Tax mop-up buoyant enough to fund extra spending, won't borrow more: FM Sitharaman

Finance Minister Nirmala Sitharaman (File Image)

The Centre's tax collections are buoyant enough to help meet the extra expenditure it has sought permission for, Finance Minister Nirmala Sitharaman said in the Rajya Sabha on December 21.

Replying to the debate on the supplementary demands for grants in the Upper House of Parliament, Sitharaman said the Centre would not borrow more from the market.

The Centre sought to spend a net Rs 3.26 lakh crore more as part of its first supplementary demands for grants for 2022-23.

The Rajya Sabha passed the appropriation bill for the same and returned it to the Lok Sabha.

"In September itself the government of India made it very clear that we are not changing our borrowing schedule... We have not changed our borrowing plans. Which means we are very clear that we are going to see that the revenue we are generating is sufficient to take care of this additional (spending)," the minister said in the Rajya Sabha.

She also added that gross tax collections during April-October were 18 percent higher than those in the year-ago period, "substantially higher" than what the budget for 2022-23 had estimated.

"So there is enough buoyancy which gives me the confidence that we will be able to fund the supplementary demand for grants," Sitharaman said.

Economy defence

Replying to questions about the economy raised by members of the house, including former finance minister P Chidambaram, Sitharaman said it was because of the government's targeted relief approach that India was perhaps not on its way to entering a recession like some other countries.

"Global economies, many of them large developed economies as well, are facing recession because, I think, of the way in which they handled COVID as different from the way in which we have handled COVID in India. Because the tendency was we should give money in the hands of the people, go printing notes…"

"Thankfully, because of the targeted way in which the Prime Minister decided to give relief during COVID and addressed the concerns, as was given as inputs from various stakeholders, a targeted approach has kept us on a safe course of helping revival but not getting into a recession," she said.

The World Bank had said India's macroeconomic and fiscal fundamentals were better now than they were during the taper tantrums, she said.

Responding to criticism of private investment remaining muted and that she was having to exhort industry to invest, Sitharaman said private sector capex was happening because of the favourable policies of the government. Citing the example of the production-linked incentive schemes, Sitharaman said the policy was seeing "an absolute robust response" from the industry.

"Yes, as finance minister, when I have an opportunity to interact with them (industry), it will certainly be something I look forward to...and also nudging them to see if they can be even more coming forward towards investing more...and I shall continue to do that," she said.

Freebie fury

The finance minister also commented on the ongoing discussion on freebies, saying it was crucial that financial transparency remained paramount.

"All we want is transparency and compliance with the statutory fiscal rules. It is important that we pay government salaries," Sitharaman said, alluding to recent reports of benefits not being paid on time by the Andhra Pradesh government.

"Subsidies or freebies are to be contextualised. If you are able to put it in your budget and make a provision for it, and when your revenues come you give the moneys, why would anyone have an objection? Education, health, many subsidies given to farmers, are all fully justified. Nobody has got a problem with it," the minister said.