Finance Minister Nirmala Sitharaman’s Budget A team is confident that the proposals will unleash a multiplier effect in the economy, while giving a much-needed infrastructure sector push.

This expansionary Budget also caters to the immediate needs around increased spend on health and other social programmes in a post-pandemic world. Although the government proposes to go in for a large borrowing of around ₹12-lakh crore in FY 21-22 as well, the Finance Ministry honchos are confident that a roadmap is in place for accomplishing these borrowings through a mix of long and short-term instruments.

Tarun Bajaj, Secretary, Department of Economic Affairs, told BusinessLine that the Ministry is in touch with the RBI and SEBI to make such instruments more attractive for small investors. This remark is significant as G-Secs that are seen as safe as they carry government guarantee are not so popular with small investors.

‘Big jump in spend’

Separately, TV Somanathan, Expenditure Secretary, felt that it may not be right to compare the overall expenditure at the revised level for 2020-21 with the Budget Estimate for 2021-22 and come to a conclusion that the expenditure increase is small. “Variation from RE to estimate in this Budget is very small, but when you see BE of the previous Budget and this, it is very big. Look it all depends upon the context. RE is full of one-time Covid factor, so it not a good base to compare,” he said.

DFI will be ‘Govt owned at start’

On the proposed enhanced spending on infrastructure, DFS Secretary Debashish Panda, in a separate interaction, said the proposed new Developmental Financial Institution — National Bank for Financing and Infrastructure Development— will be entirely government owned to begin with and later the government stake could go down to 26 per cent.

The government is not averse to subsuming India Infrastructure Finance Company Ltd (IIFCL) with the proposed new state-owned DFI entity to give a quick start to the entire process of having developmental financial institutions.

Panda made it clear that the government does not intend putting any equity in the proposed Asset Reconstruction Company and Asset Management Company that have been proposed to deal with the large non-performing assets of the banking system.

Key instrument for divestment

Asked what will be the key instrument for 2021-22 — IPO, OFS or ETFs — that the government will rely on for disinvestment, Tuhin Kant Pandey, DIPAM Secretary, made it clear it will not be exchange traded funds (ETFs). “ETFs we are disengaged with. It is not going to be ETFs,” he said, adding that the focus is now on the recently-approved policy that makes a case for having “bare minimum” presence in four identified strategic sectors and entirely exiting from the non-strategic ones.

Taxing high EPFO contribution

Asked about the Budget proposal to bring interest earned from Employee Provident Fund to taxation if the annual contribution is more than ₹2.5 lakh, Ajay Bhushan Pandey, Finance Secretary, who is also Revenue Secretary, said that one must see this proposal from the aspect of “equity”.

“There should be equity between those contributing more towards EPF and those contributing less. Whenever a tax benefit is given, it is given from ordinary taxpayers’ money. Similarly, if you are giving assured return, it is taxpayers’ money being spent. Why should the taxpayers’ money be used to give assured returns for those contributing high amounts.”

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