Minister says that there will be growth momentum in the medium-term. Citizens are working with Centre and states towards recovery. This cooperation will put India on a growth trajectory, she says.
On Friday, Union Minister spokesman Arup Roychoudhury and Shrimi Choudhary expressed confidence in the robustness of the Indian economy. The FM said that the government had to present five mini budgets in 2020 despite the upheaval caused by the Pandemic. She said that the government has turned to a public capital expenditure programme to revive demand during the tough period.
The FM said that spending on capital assets was chosen because the government had adopted that route for economic revival during the Pandemic. Capital expenditure is money spent by the government on the development of machinery, equipment, building, health facilities, education, etc.
The Centre's capex outlay is estimated to be 7.5 trillion rupees in FY 23. According to the FM, 1 trillion rupees will go to states as a long-term interest-free loan for their capex needs.
In 2019 -- 20 the government's capital expenditure through budget was Rs 3.35 trillion.
The entire 1 trillion rupees could be given to states in the July-September quarter. The rules for distribution of the loan had been framed by the FM. Many states were ready to submit their projects - both greenfield and brownfield -- for evaluation.
Sitharaman was confident that the amount would be picked up by states before the end of the second quarter.
The FM tried to assuade the concerns around the fiscal deficit, saying that they are under control despite continued external headwinds.
Revenue buoyancy gives you a bit of comfort and will continue to source materials from specific places to cut cost. She says there is strong centre-state synergy to continue.
FM Sitharaman said that inflation is nowhere close to what other countries are seeing, despite the fact that inflation is giving a tough time for policymakers. She conceded that it is burdensome for people, especially those with low income.
Retail inflation went up from 3.4% in FY 19 to 4.8% in FY 20 and 6.2% in FY 21 before easing moderately to 5.5% in FY 22.
Retail inflation for May 2022 cooled off from the 8 year high of the previous month to settle at 7.04 per cent. The Reserve Bank of India expects to have an inflation of above the 6 per cent mark by October-December quarter.
The bank privatisation plans are almost ready and the government will bring amendments to the Banking Regulation Act soon, according to the FM. She said that while the Centre would continue to own some banks, in the banks that it decides to exit, it could do so completely.
There has been no official confirmation from the government, Central Bank of India and Indian Overseas Bank.
After the GST Council meeting, the FM said that the government was aware of Covid-affected revenue growth. The growth percentage can't be measured for those two years. She said that the government is yet to take a call on rate rejig.
The infrastructure projects in India are hampered by the cost overruns and delays. Will the government overcome such challenges and spur the economy on with its ambitious capex plans hanging in the balance?