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Twin pillars of the Budget: Income, purchasing power, says Atanu Chakraborty

In an interview with ET, he says the budget has taken steps both on the investment as well as the demand side to boost growth.

, ET Bureau|
Last Updated: Feb 03, 2020, 07.36 AM IST
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The budget has unveiled several measures to lift growth, says economic affairs secretary Atanu Chakraborty. In an interview with ET, he says the budget has taken steps both on the investment as well as the demand side to boost growth. Excerpts:

The economy is forecast to grow at 11-year low of 5%. Do you think the budget had enough to lift demand?
The para two in the budget speech clearly states that this is the budget to boost incomes and enhance purchasing power. Boosting incomes is via GDP, and GDP is related to investments. Enhancement of purchasing power is when a people have more money in their pockets. These two are the pillars on which the speech rests. On the investment side, if you see, the capex has been increased substantially — almost 22%. In real monetary terms, it is larger — Rs 4.12 lakh crore, up from Rs 3.48 lakh crore, which is a Rs 64,000-crore increase. This is where our intent on implementation of National Infrastructure Pipeline comes in. We have also provided Rs 22,000 crore for India Infrastructure Finance Company and National Investment and Infrastructure Fund that can be leveraged to over Rs 1 lakh crore for investment on infrastructure.

It was expected that the government may opt for wider fiscal expansion...
I thought at Rs 1 lakh crore, somebody would blame us for profligacy. It’s important that money will be used for creation of assets. Allocation to all the schemes have been fully met.

Liquidity seems to be still an issue and there have been suggestions of the government coming out with TARP-like framework.
We have been very mindful of this issue that there are certain organisations that needed a lifeline. So, for them we will talk about Troubled Asset Relief Programme (TARP)-like things. So, this mechanism is essentially to provide for an organization which now doesn't have assets because the Partial Credit Guarantee takes out the assets from the books and gives them money to create more assets. But there are certain companies who may like to retain those assets and like to have some more liquidity. So, those assets then fetch them at much higher returns and they return back that money. So, those are more than the nature of short-term financing. So, with the help of government providing the backstop. Ideas to have an organisation, not to create a new one to push liquidity into those few organizations.

The new personal income tax regime is seen to disincentivise savings. With household savings already down, do you see a concern here?
People have different saving requirements. If I am young, I would put it in a house, I would put it in some savings. But if I am a senior citizen, I would use this to create a nice estate for myself, that adds to consumption. Budget provides both — a choice, it provides yearly choice and it just adds a menu of choice.

Is overseas borrowing off the table or could it be back because of the borrowing size?
Last year, it was not understood in that context. The idea was to give a clear intent that now India is capable of bringing some fungibility in the money which is outside, not completely. It does not take place anywhere in any economic system, but some amount of it so that the flow, getting it in India brings the external interest rate, if it’s low, into India and lowers it. After all, lowering the cost of capital in the economy is what we desire both for government and for corporate sector. The other major intent in the works was to open certain specified government securities by the RBI in consultation with the government, which has now been announced. So, if you put these two together, if money is willing to come to my market, first why should I go out and borrow. So it not only allows development, it also allows dollar into rupee. My currency is what I like my borrowings to be. As a borrower my first choice would always to be to borrow in rupee not in dollar.
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