'Marathi Muslims': Hemmed in by BJP, Shinde party, Uddhav Sena wields a new support base.Bracing for challenge, BJP puts all hands on deck to steady Gujarat ship.We have a few easy to meet reforms criteria,” he said. That has been tied to some reforms in building laws and so on, but it is intended for generating urban projects. There is a component, which has specifically an urban component there. “A proportion of this capital expenditure to states will also be for urban. The capex proposal also includes urban projects which will help in creating jobs for the urban unskilled, he said. The Finance Secretary said the multiplier effect will be far greater in case of higher expenditure than through generation of demand through cash transfers. The increase in public investment helps to address infrastructure constraints and support future private investment,” it said. In fiscal 2021, the government spent 11% more than budget estimates on highways and 9% more on railways. “Continued government spending on infrastructure projects will drive demand for key user industries, a credit positive. Incidentally, Moody’s Investors Service Friday said the focus on capital expenditure supports near-term growth but poses challenges to longer-term fiscal consolidation. There was feedback from the states that it was very useful to them to preserve capital expenditure during the pandemic, please continue and increase,” Somanathan said. In both years it has been very quickly and effectively spent by the states. We gave Rs 12,000 crore in one year, and Rs 15,000 crore in year 2. “It has proved very successful in year 1 and year 2. And growth will be better off with a slightly higher deficit,” he said. So, crowding out is less of a risk now was the judgement. They are not struggling to get funds banks are also sitting on a lot of money that they can still lend. I don’t think we are in a crowding out situation because private investment intentions are not so buoyant that they are waiting to use these funds. But there is a pace of consolidation… We felt that spending will create a better growth impact, even with some borrowing impact. There’s no question of remaining at 6.9 per cent. Spending, according to the Finance Secretary, will create a better growth impact, even with some borrowing impact. If they were so rate sensitive, in the last two years when the rates were so low, we should have seen a surge in private investments. But those projects in the private sector that are being planned, I don’t think they are so interest rate sensitive that 0.25 per cent change will make them drop the project. Yes, there will be a marginal increase in the borrowing cost, that will filter through to the private sector also. Is that going to drive a sufficient quantity of investment? Is the crowding out such that by reducing borrowing, more private funds will be available and they will invest? We were not convinced that would happen in the current scenario. “If we reduce the expenditure and fiscal deficit, perhaps it will get a lower cost of borrowing.
State spending on masstransit full#
Full interview with Finance Secy | ‘Cash transfers not been done short of that, there are lot of programmes’
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