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Next Union budget may retain focus on infrastructure story: Nirmala Sitharaman

The upcoming budget may have a continued focus on infrastructure development, Finance Minister Nirmala Sitharaman said on Saturday, stressing the importance of a consistent tax system.

Speaking at the 2021 Hindustan Times Leadership Summit, the finance minister said infrastructure development is one of the government’s main focuses and the “emphasis on infrastructure spending in one form or another” will continue.

Sitharaman said the robust recovery of the pandemic-stricken Indian economy is due to the government’s policy focus on providing support to micro, small and medium-sized enterprises, increasing infrastructure investment, easy compliance and consistency in both direct and indirect taxes.

“If decision-making is complicated, time-consuming and cumbersome, it can’t help. So the ease of doing business and the burden of compliance are reduced,” she said, pointing out that governments are constantly making policy decisions to make doing business easier.

As for consistency in taxes, the finance minister said the government cut corporate taxes in 2019 to boost investor sentiment and the policy decision helped accelerate the recovery of the economy after the two waves of the Covid-19 pandemic hit the economy. – the first in March 2020 and the second in April-May this year.

The Covid-19 outbreak last year and the 68-day hard lockdown since March 25, 2020 had a devastating impact on the economy. India’s gross domestic product fell 24.4% in the first fiscal quarter ended June 2020. The economy plunged into a technical recession (negative growth for two consecutive quarters) and then shrank 7.4% in the second quarter from 2020-21.

The economy subsequently experienced a V-shaped recovery thanks to a EUR 20.97 trillion stimulus package and several policy reforms announced since March 2020. Positive growth of 0.5% was reported in the third quarter, followed by an expansion of 1.6% in the fourth quarter ending in March. January 31, 2021.

The Indian economy started the current fiscal year with a record 20.1% growth in the first quarter, signaling a strong rebound in business activity. The most recent official data released on November 30 reported growth of 8.4% in the second quarter ended September as a result of higher government spending, exports and agriculture.

Speaking about the importance of certainty about tax rates for companies making critical business decisions, she said, “Both direct taxes and indirect taxes need to have a level of predictability.”

On meeting the divestment targets, Sitharaman said the sales processes are complex and it takes time to address various technical and procedural issues. She said “tying up the loose ends” in different departments “takes its own time”. “And that’s what we’re trying to accelerate.”

With about three and a half months to go in FY22, the government is some way from meeting its budgeted divestment target of 1.75 lakh crore, and its divestment receipts are less than ₹10,000 crore (₹9,329.90 crore). according to official data).

She gave the example of the divestment of Air India, which happened transparently even during the pandemic. “Same approach” [is adopted] to handle the rest,” she said, adding that the transfer of ownership for Air India was expected to be completed by December 31.

The hint that infrastructure spending will be one of the budget considerations comes as no surprise. High capital expenditures and infrastructure development are expected to be the main growth drivers in 2022-23, which will be based on the ₹111 lakh crore National Infrastructure Pipeline (NIP) and the PM Gati Shakti, the integrated digital infrastructure development platform with the potential to logistics costs from 13% to 8% over the next four to five years.

The Gati Shakti platform was launched in October by Prime Minister Narendra Modi to ensure integrated planning and execution of infrastructure projects over the next four years, with a focus on accelerating work on site, cutting costs and creating jobs.

The integrated approach is in line with the government’s plan to increase capital expenditure to boost the economy. Sitharaman announced a ₹5.54 lakh crore investment plan for the current fiscal year in her budget speech on February 1. In August, she unveiled a ₹6 lakh crore plan to monetize the existing central government assets within four years, coinciding with the ₹111 lakh crore NIP.

NIP was announced by the Minister of Finance in December 2019 with 6,835 projects. The pipeline has now been expanded to 7,400 projects. Out of these, about 217 projects worth 1.10 lakh crore have already been completed.

The Ministry of Finance regularly monitors the progress of infrastructure projects. While reviewing the capital expenditures of the highways, petroleum and steel ministries last month, Sitharaman suggested that officials advance capex in the third quarter of 2021-22 and the first half of the financial year from April 2022 as infrastructure projects are a priority. for the government.

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