Any excess funds from RBI will be for next year: Finance Secy

If the capital expenditure is not resulting in the completion and delivery of service, then thats fiscal. That expenditure on capital is actually worse, says Subhash Chandra Garg, Finance Secretary. Excerpts from an interview with ETNow.

There seems to too much focus on revenue expenditure in this Budget.

In my understanding, if you spend on education, if you spend on health, if you spend on the Swachh Bharat Abhiyan, all of them are revenue expenditures. Are they in terms of quality less important than constructing a factory or constructing a road or constructing a dam? It might also happen that many times the capital expenditure is not productive, as we have seen in the case of several dams. 99 damns which are still being completed over so many years have not actually generated and so that capital expenditure has not yielded anything to the economy.

A fiscal multiplier from say building a road is definitely more than the fiscal multiplier of spending on education.

I agree with you so long as that capital expenditure results into a multiplier but if it is not resulting into the completion and the service of the production coming up, then that fiscal, that expenditure on capital is actually worse. It ends up adding the expenditure to the economy but the productive assets not coming through. It might actually be inflation.

Are we not throwing the baby out with the bathwater when we shift from investments to consumption?

I do not think I wanted to communicate that capital expenditure is bad. Capital expenditure is very good and very desirable and that is why a lot of capital expenditure has actually been shifted to more productive organisations. So whether it is NTPC or Power Grid or for that matter NHAI, which does the road the construction programme and all, there is a massive capital expenditure.

My sense is both the expenditures are important and most monitored indicator should be how much is the total fiscal deficit.

Another important issue is that of the RBI dividend. The dividend that you put forth this time around in terms of financial institutions is over Rs one lakh crore as against Rs 82,000 crore earlier. How much money are you factoring in from the RBI?

The heading which we have is for the dividend surplus and profits, these are the ongoing normal profits. So we did estimate a certain kind of amount depending upon what the six months profit and loss statement of the Reserve Bank of India indicated. It is actually not very complicated. It depends upon how much the Reserve Bank earns on their investments, both the foreign as well as domestic.

Last year was better in terms of foreign investments yield and so this year, it should be better than last year and that is what maRead More – Source


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