NEW DELHI: Finance Minister Nirmala Sitharaman on Tuesday said the Budget for the next fiscal will attract private investment, and ensure a predictable economic recovery in the years to come.
Replying to a debate on appropriation and finance bills in the Rajya Sabha, she also defended the handling of inflation but acknowledged the ongoing war in Russia and Ukraine has posed fresh challenges, including higher oil prices, and disruptions in supply chains.
The Upper House later returned the two bills without any changes, other than those proposed by the government, completing the nearly two months long parliamentary process for approval of the Union Budget for the fiscal beginning April 1.
"Newer challenges are before us, (in the) Budget presentation I had not taken into account the Omicron and now we are also facing the situation of a full-blown war in Ukraine which is not some war in some corner of the world. But it is seemed to be having an impact on all countries like the way the pandemic had," the minister said.
She said the war has affected the value chains, and the world markets are caught up in a situation where nothing is normal.
The minister said that while 32 countries (as per an OECD report) resorted to taxation to revive their economies, the Modi-led government did not increase taxes.
"So you are in a situation where like during the pandemic we came up with a Budget and then came the second wave. This time we came up with budget continuity aimed at recovery and then Omicorn and now we also have war whose impact has been felt by all of us," she said.
Sitharaman said the government did not resort to taxation for resource mobilisation to deal with the impact of the Covid pandemic.
"Last year we did not fall back on any increase in taxation rates in the name of Covid tax or in the name of any other element of tax to have the resources mobilized for the sake of meeting the challenges of recovery, so we did in this budget as well," she stressed.
She further said the Prime Minister had directed that the Budget should not draw on resources by taxing people at this time when recovery is the most important element and that "we should find resources and fully continue with the predictable recovery that we were aiming at".
Referring to issues concerning private investment, Sitharaman said following the pandemic, the government had stepped up the investment with a view to creating an environment to revive and sustain the economy.
"We believe that the government and the private sector are partners in assuring development in this economy. There is no 'us versus them' when it comes to government and the private sector," the minister said and highlighted measures like the PLI scheme, and PM Gatishakti, to attract private investment.
The government is conscious of the need to balance the growth and also make sure India's recovery post-Covid is sustainable, she said and added the budget reflects this commitment and outlays the way forward.
During the discussion, several members had raised concerns over the price situation in the country.
To this, the minister said the government was conscious of inflation.
She expressed hope that the Wholesale Price Index (WPI) will shrink going forward.
The finance minister further said that in spite of all the uncertainty and all the self-doubting eminent persons, who have been commenting saying the Indian economy has a problem, the FDI inflow into India in 2020-21 was USD 81.72 billion and USD 74.39 billion in 2019-20.
She said India has continued to remain in the top five foreign direct investment (FDI) recipient countries as per a UNCTAD report.
The minister said that in the seven years and nine months of Prime Minister Modi's government till December 2021, FDI inflows have been USD 500.5 billion and that is about 65 per cent higher than FDI inflows during the entire 10-year regime of the UPA.
"I think that reflects how honestly both the Indian investors and investors from abroad have trusted the economic management of this government under Prime Minister Modi and that is why you find 10 years of more than 65 per cent FDI in the seven years and nine months has come into this country," Sitharaman said.
Referring to the states' share for devolution in central taxes, Sitharaman said it was projected at Rs 6.66 lakh crore as per Budget Estimates of 2021-22, and Rs 7.45 lakh crore as per Revised Estimates.
"What I have actually devolved is Rs 8.35 lakh crore, Rs 1.69 lakh crore more than the BE and Rs 90,000 crore over the RE has been given," the finance minister said.
Giving more financial details, she said from 2013-14 to 2022-23, the actual utilisation of health and education cess is expected to be Rs 3.94 lakh crore as against an estimated collection of Rs 3.77 lakh crore.
This cess, she said, is primarily funding centrally sponsored schemes that happen in the states, wherein the funds are being transferred to the state governments.
She also spoke about steps that are aimed at making ease of living for the middle class, related to the Pradhanmantri Garib Kalyan Yojana, statutory PF contribution, and construction of housing units, among others.
Sitharaman had presented the Union Budget on February 1.
The Lok Sabha approved the two bills on Friday.
Sitharaman on Tuesday defended the 137-day hiatus in fuel price revision, saying the disruption in supply chains and the resultant increase in global oil prices due to the war in Ukraine was a "couple of weeks" phenomenon resulting in the record hike in petrol and diesel prices in last 8 days.
International oil prices had started moving up days before Russia invaded Ukraine on February 24.
The basket of crude oil that India buys averaged USD 100.71 per barrel that day as compared to USD 82 in early November 2021 when state-owned fuel retailers hit the pause button on daily price revision ahead of assembly elections in five states.
On March 9, international prices touched USD 140 a barrel (USD 128.24 for the Indian basket of crude oil) while the fuel retailers re-started daily price revision on March 22.
Replying to a debate on the Budget for 2022-23 in Rajya Sabha, she said opposition members had stated that the war in Ukraine had been raging for a long time and fuel prices are being raised now.
"Absolutely untrue," she said.
"The disruption and a resultant increase in the price of global oil and also disruption to supply are all happening since a couple of weeks ago and we are responding to it."
Petrol and diesel prices have been hiked by Rs 4.80 per litre since March 22 -- a record increase in any eight days since the daily price revision was implemented in June 2017.
Sitharaman said the government is taking various steps in response to the rise in global oil prices.
She blamed the issuance of bonds by the UPA government more than a decade back to oil companies to make up for losses they incurred on selling auto and cooking fuel below cost.
"Taxpayers of today are paying for subsidy dished out to consumers more than a decade ago in the name of oil bonds. And they will continue to pay for the next five years as the redemption of bonds continues till 2026," she said putting the redemption value at Rs 2 lakh crore.
To the opposition party's assertion that oil bonds were first issued by the BJP government between 1999 and 2004, she said Atal Bihari Vajpayee's government had issued bonds worth Rs 9,000 crore as compared to Rs 2 lakh crore by the UPA.
International oil prices during the Vajpayee government were below USD 30 per barrel while they shot up to record levels of USD 147 under the UPA, requiring higher subsidy support in form of oil bonds.
She said the oil bonds issued by the Vajpayee government were "one-time action rather than a continuous policy (as in the UPA)."
"There is a huge difference in the magnitude between Rs 9,000 crore which was one time that had to be repaid on account of Vajpayee government's oil bonds and more than Rs 2 lakh crore which was raised during UPA which is getting paid even now," she said.
"Funding oil at a higher cost has an honest way of doing it and a way in which you book it on somebody else and some other government keeps paying for it. We have not done that," she pointed out.
While the war in Ukraine had posed fresh challenges in the form of higher international oil prices and supply chain disruptions, she went on to state that inflation has been kept under control.