Finance Minister Nirmala Sitharaman on Friday put a staunch defence of her Budget relying on expenditure to boost growth, saying the Budget brings stability for an economy reeling under the pandemic and will create jobs through public spending. Rejecting criticism of high prices in the country, she said the inflation at just over 6 percent when pandemic shaved off Rs 9.57 lakh crore from the economy is less than that during past crises like the 2008-09 global financial meltdown when the economic impact was much less.
Replying to a discussion on Budget 2022-23 in the Rajya Sabha, she said there is no question of a slowdown or recession, as she cited an estimated 9.2 percent GDP growth in the current fiscal year ending March 31. The size of the economy has grown from Rs 110 lakh crore 7 years ago to Rs 232 lakh crore, she said, replying to the charge that the economy was running on a treadmill.
The Budget for the fiscal year beginning April 2022 (FY23) stands for continuity and predictability in taxation while focussing on growth just as last year. "The Budget aims at continuity, the continuity is in giving the stimulus through public expenditure. We also wanted to underline the stability and sustainable recovery that we so need now," she said.
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"At a time when the economy has to grow and grow at a good pace, it is important for the economy also to be stabilised." Public expenditure in building infrastructure as part of the massive Rs 7.5 lakh crore capital spending plan outlined in the Budget will provide stable and sustainable recovery.
Answering criticism of the Budget not giving any guidance on incomplete plans such as privatisation announced in the last Budget, Sitharaman said the continuity principle guides the government. Stating that the Indian economy suffered more than anywhere else in the world due to the pandemic, she said there was a 0.6 percent contraction in the economy in 1972-73 due to the oil crisis and a 5.2 percent reduction in 1979-80 due to Iran-Iraq war.
The contraction of 6.6 percent in 2020-21 is much worse than what was witnessed during 2008-09 global financial crisis, she said. "There is no memory or there is no comparison between this kind of a contraction or anything else which happened earlier." In 2008-09 the economy's size reduced by Rs 2.12 lakh crore while during the present pandemic, the economy shrank by Rs 9.57 lakh crore.
"So, this crisis is a big one, the loss to the GDP is much higher," she noted. But even with the record contraction and stimulus package, the inflation rate at 6.2 percent is less than the 9.1 percent of 2008-09 crisis, she said.
"I want to highlight this for all, for the benefit of all Opposition respected members who periodically say look at the inflation, look at inflation, I want to say lesser crisis, you couldn't handle the inflation, you let it to 9.1 percent. We are taking care of it and it is remaining at 6-6.1 percent only," she said. She, however, agreed that work needs to be done to contain inflation but added the handling of price rise was better than that in the past.
"A smaller crisis you could not handle with very experienced finance ministers and I was mocked at saying would you know anything at all," she said. She said public expenditure on infrastructure building has a multiplier effect, while revenue expenditure does not give you the required multiplier.
Every one rupee spent on revenue expenditure would give a 45 paise worth multiplier immediately and additional 10 paise later. But an equivalent amount spent in capital expenditure would get Rs 2.45 worth of multiplier in the immediate specific period. "Therefore to sustain the growth we have to choose spending through public capital expenditure and that is why the money (has gone up from) Rs 5.54 lakh crores (in the current year) to Rs 7.50 lakh crores (in the next)," she said.
Besides, she said advanced economies that relied on large stimulus and demand-side measures to stimulate the economy during the pandemic are facing high inflation, citing observations by an economist. On variance in figures given the pre-Budget Economic Survey and the Budget, she said the source of data for the two are different.
To counter Opposition criticism of high privatisation target set for the current year and not meeting it, she cited Rs 1.07 lakh crore disinvestment done during the UPA regime. Taking a swipe at the Congress, Sitharaman said while the party was responsible for rural employment guarantee scheme MGNREGA, it was also responsible for the manner in which it has been misused.
"Take the entire credit for the misuse of MGNREGA. We use the scheme transparently and properly." "MNREGA's misuse was also due to them. CAG was also talking about the misuse and MNREGA was infested with ghost accounts. People who did not exist were receiving money," she said.
On the allocation for the scheme, she said the programme is meant to provide rural employment in lean seasons and if the demand rises, more money will be provided through the supplementary demand for grants. On job creation, she said the 60 lakh job creation talked about in the Budget was only from giving production linked incentives for setting up manufacturing units in 14 sectors. She added employment will also be created when Rs 7.5 lakh crore is spent for building public infrastructure.
The latest periodic Labour Force Survey indicates that the urban unemployment rate in January to March quarter of 2021-22 has declined to a pre-pandemic level of 9 percent after peaking at 20.8 percent. Refuting that the allocation made for the Ministry of Housing and Urban Affairs is purely for the sake of the Central Vista project in the national capital, she said the allocation has been increased from Rs 54,581 crore in 2021-22 to Rs 76,549 crore in 2022-23 due to increased allocation in PM Awas Yojna Urban.
First Published: Feb 11, 2022 7:13 PM IST
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