Government plans to push infrastructure and direct cash transfers to stimulate demand

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As the economy reopens following the easing of foreclosure restrictions in most parts of the country, the Center is discussing a number of measures to help stimulate demand. These include an infrastructure push, which may result in higher than expected capital spending for 2020-2021, sources told Business Standard.

Discussions are also underway on increasing the scope and amount of direct cash transfers to recipients who need them most, two senior officials said.

“With the resumption of activity, the priority is now to push demand. There are discussions about infrastructure. Any nudge there will help create jobs, which we need right now, ”said one of the officials. “The National Infrastructure Pipeline is already in place, and this will serve as a starting point for our efforts. “

The official did not rule out the Center spending more than the estimated capital expenditure budgeted for fiscal year 21 of Rs 4.12 trillion. The idea, as is the case during downturns, is that the Center and the PSUs will increase capital spending to encourage the private sector to start spending. Steps are also being taken to attract more foreign direct investment.

“The budgeted budget figures no longer hold. Income is strained and we are dependent on a larger loan. If the need arises, investments will be increased, ”said the official.

The final report of the National Infrastructure Pipeline was submitted to Minister of Finance Nirmala Sitharaman at the end of April. The report forecast a total infrastructure investment of Rs 111 trillion in the 2020-25 fiscal year, 40% of which will be borne by the Center and the states each.

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The report is now slightly edited to reflect the reality of the current severe slowdown due to the Covid-19 pandemic and the nationwide shutdown that just ended. “The finance minister said the pipeline would be fed upstream and most of the investment would happen in the first two or three years. This commitment has not changed, ”said the second official.

Earlier this month, Cabinet approved the creation of a “Group of Authorized Secretaries (EGoS) and Project Development Cells (PDC)” in various ministries and departments to attract investment in India.


“This will make India a more investor-friendly destination and will further retain and smooth investment flows into the country. This will give a boost to our national industries and open up a huge potential for direct and indirect jobs in various sectors, ”the Center said.

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There have also been talks to stimulate demand by increasing cash distributions by direct transfer to Jan-Dhan’s accounts, the second official said. As part of Prime Minister Garib Kalyan and Aatmanirbhar Bharat’s programs, the Minister of Finance announced a one-time cash transfer to the elderly, women and divyangs, in addition to an increase in the amount of remuneration under the NREGA and an acceleration of transfers from Prime Minister Kisanp.

“Discussions are underway on increasing cash transfers. They will be extended beyond June, ”said the second official.

The official said that although the Center has put in place strict measures regarding spending, including no proposal for new programs, unlike those in the Aatmanirbhar Bharat package, there would be no impact on the programs and projects of infrastructure, nor on existing rural and social programs.

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