2022, as infrastructure projects are a priority. for the government.