Reform measures to take India out of COVID-induced downturn: Rajiv Kumar

New Delhi: The reform measures announced in the budget 2021-22 are aimed at taking India out of the COVID-19-induced downturn and making the country a better destination for private investment, both for domestic and foreign investors, Niti Aayog Vice-Chairman Rajiv Kumar said.

Kumar further said he is confident that the government will cross the next fiscal year’s disinvestment target of Rs 1.75 lakh crore.

He also stressed that reform measures announced in the Budget will help us achieve the target of USD 5 trillion economy.

“The direction of the Budget 2021-22 is to accelerate growth and take India out of COVID-19 pandemic induced downturn,” Kumar said.          “… (the aim of budget) is also to give better access and opportunities to the private sector by improving its confidence, and making India a better destination for private investment both domestic and foreign,” he added.

On disinvestment target of Rs 1.75 lakh crore for the next fiscal year, Kumar said a lot of preparatory work has already been done in the past 8-9 months, and now market conditions have changed.

“I am confident this target (disinvestment target for 2021-22) will probably be over-achieved,” he said.

Noting that for the first time, the finance minister has announced a real-time dashboard for monitoring the progress of asset monetisation and disinvestments, Kumar said, “So, there is focus on implementation this time.”

The Niti Aayog VC pointed out that in the absence of strong private investor appetite, the government has to take up the running.

“We are hoping once this is done, it will attract investment both domestic and foreign and that will help us achieve a target of USD 5 trillion economy.” Asked how soon India can see a recovery on the job front, Kumar said the Budget has announced huge investments in the infrastructure sector which has a massive multiplier effect in related sectors.

“And for the first time, you have seen that Rs 1.97 lakh crore has been allocated for fiscal incentives, for all those companies which will come establish plants that will improve manufacturing jobs and employment generation.      And the seven mega textile parks, were again, labour intensity is high,” he pointed out.

On the government’s proposal to privatise two public sector banks and one general insurance company in 2021-22, Kumar said all the necessary preparation has to be done. which includes engaging with all the stakeholders.

“As to why such a reform is essential for improving growth prospects and employment prospects of the country and why it cannot be an unending story of taxpayers money going into some direction and being wasted whether it is in public sector banks recapitalisation or in making in losses of central public sector enterprises,”  he said.

Kumar also emphasised that some steps have to be taken to overcome the vested interests, which are keeping the country from maximising its growth potential.

On the government’s proposal to set up a Rs 20,000 crore Development Finance Institution (DFI), he said given the climate today it is very clear that infrastructure financing needs long-term debt finance.

“We have to learn from the basic mistake that the DFI should not be run on the basis of any phone banking,” he said, adding they have to be managed professionally and they have to be at arm’s length from the government.

Kumar expressed confidence that this time around, DFI will be able to do what it is supposed to do and attract long-term financing from overseas funds.

Commenting on the threat of rating downgrade, the Niti Aayog VC said the next fiscal year’s budget has taken a very bold step to bring food subsidy in the budget and not outside.

“And the rating agencies will recognise that this budget has been more transparent and has improved the quality of expenditure by raising the share of capital expenditure,” he asserted.

Noting that the extra additional budget has not been handed out in terms of subsidies, Kumar said, “therefore, I would be very surprised if there is any rating agencies which behave otherwise.”