Health care, infrastructure and fiscal deficit

SINGAPORE – India’s Finance Minister Nirmala Sitharaman presented the country’s budget on Monday for the fiscal year starting on April 1 and ending on March 31, 2022.

In his speech to Parliament, he proposed more than doubling India’s health and welfare spending to 2.2 trillion rupees ($ 30.1 billion). This includes a new federal scheme with a disbursement of Rs 641 billion in six years to develop the country’s primary, secondary and tertiary care capacity, as well as strengthen national institutions and create new ones to detect and cure new diseases. , said Sitharaman.

India’s health expenditure as a percentage of its GDP is comparatively much lower than that of many other countries.

The budget comes at a time when India’s growth prospects remain uncertain. South Asia’s largest economy plunged into a technical recession last year due to a long blockade to curb the spread of the coronavirus outbreak. India’s statistics ministry said last month that advanced data indicated that the economy was still down 7.7% for the current fiscal year.

“I want to state with confidence that our government is fully prepared to support and facilitate the recovery of the economy,” Sitharaman told Parliament. “This budget provides all the opportunities for our economy to compete and capture the pace it needs for sustainable growth.”

The budget will allocate 350 billion rupees for vaccines against Covid-19 and the government is committed to providing more funds if needed, according to the finance minister.

India last month launched a mass vaccination program that aims to inoculate 300 million people in its first stage, mostly front-line workers over the age of 50 or in high-risk groups. The country has the second largest number of Covid-19 cases in the world, with more than 10.7 million infections reported. But the data suggest that the number of new cases reported is declining.

Aside from health care, Monday’s budget also focused on infrastructure spending, as well as plans to establish a financial institution to fund those expenses, asset monetization, bank recapitalization, among other things. others.

“Infrastructure needs long-term debt financing,” Sitharaman said. “A professionally managed development financial institution is needed to act as a provider, facilitator and catalyst for infrastructure financing.”

He added that he will present a bill to create the institution with Rs 200 billion to capitalize on it.

Sitharaman said the government’s fiscal deficit for the fiscal year ending March 31 is set at 9.5% of GDP, which far exceeded the targets set in the years before the pandemic.

To ensure that the economy receives the impetus it needs, the finance minister said for next year, the deficit target would be around 6.8% of GDP, which includes about 5.54 trillion rupees (about 80,000 million) in capital expenditures, up 34.5% from a year ago.

The budget’s focus on health spending and infrastructure was in line with what many economists expected.

“The timely implementation of the large number of well-targeted budget announcements will be the key to maintaining the birth of the ongoing revival of growth and helping the Indian economy achieve a higher growth trajectory in the medium term,” he said. say Aditi Nayar, chief economist at credit rating agency ICRA, India’s subsidiary of Moody’s.

Some of the measures announced on Monday include:

• A new federal scheme with a disbursement of Rs 641 billion in six years to develop the country’s primary, secondary and tertiary care capacity.
• Support for 17,788 rural and 11,024 urban urban health and wellness centers, as well as the strengthening of the National Center for Disease Control
• A program to provide clean water to urban areas as well as liquid waste management for five years and allocated 2.87 trillion rupees.
• Voluntary vehicle scrapping policy to progressively remove old vehicles that contribute to India’s poor air quality.

• The government will commit 1.97 trillion rupees in five years for an existing incentive scheme linked to production aimed at improving the scale and size of major sectors.
• Monetization plans for public infrastructure assets, including freight rail corridors and airports.
• An allocation of Rs 1.18 trillion to the Ministry of Roads and Highways, most of which will be earmarked for capital expenditure.
• An allocation of Rs 1.1 trillion for the railways, most of which will be spent on capital expenditure.
• About 3 trillion rupees over five years will be spent on renewing India’s energy distribution sector.

• India will relax the limit of foreign direct investment in the insurance sector from 49% to 74%.
• Public sector banks will receive an infusion of Rs 200 billion for recapitalization.
• An asset rebuilding company will be set up to take over existing toxic assets and find ways to manage them and dispose of them with alternative investment funds.
• Two public sector banks and a general insurance company are expected to be private as part of the government’s divestment strategy.
• About 15 billion rupees will be allocated to promote the use of digital payments.