States Must Step Up Capex, In­vest More in Ru­ral Ar­eas: Fin Secy

The Economic Times - - Economy - Our Bu­reau

New Delhi : The Cen­tre has nudged states to en­hance cap­i­tal ex­pen­di­ture and in­vest more in ru­ral ar­eas and in­fra­struc­ture. “States are re­quested to align their fo­cus to the thrust pro­vided in the Union Bud­get to pro­mote in­vest­ment and growth in the ru­ral sec­tor...It is im­per­a­tive to step up cap­i­tal ex­pen­di­ture at state level also,” fi­nance sec­re­tary Ratan Watal said on Mon­day.

Ad­dress­ing the sec­ond con­fer­ence of state fi­nance sec­re­taries in Delhi, Watal said the Cen­tre has ac­cepted the rec­om­men­da­tions of 14th Fi­nance Com­mis­sion and that will give more funds and greater au­ton­omy to states.

“To­tal trans­fers to states in­clud­ing grants in aid from Cen­tre to states are es­ti­mated to be .₹ 9.47 lakh crore in 2016-17 as com­pared to .₹ 8.36 lakh crore dur­ing 201516, which is a hike of 12% of re­vised es­ti­mates of 2015-16,” Watal said.

He said the Cen­tre has also ap­proved an ad­di­tional fis­cal deficit to el­i­gi­ble states dur­ing the re­main­ing pe­riod of the award from 2016-17 to bor­row more un­der the two flex­i­bil­ity op­tions.

“The states will get ad­di­tional space to raise bor­row­ings, which may re­sult in much-needed gov­ern­ment ex­pen­di­ture for cap­i­tal projects and in­fra­struc­ture,” Watal said. The union cab­i­net last week al­lowed states with sound fi­nances to bor­row an ad­di­tional 0.5% of their GDP over and above the 3% pre­scribed by the 14th Fi­nance Com­mis­sion to help them meet de­vel­op­men­tal needs. Watal said pru­dent ex­pen­di­ture man­age­ment by ex­plor­ing the pos­si­bil­ity of ra­tio­nal­is­ing sub­si­dies, cer­tain state sub­si­dies and grants can help states main­tain rev­enue bal­ance so that capex can be in­creased.

“To give fur­ther im­pe­tus to pub­lic in­vest­ment and in­fra­struc­ture, it has been de­cided to give ad­di­tional re­sources of .₹ 31,300 crore through is­suance of bonds, by CPSEs (cen­tral pub­lic sec­tor en­ter­prises) and min­istries like (those of) power, re­new­able energy, ship­ping, agri­cul­ture,” he said. Watal said to en­sure macroe­co­nomic sta­bil­ity and pru­dent fis­cal man­age­ment, the Cen­tre has stuck to the fis­cal deficit tar­get of 3.5% in 2016-17.

“The global econ­omy is still strug­gling and it may take some time for it to sta­bilise. Eco­nomic shocks else­where in the world are felt in the do­mes­tic mar­kets. De­spite the slug­gish sce­nario, the In­dian econ­omy has shown steady im­prove­ments in the re­cent pe­ri­ods,” he said.

Rat­ing agen­cies glob­ally have es­ti­mated that In­dia will be the en­gine of global growth, Watal said.

Watal said Cen­tre has ac­cepted the pro­pos­als of 14th Fi­nance Com­mis­sion that will give more funds & au­ton­omy to states

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