The director of the National Institute of Public Finance and Policy (NIPFP) Rathin Roy believes the government has limited room to ramp up public spending on infrastructure due to higher tax devolution to states and stringent deficit targets.
In an interview to CNBC-TV18, Roy said the Centre needs to rationalise state plan assistance and subsidies sharply in the Budget, besides it also has to mop up revenues by a sharply accelerated disinvestment. Roy also expects a shortfall in tax collections.
Below is the transcript of Rathin Roy's interview with Sapna Das on CNBC-TV18.
Q: On 14th Finance Commission report...
A: If this had not happened or had had been less generous to states in terms of vertical devolution then the central government would have done what it seeks to do which is increase public investment while maintaining its FD target by reducing the revenue deficit within the same. That room is now very limited so, something has to give so what will give is either the fiscal deficit and I hope not or state grants but definitely any ambitious plans to scale up central level public investment will have to be it.Q: But can’t they do this through by telling the PSUs to increase their capex because they are sitting on a huge cash reserve of about Rs two lakh crore or am I deviating from this issue?A: No, that is not something that happens in the Budget so whether there was Rs two lakh crore of taxes or one lakh crore of taxes or whatever they always have that option to tell the PSUs to do things with their capex reserves. So, that is not relevant to the Budget, that could be done anyway but that will not increase budgeted public investment
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
