NITI Aayog Vice-Chairman Suman Bery on Friday described Finance Minister Nirmala Sitharaman’s pre-election budget as ‘fiscally conservative’ and exuded confidence that the government will achieve the fiscal deficit target of 4.5 per cent of GDP by 2025-26.
Sitharaman on Thursday announced a Rs 11.11 lakh crore spending on infrastructure and vowed to continue reforms as she resisted resorting to populist measures in the Modi government’s last budget before general elections, instead choosing to stay on the path of cutting deficit while bolstering measures for focus groups.
“I think the interim budget is fiscally conservative, actually opens new ground and provides indications of what might figure in the actual major budget, which will be presented in July,” he told PTI in an interview.
Bery further said the fiscal outcome of this year’s budget is better than what was anticipated.
“We are going to achieve 4.5 per fiscal deficit target for 2025-26 as it is important, both in substance and for signal,” he added.
Continuing on the fiscally prudent path, the Modi government in the interim budget refrained from announcing populist measures, which will help it trim the fiscal deficit to 5.1 per cent of the GDP next fiscal and 4.5 per cent in FY26.
According to Bery, there are several indications that private investment will revive.
Replying to a question on capital expenditure outlay for the next fiscal year, he noted that the thrust on capex was because the economy was paralyzed at the time of COVID pandemic.
“The logic is that in the short term, the return in terms of multiplier, connected with capex is much greater than revenue expenditure,” Bery said.
The 11 per cent increase in actual capital expenditure outlay announced in the budget is well below the capital spending growth target of 33 per cent in FY2023–24 Budget. This would nonetheless keep the government’s infrastructure investment agenda rolling and, if realised, bring the capital investment share in GDP to a record 3.4 per cent.
Asked how the measures announced in the budget will help in creating more jobs, he said,”the issue is not jobs, the issue is good jobs”.
Asserting that unemployment has been coming down, he said India has problems of matching employees to jobs.
To a question on farm distress, Bery said India’s agricultural productivity is much lower than what it should be.
There are many announcements in this budget to raise productivity in agriculture, he added.
Asked what reforms the government should take to make India a developed nation by 2047, Bery said India has made a lot of progress in reforming its taxation system.
“India needs to take a few next-generation reforms, what one might call process reforms, rather than pricing reforms. And those are harder and some of the reforms have to be at the state level,” he said.
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