BackInfrastructure spending will draw the economy forward, says Nirmala Sitharaman
The government has projected ₹111 trillion investments for 2020-25 to develop social and economic infrastructure to boost economic growth, under NIPThe finance ministry had also said that it is critical to re-orient India’s policy towards calibrated reconstruction of the economy
PremiumFinance minister Nirmala Sitharaman on Friday said that public spending on infrastructure will be one of the key factors that will revive economic growth that has witnessed a sharp contraction due to the outbreak of covid-19.
Speaking at a virtual event organized by Dr Syama Prasad Mookerjee Research Foundation, the minister said that macroeconomic fundamentals of the Indian economy remains firm, which is evident from three crucial factors-- inflation figure well within monetary policy committee’s target, highest inflow of foreign direct investment as well as forex reserves, at a time when the whole world is affected by the pandemic. However, factors such as delay policy making decisions can be bettered.
“A lot of power to pull the economy up will lie with the infrastructure sector. Among the four engines that will draw the economy forward, public spending on infrastructure will be that one engine on which I will be spending a lot of money, making sure the money is going down where it should," Sitharaman said, adding that the minister is regularly reviewing the progress of the projects under the national infrastructure pipeline (NIP).
The government has projected ₹111 trillion investments for 2020-25 to develop social and economic infrastructure to boost economic growth, under NIP. As far as the funding of projects is concerned, National Infrastructure Investment Fund (NIIF) is one of the ways through which the infrastructure projects will be funded, she said.
“Rural non-agri rural activity are gaining strength and when money is being spent by public and private sector, it will have its spillover effect in the urban area. After all, rural products will have to go to urban centers…This will also draw the economy together and forward," she added.
The finance minister’s comment comes at a time when India’s Gross Domestic Product (GDP) has contracted 23.9% on-year in the April-June quarter due to a stringent lockdown enforced across the country. Aided by easing of lockdown restrictions, India is now witnessing a ‘sharp V-shaped recovery’, the finance ministry said last week.
The finance ministry had also said that it is critical to re-orient India’s policy towards calibrated reconstruction of the economy, with specific attention on agrarian supply chains, factor markets, infrastructure, start-ups, financial inclusion, skilling and health care. “Progress in these areas will sustainably boost economic growth in years to come," it had said.
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