India needs to double its infrastructure spending and the private sector must step up and partner with the government, Economic Affairs Secretary Ajay Seth said on Monday, adding that the ministry was actively working on the Gati Shakti vision outlined by the Prime Minister.
Mr. Seth said that work was apace on operationalising the ₹111 lakh crore National Infrastructure Pipeline supplemented by the National Monetisation Plan that aims to raise ₹6 lakh crore. The two programmes, he said, were being coupled with the Gati Shakti vision so that there could be ‘seamless movement of goods, services and employment opportunities’.
“That is one area we are particularly working on... with other ministries and States — how do we implement on the ground these two major plans with the overall vision of Gati Shakti,” Mr. Seth said at a meeting hosted by FICCI.
Asserting that the heightened pace of reforms during the pandemic period of the last 18 months was aimed at spurring a bounceback in the economy, Mr. Seth said: “Now, we are really on the path of very fast recovery”.
Urging industry to partner with the ministry on ideas for further reforms, particularly in infrastructure development, he said doubling the current infrastructure spending of 5%-6% of GDP was an imperative that could only be met through public private partnerships.
Credit concerns
Although the government had taken up ‘strong’ banking sector reforms and the Insolvency and Bankruptcy Code had yielded about ₹2.4 lakh crore of recoveries on bad loans, Mr. Seth expressed concern about tepid credit offtake trends.
“In spite of the pandemic, gross non-performing assets have come down from 11.2% to 5.9% and in RBI’s assessment, even in a distressed scenario, it will be well within the upper limit that we can afford,” he noted. The government has provided over ₹2.5 lakh crore to recapitalise public sector banks and consolidated banks so that adequate credit can be provided. “There are challenges though… in the past 18 months, due to lack of private demand and investment demand, the credit offtake has been rather moderate. That’s an area that needs work,” the Secretary added.
Mr. Seth also said that pain points pertaining to the Goods and Services Tax (GST) regime had been resolved by the government with a ‘flexible and responsive’ approach.
“Initial problems of the GST, and some are still there, are getting sorted out… In the second wave of the pandemic, when supply chains could be maintained fairly well, GST systems could support free movement of goods and supplies across the country which would not have been possible in the earlier system,” he concluded.
