Finance Secretary TV Somanathan in an interview with CNBC-TV18, emphasised the government's commitment to long-term development, as outlined in the interim budget speech focused on the year 2047. He likened the journey to a marathon, stressing the need for fiscal fitness to reach the goal of becoming a developed country.
Somanathan said, "The budget speech is very clear, everything is oriented towards 2047. It is a marathon to reach 2047 as a developed country and to run a marathon you have to be fiscally fit.
To be fiscally fit, we have to prepare ourselves for that long run. So stimulating short-run consumption through some new form of subsidy or something which is very difficult to rollback is the kind of thing that governments should not do."
He clarified that the government has improved the fiscal deficit without cutting expenditures, rejecting the notion of a recessionary or austerity budget.
Finance Minister Nirmala Sitharaman announced a reduced fiscal deficit target for 2024-25 at 5.1% of GDP, with a further reduction to 4.5% for FY26. The government achieved a fiscal deficit of 5.8% for the current financial year, outperforming the budget estimate of 5.9%.
Somanathan affirmed the continuity of the government's divestment policy, citing execution delays, particularly with the IDBI Bank divestment pending regulatory clearance from the Reserve Bank of India.
India's disinvestment target for FY2025 is ₹50,000 crore, while the target for FY2024 has been revised to ₹30,000 crore from the initial ₹51,000 crore.
Somanathan highlighted the government's approach of using disinvestment strategically for public asset management, prioritizing value maximization over short-term fiscal needs.
“The government has taken a policy decision that we won't use disinvestment as a means of funding our fiscal requirements. We will use disinvestment as a part of our larger public asset management strategy and maximize our value. If maximizing value, conflicts with fiscal management, then maximization of value takes priority.
So we're saying to PSUs you give us resources as dividends, give us resources as disinvestment, give us resources to boost the economy by incurring capital expenditure three different purposes for which public sector enterprises can be used.
So in certain cases we may actually opt for a lower dividend if they need it for capital expenditure, we may opt for a higher dividend or we may sell our share, the idea is to maximize the value that we can get from our public sector assets by de-emphasizing the short term fiscal imperative,” Somanathan stated.
Watch the accompanying video for the entire conversation.
First Published: Feb 3, 2024 12:17 AM IST
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