Sunday, Nov 27, 2022

Budget a continuity of 2021 policies…capex push to lead lasting revival: FM

Nirmala Sitharaman was responding to a specific query from Bajaj Finserv CMD Sanjiv Bajaj regarding the timeline for privatisation of two-state owned banks and one general insurance company.

Finance Minister Nirmala Sitharaman at a post-Budget CII National Council interaction in New Delhi, Saturday. (Express photo by Praveen Khanna)

A “timeline” for privatisation of two state-owned banks and one general insurance companies cannot be specified, but the government policy on privatisation will continue, Finance Minister Nirmala Sitharaman said Saturday. Addressing the Confederation of Indian Industry’s (CII) National Council in a post-Budget interaction, she said the Budget has been very “simple and straightforward” with a clear path chosen for investing in creation of assets, which have a higher multiplier effect on economic activity and job creation.

“The policies which were announced in 2021 are continuing and I’m reiterating them in this Budget. I’m also ensuring that there is stability, there’s continuity and transparency. And privatisation was part of a policy announcement. In fact, it was very specifically an announcement that we want minimum government maximum governance and therefore government will get out of many of these areas and equally open up all the sectors, all the areas for private sector. However, the strategic sectors will be those in which at least a bare minimum presence of the government will be there,” Sitharaman said.

“… when I say bare minimum, there are others, some of whom have already been cleared by the Cabinet which will have to go for privatisation and the issue of insurance and banks are all part and parcel of that. I’m not going to be able to give a timeline now as we are moving forward with each of them. Near the time and when it is (ready), because all this is related also to the markets, we will announce closer to when we think it’s appropriate to announce, but my not speaking about it in this Budget as much as I spoke about it last year does not indicate that I changed my mind,” she added.

Sitharaman was responding to a specific query from Bajaj Finserv CMD Sanjiv Bajaj regarding the timeline for privatisation of two-state owned banks and one general insurance company. The government’s ambitious privatisation agenda has been scaled down, as it revised down the disinvestment receipts target to Rs 78,000 crore in the current fiscal’s RE from Rs 1.75 lakh crore in BE. For FY23, it has been set at a modest Rs 65,000 crore. Incidentally, Sitharaman did not use the word ‘privatisation’ in her speech this year, the hallmark of her FY22 Budget presentation.

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The Finance Minister stressed that the capex push by the government should lead to a “lasting” revival and recovery in the economy, having a bearing on the “core industries” soon, thereby crowding in private investment. Globally investors are now looking for law abiding, rule-based and possibly English-speaking jurisdictions to expand manufacturing and “India fits into that very well”, she said, while telling industry captains not to lose this opportunity for having higher level of industrialisation.

Responding to a suggestion by Kotak Mahindra Bank MD & CEO Uday Kotak on the need to set up a “proactive group” to deal with uncertainties emerging from likely rate hikes by developed country central banks and higher commodity prices due to geopolitical developments, the Finance Minister said the government has a “contingency plan” that keeps evolving to deal with such factors.

CII president TV Narendran said private sector investments will be catalysed through push on public capital expenditure (capex) but inflation remains a key concern. “Inflation is a key concern, if it can be addressed without raising interest rates. One suggestion is including Indian bonds in global bond indices,” Narendran said.
In her suggestion, Tractors and Farm Equipment Ltd (TAFE) CMD Mallika Srinivasan said despite intensive government support, the rural stress continues and therefore allocation for MNREGA schemes should kept at last year’s (revised estimates, or RE) levels.


Sitharaman said MNREGA is a demand driven scheme, and “we will be anytime ready to add on to that money.” Allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme, at Rs 73,000 crore for next year, is the same as in budget estimates (BE) for this year, but sharply lower than the RE of Rs 98,000 crore for the current fiscal, and the actual expenditure of Rs 1,11,170 crore during 2020-21.

First published on: 06-02-2022 at 04:00:37 am
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