Higher capex is expected to be a key plank of Sitharaman’s fourth Budget to be presented on February 1 as the government looks to spur investment in infrastructure as part of a plan to create demand for inputs such as steel and cement and also generate employment.
While capex by central government agencies is expected to be channelised better, the Centre is also likely to incentivise states to join forces. During the current financial year, states were allowed to borrow an additional Rs1 lakh crore if their ca- pex for the year topped 5.8 lakh crore.
Sources indicated to TOI that a similar dispensation may be continued.
“This will not just result in encouraging states to spend more to create assets and infrastructure, but will also give them flexibility in deciding where they want to put that money, which is a better way to do it than a top-down approach,” a government source said.
Over the last 18 months, the finance ministry has decided to allow states to borrow more, provided they meet certain yardsticks, whether they are related to spending or power sector reforms. The government believes that incentives are helping states to focus on strategies better and align with the national objective.
In case of the central government agencies and departments, the department for promotion of industry and internal trade has already initiated the PM Gati Shakti scheme, which is aimed at better implementation of projects so that resources can be pooled and duplication is avoided for better delivery.
The initiative ties in well with the Centre’s National Investment Pipeline, with the states also expected to come on board for Gati Shakti, so that whatever gaps are there in planning or implementation can be avoided in future. The whole idea of the initiative is better convergence and the capex initiative is expected to add to it.
