Appreciating Finance Minister Nirmala Sitharaman for continuing fiscal consolidation in the Budget for 2023-24, Niti Aayog member Arvind Virmani on Tuesday said it would help in reducing the cost of capital for Indian companies.
Virmani further said the large increase in capital expenditures by 33 per cent to Rs 10 lakh crore for infrastructure development will accelerate India’s economic growth.
“On fiscal consolidation, the Finance Minister has reiterated that she will stay on it (the path of fiscal consolidation).
“… So, in a situation where there is a lot of global uncertainty, it is very very important because it will have an effect on interest rates available to Indian companies,” he told PTI.
Sitharaman in her fifth straight budget has raised the capital expenditure by 33 per cent to Rs 10 lakh crore for infrastructure development in 2023-24.
She announced a lower fiscal deficit target of 5.9 per cent for FY24 while retaining it at 6.4 per cent for the current financial year.
The minister also reiterated her intention to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26.
Virmani noted that the Budget for 2023-24 has inclusive aspects of growth also.
In the Prime Minister Narendra Modi-led government’s last full Budget before the general elections, Sitharaman unveiled tax rebates and saving plans to woo the middle class, women and pensioners, and announced massive spending on housing and infrastructure as she walked the tightrope between staying fiscally prudent and meeting public expectations.
To a question on the revival of the Old Pension Scheme (OPS) by some states, Virmani said the new pension scheme was a great reform.
“And anybody who says the contrary, I can not have any respect for them,” he asserted.
The OPS, under which the entire pension amount was given by the government, was discontinued by the NDA government in 2003 from April 1, 2004.
Under the new pension scheme, employees contribute 10 per cent of their basic salary, while governments contribute 14 per cent.
Two Congress-ruled states, Rajasthan and Chhattisgarh, have already decided to implement the OPS.
The Himachal Pradesh government has also promised to restore the scheme.
Jharkhand too has decided to revert to the OPS, while Aam Aadmi Party-ruled Punjab recently approved the reimplementation of OPS.
To a question on the International Monetary Fund (IMF) cutting India’s next fiscal year’s GDP growth forecast, Virmani said, “I think the IMF is going to revise it upwards”.
Last month, the IMF said it is expecting some slowdown in the Indian economy in the next financial year and projected/revised its growth projection to 6.1 per cent from 6.8 per cent for the current fiscal ending March 31.
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