NEW DELHI: Union Finance Minister Nirmala Sitharaman on Saturday indicated that to kick-start economic growth, the government has tried to give a boost to consumption through a combination of public spending in infrastructure, reforms that included solving the NBFC crisis, and direct benefit transfers, in Union Budget 2019-20.
“We have not ignored consumption. We did not ignore consumption even in the last term. I am reiterating that public expenditure would be focused through infrastructure development,” she said in an interaction with select media a day after the budget.
Elaborating on the point, Sitharaman said that infrastructure spending is one route that will fuel consumption. For instance, she has proposed a capital expenditure of Rs 1.60 lakh crore, including budgetary support of Rs 65,837 crore, for the railway ministry.
“We reinforce our commitment that if consumption has to be pepped up, there is one route (not the only route) that is public spending on infrastructure. Infrastructure is one powerful place where money can reach the hands of people and that will trigger greater consumption,” she added.
The Finance Minister said that the government has emphasised on kicking a process of “virtuous cycle” of investment, consumption expenditure and job creation. For instance, “if we increase wages that trigger greater consumption, this, in turn, will increase manufacturing.”
She also added that the Budget has attempted to keep the consumption level robust by taking a much-needed step to tackle the crisis in the shadow banking sector.
It proposed that that government will give one-time six-month credit guarantee for the purchase of assets of high-rated NBFCs with a turnover of up to Rs 1 lakh crore. The move is set to ensure the flow of capital for well-performing NBFCs.
The minister also pointed out that direct benefit transfers would also play a role in boosting consumption. The outlay for transfers to small farmers under PM-Kisan has been increased to Rs 75,000 crore.
In her limited space to manoeuvre, she sought to fire all engines to revive private investment and boost consumption offering a slew of tax concessions to companies, raise public spending for infrastructure and ensure credit flow for business expansion and addressing the immediate crisis.
“Measures like strengthening of logistics infrastructure and stepping up efforts in rural housing, are likely to provide an impetus to investment spending and consumption. Apart from boosting growth in the near to medium term, they will also help generate jobs in the economy,” CII president Vikram Kirloskar said.