Nirmala Sitharaman Press Conference: Finance Minister Lays Out Capital Expenditure Plans After Meeting With Key Ministries

Finance Minister Nirmala Sitharaman said that the government wants to clear all pending dues of goods and services of government departments.

Sitharaman will meet CPSEs and other agencies tomorrow to discuss pending dues.

Watch the full media conference here.

Consumption and credit offtake will be good during the festive season and that will bring buoyancy in the market, Sitharaman said.

The Indian government will not cut its spending for the current fiscal year even after it announced a Rs 1.45 lakh crore stimulus in the form of corporate tax rate cuts. “At this stage, I am only looking at getting this expenditure going on. Because they (ministries) are all committed. I am having every department to go ahead with what has been scheduled in the budget,” Sitharaman said.

The government and its various departments have already released Rs 40,000 crore of the Rs 60,000 crore pending dues, expenditure secretary Murmu said.

Sitharaman said that the finance ministry has asked other ministries to submit their capital expenditure plan for the next four quarters. They will report their expenditure committment and how much will be grounded, she said.

The respective departments will come back with their capex plans in a week.

All non litigated dues sitting with government departments should be paid up, she said.

The dues of CPSEs are being monitored, Murmu said, adding that the government is on track to achieve the 100 percent capital expenditure target.

The government has allocated Rs 3.38 lakh crore from the gross budgetary support to 21 ministries for capital expenditure.

The total government and extra-budget capex is seen at Rs 10.82 lakh crore, expenditure secretary GC Murmu said. Most ministries have already reached 50 percent of the spending target, he added.

Finance Minister Nirmala Sitharaman will brief the media after a meeting with secretaries and financial advisers of selected ministries to review their capital expenditure.

The meeting comes at a time the government announced a Rs 1.45-lakh-crore stimulus by slashing corporate tax rate. But that raises fears that India may miss its fiscal deficit target, unless the government cuts spending.

Yet, the government said it would maintain its borrowing plan for the remainder of the fiscal. It will sell Rs 2.68 lakh crore of bonds in the six months from Oct. 1. It had a target to borrow Rs 4.42 lakh crore in the first half of the financial year.

As of now, the government said it isn’t revising any target. It, however, will decide on reviewing the fiscal deficit target around February, closer to the union budget.

Sitharaman has been involved in a series of meetings over the past two months with tax officials, industry heads, public and private banks, among others, to prop up the economy after growth fell to its lowest in six years.

The finance minister has been actively making announcements over the past one month to revive the economy.

On Aug. 23, Sitharaman announced the government’s plan to remove the tax surcharge on foreign portfolio investors, pay upfront Rs 70,000 crore for bank recapitalisation, and several other measures to revive the automotive industry.

Again on Aug. 30, she outlined plans to merge 10 public sector banks into four in an effort to better manage capital. She also announced a series of measures for state-run banks hoping that the capital infused by the government would result in stronger banks.

Later, she announced measures to provide relief to the housing sector and boost exports. One such proposal was to set up a special fund to provide last-mile funding to affordable and middle-income housing projects that are stalled due to a liquidity crunch.

Still, the biggest surprise was reducing the effective corporate tax rate for companies that has revived business sentiment and buoyed the equity markets.

Sitharaman also directed state-run banks that no stressed MSME be declared as an NPA at least till March 31, 2020. She has convinced PSU and private banks to join a public outreach programme, in the form of a loan melas in 400 districts, where those in need of credit can come and avail it.