Budget 2024-25: We must balance fiscal prudence with support for economic growth

livemint.com:

₹2.1 trillion received in May 2024 has significantly eased the government’s fiscal constraint for the fiscal year 2024-25. CII has recommended that a part of this windfall be used for boosting capital spending by 25% over the revised figure for 2023-24. This would help maintain the upward trajectory of public capital expenditure and help crowd in private investment.

The government may look at raising money through disinvestment and asset monetization. It is likely that setting an achievable target is difficult, since the outcome is dependent on market forces that are not always predictable. CII has therefore recommended that a demand-based approach be followed for the selection of public sector enterprises (PSEs) to be divested by the government.

Based on investor interest, the government should come up with a medium-term schedule for PSE disinvestment, say for the next three years. The government’s asset monetization programme can be intensified by providing support to ministries and state governments on aspects such as identification of assets, regulatory design and execution. A dedicated cell either in the Niti Aayog or ministry of finance can be set up for this purpose.

The receipts from disinvestment and asset monetization should be used to either retire debt or create new assets. To create fiscal space for stepping up expenditure on critical areas, the government will need to enhance tax collections. As a proportion of GDP, the Centre’s gross tax revenue has remained around 11.5% for the last four years.