PM Modi pushes for innovative, futuristic financing measures

Prime Minister Narendra Modi has asked financial institutions to devise innovative and futuristic financing measures to fund the burgeoning economy and urged the Union and state governments to implement Budget 2022-23 from day one to sustain the growth momentum and make the country self-reliant.

Addressing the tenth post-budget webinar on Tuesday, he said: “The government has taken several steps to maintain the high growth momentum in this budget. By encouraging foreign capital flows, reducing tax on infrastructure investment, creating institutions like NIIF (National Investment and Infrastructure Fund), Gift City, new DFIs (development finance institutions), we have tried to accelerate financial and economic growth.”

He said that the purpose of these webinars is expeditious and effective implementation of budget announcements between April 1, 2022, and March 31, 2023, in a coordinated manner. This is a new initiative which is an example of sabka prayas (everyone’s effort), where consultations happened at three stages — before preparing the budget, after presentation of the budget and before implementation, so that it is carried out in letter and spirit, he said.

“This, in itself, is a wonderful experiment of democracy,” the Prime Minister said.

The topic of Tuesday’s webinar was Financing for Growth and Aspirational Economy. Wider consultations and outreach have been institutionalised with regard to the budget as finance minister Nirmala Sitharaman, along with top bureaucrats of her ministry, has been visiting various parts of country to interact with stakeholders.

Modi urged state governments to frame necessary policies before April 1 so that budgetary measures could be implemented expeditiously and create a favourable investor sentiment.

“There should also be competition among states; that which state takes the maximum benefit of this budget. Which state comes up with such progressive policies that all financial institutions would rush there to fund investments. We could develop a large progressive ecosystem,” he said, seeking suggestions from the participants for expeditious and effective implementation of the budget proposals.

The participants included union and state government officials, industry and sectoral experts.

Budget 2022-23, presented by Sitharaman on February 1 with an estimated ₹39.45 lakh crore total expenditure, has enhanced capital investments by 35.4% ( ₹7.7 lakh crore) to boost growth.

“With this investment, taken together with the provision made for creation of capital assets through Grants-in-Aid to states, the ‘Effective Capital Expenditure’ of the Central Government is estimated at ₹10.68 lakh crore in 2022-23, which will be about 4.1% of GDP (gross domestic product),” Sitharaman had said in her budget speech.

Modi’s address at webinars and the finance minister’s nationwide outreach before implementation of budget 2022-23 come at a time when international crude oil prices have soared to a 14-year high and the rupee plunged to an all-time low due to escalating geopolitical tensions driven by the Ukraine war and supply chain disruptions due to sanctions on Russia announced by the US and its allies.

In a recent report prepared by securities firm Nomura, economists Sonal Varma and Aurodeep Nandi said: “Overall, despite India’s limited direct exposure, the combination of supply disruptions and the ongoing terms of trade shock will likely weigh on growth, but also result in a sharper rise in inflation, a wider current account deficit and a hit to fiscal finances due to higher fertiliser subsidies and a potential cut in taxes to shield consumers, in our view.”

International oil prices rose to their highest since 2008 during the trading session on Monday after the US said it was considering banning Russian oil imports. It saw benchmarks Brent crude surging to $139.13 a barrel and West Texas Intermediate $130.50 in the Monday session. The rupee also breached the 77-mark against the US dollar to settle at 76.97.

The Prime Minister will address the eleventh webinar on Wednesday covering issues pertaining to privatisation, disinvestment and asset monetisation, a finance ministry statement said. The webinar will be organised jointly by the Department of Investment and Public Asset Management and the NITI Aayog, the government’s think tank.