NEW DELHI: The central government is open to frontloading its borrowing for the current fiscal and states have been allowed to do the same to meet their spending needs, finance minister Nirmala Sitharaman has said.
In an interview clip released by the finance ministry on Friday, Sitharaman told journalists from the Indian Express and the Financial Times that the Narendra Modi administration was currently focusing on containing the pandemic while reforms remain unaffected by the devastating second wave of the pandemic.
Sitharaman assured that although the focus is on vaccination and treatment of people at present, she was constantly monitoring how the economy is impacted by the surge in coronavirus infections.
“At this stage, our focus is to address the immediate requirement for saving lives and also making sure that vaccination is ramped up,” Sitharaman said. The minister said that the economy is kept open and hopefully, the local lockdowns will be over once the chain of infection is broken.
Sitharaman said that the government stepped up borrowing substantially in FY21 and that she has made it clear that the government will not hesitate to frontload as much as is required in the current fiscal. This option, the minister said, is also being extended to state governments. It will support the spending plans including investments into infrastructure. The Central government’s gross borrowing for FY22 is estimated at ₹12 trillion.
“We are only (about) 20 days into the new financial year, but we have allowed states to go ahead with borrowing as much as they would want. I recognise they also now have the issue of buying vaccines,” Sitharaman said. From 1 May, India is opening up vaccination to those who are 18 years or older.
The minister’s emphasis on containing the pandemic comes at a time the second wave of infections has threatened the extent of economic recovery that was expected this financial year. Shortage of hospital beds and oxygen supplies has currently exposed the weakness in India’s healthcare system.
“..in government hospitals, we are ensuring vaccination is available for free, particularly so for those who cannot afford to pay and the migrant workers,” the minister said, adding that testing, tracing and treating people will be ramped up.
Sitharaman said the higher import tariffs introduced as part of the self-reliance drive was to check the practice of dumping goods from some markets which hurt India’s small scale industry. Labour intensive small businesses needed support, the minister said. The government is banking on an increase in local manufacturing to add more jobs, for which manufacturers are offered financial incentives.
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