Government paving road for Rs 60,000 crore push to infrastructure sector

Source: The Economic Times, Oct 14, 2016

NEW DELHI: An influential section of the government is pushing for an additional Rs 50,000-60,000 crore burst of spending to give infrastructure a big mid-year push through the second supplementary demand for grants. Roads, railways and rural electrification will be among the main beneficiaries.

This is being discussed at the top levels of the government, a senior official told ET. The money will be needed as a number of departments will be close to exhausting their funds and require more money to meet targets. A final call on the amount will be taken in line with additional resources that the government is able to garner.

Genuine requirements based on the utilisation record of ministries will also be taken into account. The government is also keen on completing the promised Indian Institutes of Technology (IITs), Indian Institutes of Management (IIMs) and All India Institutes of Medical Science (AIIMS).

The finance ministry, which needs to stick to the fiscal deficit target of 3.5% of GDP, will be closely involved in taking a final call on the issue. It has begun to look at various options to make room for additional spending.

“Genuine fund requirements would be met. Actual utilisation and unspent balances released to various agencies would be taken into account before allocating any additional funds,” a finance ministry official told ET. “Ministries that are sitting on funds and have not been able to spend would have to forego to those that have been able to spend.” Policymakers are of the view that the spending push will help boost growth and also aid timely completion of key government programmes. The finance ministry had on September 26 invited proposals to be considered for the second supplementary demand for grants that will be presented to Parliament in the winter session that’s to start November 16.

The funds constraint has resulted in just a marginal increase in the capital spending allocation in the current fiscal to Rs2.47 lakh crore from Rs2.38 lakh crore last year. The government has an additional burden of Rs 1.02 lakh crore in the current year on account of the seventh pay commission award. But it’s confident of generating any additional funds that may be required thanks to the just-concluded black money disclosure scheme, dividend payments from the Reserve Bank of India and asset sales despite revenue from the recent spectrum auction falling short of target.

“There will be no cuts,” said the official cited above. “The government is quite comfortable with the additional RBI dividend, tax expected on black money disclosures and is confident that the divestment target would be met.”

Highway target
The highway, power and railway ministries are looking for more funds to maintain the momentum on road building, rural electrification and railway capital spending.

The government is also looking at funds to implement its biodegradable toilet project in addition to setting up the promised IITs, AIIMS, and IIMs.

The Nitin Gadkari-led department of road transport and highways spent half of its Rs 55,000-crore allocation by August and needs more money to meet its target of 15,000 km of highways.
The railways has got government support worth Rs 45,000 crore, of which 32% was utilised by August.

The government is keen that the national transporter completes initiatives such as bio-toilets that are announced every year but left incomplete.

The power ministry wants to electrify all villages by May 2017, a year ahead of target, which means it will need more funds. It wants to give soft loans to states to ensure that every household gets a power connection.

The rural development ministry will need more funds for the Mahatma Gandhi National Rural Employment Guarantee Scheme, having run through its Rs 45,000-crore allocation as it cleared past dues and speeded up payments. Another Rs 10,000 crore is needed for the rest of the year.

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