Union budget 2022: the Sarkari engine to stimulate the economy

NEW DELHI: As the economy appears to be picking up speed, Finance Minister Nirmala Sitharaman decided on Tuesday to maintain focus on government spending to boost economic activity and demand for inputs such as steel and cement through what is called a “multiplier effect”.
Through higher capital spending, the government hopes to create the conditions for the private sector to kick-start the investment cycle once it has exhausted the excess capacity of its factories, a theme that was debated in the study. Economic Monday.

As a result, the Center has planned to increase capital expenditure by 24.5% to Rs 7.5 lakh crore in the next financial year, against a shadow above Rs 6 lakh crore in the revised estimates for the current exercise. The revised estimates are approximately 8.5% higher than the budget estimates for the year.
Much of the revised estimate for this year was due to the capital injection and loans of almost Rs 52,000 crore linked to Air India, whose books were cleaned up during the privatization process.

In addition to the Center’s own expenditures, Sitharaman also decided to increase aid to states via aid grants – through 50-year interest-free loans – for those undertaking nearly sevenfold capital investments. to Rs 1 lakh crore in the next financial year. of the enhanced allocation of Rs 15,000 crore for this year.

Along with a higher capital expenditure allocation by railroads, telecommunications and highways, state loans, which will be in addition to normal borrowing, are major contributors to the higher capital investment plan.
The biggest leap is in the case of the telecommunications department, with a 10-fold increase to Rs 55,150 crore next year, driven by investments in BSNL.
Road transport and highways will also see a 55% increase to almost Rs 1.9 lakh crore, partly due to direct funding from the budget instead of fundraising by NHAI from the markets. Similarly, railway investments are expected to increase by 17% to around Rs 1.4 lakh crore.
“Renewed focus on improving capital spending is in line with improving spending outcomes. They will significantly improve our infrastructure – roads; airports; railways; and logistics. This improves efficiency competitiveness of our economy and enhances our export capabilities It has an immediate multiplier effect in creating jobs, improving incomes and as a catalyst for growth State governments will reap its multiplier benefits as these projects will be implemented in the states,” said Economic Growth Institute Chairman NK Singh.

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