FM Nirmala Sitharaman urges industry to overcome hesitation and propel growth

Finance Minister Nirmala Sitharaman on February 4 said that industry is now expected to overcome its hesitation and be the engine to pull the economy forward.

She said that the government’s approach has been to spend on asset creation and the cascading effect of it is going to help the industry.

“So we expect you to be equally the engine to pull the economy forward. I don’t think in today’s conditions, it can be just the govt spending which can pull this economy towards that growth which all of us want,” Sitharaman said at the National Council Meeting of Confederation of Indian Industry.

Sitharaman said that the government did whatever it could and is ready to do more as and when necessary.

“But I want it to be a meaningful intervention from the government rather than rush to do something which may not be necessary at all for the government,” she said.

Sitharaman in her Budget 2020-21 speech announced imposing a 5 percent health cess on imports of medical equipment, over and above basic customs duty (BCD). Currently, most medical device imports attract a basic customs duty of 7.5 percent.

On being asked whether the move is protectionist in nature, the minister said that the step has been taken but to encourage production of devices under ‘Make in India’ programme.

“In case the production in India is not sufficient in India to meet our demand and we still want to import… but even then that additional import and the revenue which is going to be generated as a result will clearly to be directed towards medical infrastructure creation in those aspirational districts where you don’t have enough hospitals which could be empanelled under Ayushman Bharat,” Sitharaman said.

Regarding breaching of the 2019-20 fiscal deficit target, the minister said that the government’s response now ia very different to what it was in 2008-09.

“I am also clearly indicating that I am going to clearly lay a glide path so that treatment to the economy which is now so demanded and justifiably demanded will be given clear monitoring. We are not going to leave it unendingly as though there’s never going to be an end and the treatment has to continue forever,” she said.

Sitharaman said that if the economy shows clear improvement, the government would focus its attention on other areas that need remedies.

“That’s the difference between 2009 treatment and now. And because it was left without an end the sprlurging continued. And between 2014-19 we had to sort that mess out which resulted in twin balance sheet problem,” Sitharaman said.

Sitharaman cited Section 4 (2) of the Fiscal Responsibility and Budget Management (FRBM) Act that provides for a trigger mechanism for a deviation from the estimated fiscal deficit on account of structural reforms in the economy “with unanticipated fiscal implications”.

The government pegged 2019-20 fiscal deficit at 3.8 percent of the GDP against the 3.3 percent projected in the previous year’s Budget.

The fiscal deficit target for the next year has been pegged at 3.5 percent of the GDP.