While ruling parties are almost always in election mode, a pre-election year is specifically when they want to be seen in action. That’s the message that’s gone out across ministries on spending the Rs 10 lakh crore ($121 billion) allotted for capital expenditure this year.
“The idea is to ensure there is activity on the ground that can be seen and has a visible impact on the economy,” a government official said.
Finance minister Nirmala Sitharaman, in her budget speech on February 1, increased the outlay for capital expenditure to Rs 10 lakh crore in FY24 to boost infrastructure development. The allocation, equivalent to 3.3 percent of GDP, was 33 percent higher than the outlay of Rs 7.5 lakh crore in FY23.
The focus will extend beyond building roads and highways to grain storage centres and other projects that will spur construction activity in the rural areas.
The Union Cabinet chaired by Prime Minister Narendra Modi on May 31 approved the constitution of an inter-ministerial committee to facilitate the world’s largest grain storage plan in the cooperative sector. The aim of this effort is to reduce food grain wastage and prevent distress sale of crops. There could be more such announcements.
Allot and spend
The finance ministry is working to build better accountability mechanisms to ensure that funds are spent.
“We did it last year. We managed to spend Rs 7.5 lakh crore. We are hopeful to repeat that this year too,” the official said.
In July 2022, the government launched a single nodal agency dashboard that monitored the allocation and spending of funds. Funds were released in tranches as spending crossed certain milestones. Additional accountability mechanisms are being set up.
Also on the anvil is the expansion of certain schemes to generate a feel-good factor in the economy. Among them is Ayushman Bharat, launched in 2018, under which the Pradhan Mantri Jan Arogya Yojana (PM-JAY) provides health insurance cover of Rs 5 lakh per year to over 100 million poor and vulnerable families for secondary and tertiary care. The scheme could be expanded to cover more people.
While some welfare programmes may be expanded to include more people, the consensus so far seems to be that there will be no direct handouts or doles. There have been debates on the financial implications of political parties promising freebies during the elections.
Each minister has been given four constituencies to cover as part of an outreach effort before the general elections in 2024. The idea is to connect with the people and get feedback on what’s working and what isn’t.
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