Focus On Capex, Says Finance Minister As Parliament Passes Rs 47.6 Lakh Crore Budget

The government did not reduce allocations for any social welfare programmes and increased its focus on capital expenditure without compromising on fiscal prudence, Finance Minister Nirmala Sitharman said on Thursday.

Speaking in the Rajya Sabha, Sitharaman asserted that 'capital expenditure is not expenditure on capitalists' as she took a swipe at the Opposition, which has been criticising the government, saying it is favouring industrialists and neglecting common people.

The minister was replying to the general discussion on the Interim Union Budget 2024-25, Finance Bill 2024 and the Interim Budget of Union Territory of Jammu and Kashmir, 2024–25 in Rajya Sabha.

Later, the Upper House returned the 5 bills with voice vote, thus completing the process of passage of interim Budget of the Union government as well as for the UT of Jammu and Kashmir.

Sitharaman stressed that the highlight of the interim budget is the emphasis given by the government on capital expenditure and sustaining pace of economic growth.

The size of interim budget is Rs 47.6 lakh crore, with Rs 11.11 lakh crore earmarked for infrastructure development.

'With the capital expenditure being in the focus, in the last 3-4 years, we have made sure that our debt management is done in such a way that we honour the glide path for fiscal deficit that we had given in 2021,' Sitharaman said.

The government has pegged the fiscal deficit, or gap between expenditure and revenue, at 5.1% of the GDP for the fiscal year starting April 1, 2024. The government intends to eventually bring it down to 4.5% of the GDP in the fiscal 2025-26.

'If for a rupee spent on revenue expenditure, you hardly get 98 paisa return, whereas on every rupee spent on capital expenditure, you get Rs 1.46 as return. So public investment in infrastructure gives us greater returns,' she said, and added the government has committed to spend about 17% higher than revised budget (RE) of 2023-24.

'Our outlay is higher than the projected GDP growth rate of 10.5 per cent during the next financial year,' she said.

During her reply she responded to issues raised by Rajya Sabha members during the discussion.

She hit out at an opposition party MP saying that she was 'astonished' that the member had confused capital expenditure with expenditure on captalists.

'Capital expenditure is not expenditure on capitalists! Capital expenditure is spent on creating assets, which can be used by all citizens equally and their common infrastructure which improves the 'ease of living' for everybody,' she said.

The minister emphasised capital expenditure for creation of public infrastructure is growing faster than real GDP growth, and assured the House that the government has not reduced allocation for any social sector scheme to meet its fiscal target.

She further said that unemployment rate in rural areas has decreased from 5.3% in 2017 to 2.4% in 2023.

During his speech, Ashok Kumar Mittal (AAP) had made a reference to India's position in Global Hunger Index at 111th spot.

To this, Sitharman said the index is not a balanced approach to measure hunger and 'lets be conscious of it'. She also pointed index's data was based on mere sample size of 3,000 households, and added 'it is not a precise index as 3 out of 4 parameters focus on children'.

Chairman Jagdeep Dhankhar too joined in and said 'we need to be cognizant...how can we allow any organisation to caliberate us'.

Several MPs from opposition parties had raised the issue of lesser allocation of funds to states like Kerala and Tamil Nadu, under the devolution of taxes formula.

Sitharaman, however, strongly countered the assertions, saying her government has not violated any recommendation of the Finance Commission.

'Whatever was recommended by Finance Commission has been already given as per time, and will be given till the time of Finance Commission,' the minister said.

Several members has raised concerns over price situation in the country. To this, the minister said retail inflation has been brought down from average 6.8% during April-December 2022 period to 5.5 per cent in the corresponding period of 2023.

Participaing in the discussion, Congress leader Randeep Surjewala attacked the government for not doing anything for farm sector in the interim budget, though the farmers continue to suffer from higher input cost like fertilisers.

He also charged that the government has failed in fulfilling its promise of doubling farmers' income by 2022.

The Congress MP also sought to now why the government has not yet brought a law to give guaranteed minimum support price (MSP).

Citing the NCRB data, the Congress leader said more than one lakh farmers have committed suicide since 2014 but the government was not listening to farmers' pain.

'The Budget and appropriation bill do not have anything for hardworking people, and farmers,' Surjewala said.

Jawhar Sircar (TMC) cautioned the government that India's GDP should reach $5 trillion mark in the near future, but 'not at the cost of such high borrowing'. He also raised concerns over fiscal deficit.

Binoy Viswam (CPI) rued that government has reduced subsidies on food and fertilizers, thus affecting both common citizens and farmers.

He also talked about tax devolution between Centre and states, and demanded due share of funds for Kerala.