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Sitharaman: Centre, states can front-load borrowing
Nirmala Sitharaman assured that although the focus is on vaccination and treatment, she was constantly monitoring how the economy is impacted by the surge in Covid-19 infections.
The central government is open to front-loading its borrowing for the current fiscal and states have been allowed to do the same to meet their spending needs, finance minister Nirmala Sitharaman said.
In an interview clip released by the finance ministry on Friday, Sitharaman told journalists from The Indian Express and the Financial Times that the Narendra Modi administration was currently focusing on containing the pandemic while reforms remain unaffected by the devastating second wave.
Sitharaman assured that although the focus is on vaccination and treatment, she was constantly monitoring how the economy is impacted by the surge in Covid-19 infections.
“At this stage, our focus is to address the immediate requirement for saving lives and also making sure that vaccination is ramped up,” Sitharaman said.
The minister said the economy is kept open and, hopefully, local lockdowns will be over once the chain of infection is broken.
She said the government stepped up borrowing substantially in FY21 and that she has made it clear that the government will not hesitate to front-load as much as is required in the current fiscal year.
This option, the minister said, is also being extended to state governments. It will support the spending plans, including investments into infrastructure. The central government’s gross borrowing for FY22 is estimated at ₹12 lakh crore.
“We are only (about) 20 days into the new financial year, but we have allowed states to go ahead with borrowing as much as they would want. I recognise they also now have the issue of buying vaccines,” she said.
From May 1, India is opening up vaccination to those who are 18 years or older.
The minister’s emphasis on containing the pandemic comes at a time the second wave of infections has threatened the extent of economic recovery that was expected this financial year. Shortage of hospital beds and oxygen supplies has exposed weaknesses in India’s healthcare system.
“In government hospitals, we are ensuring vaccination is available for free, particularly so for those who cannot afford to pay and the migrant workers,” the minister said, adding that testing, tracing and treating will be ramped up.
Sitharaman said the higher import tariffs introduced as part of the self-reliance drive was to check the practice of dumping goods from some markets which hurt India’s small scale industry.
Labour-intensive small businesses needed support, she said.
The government is banking on an increase in local manufacturing to add more jobs, for which manufacturers are offered financial incentives.
