Finance Minister Nirmala Sitharaman claimed on Wednesday the Narendra Modi government had aimed at the “multiplier effect” from the recent Union Budget, which has extensively focussed on infrastructure expenditure.
Sitharaman had surprised both critics and supporters alike on Tuesday as the Budget had little by way of announcements or schemes targeted at the five states where assembly polls will be held this month.
Sitharaman talked of her Budget priorities in a detailed interview with News 18.
Sitharaman told News 18 the elections were not weighing on her mind. “We thought that if the economy does well and if growth has attained that kind of a momentum, the multiplier effect, because when you spend on infrastructure and when you do capital expenditure, for every rupee that you spend, approximately, 2.95 is what you would get as a multiplier as opposed to when you are giving money through revenue expenditure, you get less than one rupee for every rupee that you spend, something in the range of 0.95 or so. Therefore, we thought it was important to have a maximum multiplier effect and that would have enough ripples in the economy whereby the well-being of the citizens will be attended to,” she told News 18.
Sitharaman added, “So, if that is happening, why would any other consideration come in even with the elections on. Elections come and go but the economy particularly at this juncture requires that strong support.”
Sitharaman argued the budget had emphasised growth, which was a key focus area of Prime Minister Narendra Modi. She said, “So, from the beginning, I think, the clarity in the mind of the Prime Minister was growth—growth has to be ensured, growth has to be sustained and we have to lead it because only by public expenditure on infrastructure building we believe that the virtuous cycle will happen and also there will be in a crowding in effect for the private investments to come in.”
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Sitharaman said the government had placed emphasis on stability and predictability in the Budget with respect to taxes. "There are ways in which demand creation can happen. In our country, where the taxpayers’ number, and also the taxpayers’ profile is seen, then you also realise that it is possible to provide stability in tax regime, predictability in tax regime and that I would think is a very important factor. At a time like this, you don’t want to bring in elements of uncertainty,” she told News 18.