Objective of kick starting growth not addressed effectively in Budget: Garg

Garg, in a blogpost titled ‘Will Expenditure Proposals of Budget 2020-21 Stimulate Growth and Improve Redistribution?’, said in the broadest sense, the expenditure proposals of Budget 2020-21 present more of consolidation in the face of deteriorating economic and fiscal situation.

“The objective of kick-starting growth and building growth momentum which does not seem to have been addressed effectively in the Budget. Infrastructure investments in roads, railways and metros have been the major planks of infrastructure investment by the government.

“The outlays of these programmes have not seen any nominal growth in 2020-21 (in real terms, these would be 8-10 per cent lower),” the former finance secretary said.

He said likewise, outlays for promoting industrial and services growth have seen no change in character.

“All these expenditures are unlikely to be imparting any fresh growth stimulus to the Indian economy,” he argued. A number of good public welfare programme like rural roads, rural housing, toilets, household electricity connections, LPG connections and now tap water are continuing with their much-needed outlays protected, Garg said, adding that distress relieving programme like MGNREGA and PM-Kisan are also continuing with their outlays preserved.

Referring to the government’s Budget proposal to provide equity funding to BSNL and MTNL to pay for the cost of 4G licence, Garg said that there is no likelihood of BSNL and MTNL to make any money ever.

“This equity will go down under without it ever coming back to the Government. It makes no sense for BSNL and MTNL to go for 4G licence and create a network at this stage in a super competitive field. “If the Government intended to keep these two companies mortally sick but on ventilator, more transparent way would have been to pay this as grant and not as capital expenditure,” he said.

Noting that equity investment of about Rs 20,000 crore in BSNL, MTNL and ITI literally amounts to wasting precious public resource, he said there is absolutely no likelihood of these enterprises being able to acquire the customers who have already bolted from their stable.