Sitharaman says infra targets will be met through asset monetisation, DFI and institutional structures
New Delhi, February 1, 2021
Finance Minister Nirmala Sitharaman today declared that the Government was committed to achieving targets under the National Infrastructure Pipeline (NIP) by creating the institutional structures, monetizing assets and enhancing the share of capital expenditure in Central and State Budgets.
Presenting the Union Budget for 2021-22 in the Lok Sabha, Sitharaman said the NIP, announced in December 2019, was the first-of-its-kind, whole-of-government exercise ever undertaken by the Government of India.
"The NIP was launched with 6,835 projects; the project pipeline has now expanded to 7,400 projects. Around 217 projects worth Rs 1.10 lakh crores under some key infrastructure Ministries have been completed.
"The NIP is a specific target which this government is committed to achieving over the coming years. It will require a major increase in funding both from the government and the financial sector," she said.
Pointing out that infrastructure needed long-term debt financing, Sitharaman said a professionally managed Development Financial Institution (DFI) was necessary to act as a provider, enabler and catalyst for infrastructure financing.
She said she would introduce a bill to set up a DFI and had provided a sum of Rs 20,000 crore to capitalise the institution.
"The ambition is to have a lending portfolio of at least Rs 5 lakh crores for this DFI in three years time," she said.
The Finance Minister said debt financing of InVITs and REITs by Foreign Portfolio Investors would be enabled by making suitable amendments in the relevant legislations. This is expected to ease the access of finance to InVITS and REITs, thus augmenting funds for infrastructure and real estate sectors.
On asset monetisation, Sitharaman said a National Monetization Pipeline of potential brownfield infrastructure assets would be launched.
"Monetizing operating public infrastructure assets is a very important financing option for new infrastructure construction," she said.
She said an Asset Monetization dashboard would also be created for tracking the progress and to provide visibility to investors.
"Some important measures in the direction of monetisation are:
a. National Highways Authority of India and PGCIL each have sponsored one InvIT that will attract international and domestic institutional investors. Five operational roads with an estimated enterprise value of Rs 5,000 crores are being transferred to the NHAI InvIT. Similarily, transmission assets of a value of Rs 7,000 crores will be transferred to the PGCIL InvIT.
b. Railways will monetise Dedicated Freight Corridor assets for operations and maintenance, after commissioning.
c. The next lot of Airports will be monetised for operations and management concession.
d. Other core infrastructure assets that will be rolled out under the Asset Monetization Programme are: (i) NHAI Operational Toll Roads (ii) Transmission Assets of PGCIL (iii) Oil and Gas Pipelines of GAIL, IOCL and HPCL (iv) AAI Airports in Tier II and III cities, (v) Other Railway Infrastructure Assets (vi) Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED among others and
(vii) Sports Stadiums," she said.
Sitharaman began by saying that the Government was fully prepared to support and facilitate the economy's reset, after the slowdown brought about by the COVID-19 pandemic, and asserted that the Budget provided every opportunity for the economy to raise and capture the pace needed for sustainable growth.
Laying out a vision for "AatmaNirbhar Bharat" (Self-reliant India), Sitharaman said her Budget proposals rested on six pillars: Health and Wellbeing; Physical & Financial Capital, and Infrastructure; Inclusive Development for Aspirational India; Reinvigorating Human Capital; Innovation and R&D; Minimum Government and Maximum Governance; and Health and Wellbeing.
She said the investment on Health Infrastructure in 2021-22 Budget had increased substantially. "Progressively, as institutions absorb more, we shall commit more,"she said, adding that the focus was on strengthening three areas -- Preventive, Curative, and Well-being -- through a holistic approach.
Sitharaman said a new Centrally-sponsored scheme, PM AtmaNirbhar Swasth Bharat Yojana, would be launched with an outlay of about Rs 64,180 crores over six years. This will develop capacities of primary, secondary, and tertiary care Health Systems, strengthen existing national institutions, and create new institutions, to cater to detection and cure of new and emerging diseases.
This will be in addition to the National Health Mission. The main interventions under the scheme are:
a. Support for 17,788 rural and 11,024 urban Health and Wellness Centres
b. Setting up integrated public health labs in all districts and 3382 block public health units in 11 states;
c. Establishing critical care hospital blocks in 602 districts and 12 central institutions;
d. Strengthening of the National Centre for Disease Control (NCDC), its 5 regional branches and 20 metropolitan health surveillance units;
e. Expansion of the Integrated Health Information Portal to all States/ UTs to connect all public health labs;
f. Operationalisation of 17 new Public Health Units and strengthening of 33 existing Public Health Units at Points of Entry, that is at 32 Airports, 11 Seaports and 7 land crossings;
g. Setting up of 15 Health Emergency Operation Centers and 2 mobile hospitals; and
h. Setting up of a national institution for One Health, a Regional Research Platform for WHO South East Asia Region, 9 Bio-Safety Level III laboratories and 4 regional National Institutes for Virology.
Sitharaman said that, to strengthen nutritional content, delivery, outreach and outcome, the Government would merge the Supplementary Nutrition Programme and the Poshan Abhiyan and launch the Mission Poshan 2.0.
"We shall adopt an intensified strategy to improve nutritional outcomes across 112 Aspirational Districts," she said.
Underlining the importance of clean water, sanitation and clean environment as a pre-requisite for achieving universal health, Sitharaman announced the Jal Jeevan Mission (Urban) with an outlay of Rs 2,87,000 core over five years.
The mission is aimed at achieving universal water supply in all 4,378 Urban Local Bodies with 2.86 crores household tap connections, as well as liquid waste management in 500 AMRUT cities.
As far as the National Cleanliness Mission in urban India is concerned, the Finance Minister said the focus would be on complete faecal sludge management and waste water treatment, source segregation of garbage, reduction in single-use plastic, reduction in air pollution by ffectively managing waste from construction-and-demolition activities and bio-remediation of all legacy dump sites.
"The Urban Swachh Bharat Mission 2.0 will be implemented with a total financial allocation of Rs 1,41,678 crores over a period of 5 years from 2021-2026," she said.
To tackle the burgeoning problem of air pollution, Sitharaman proposed to provide an amount of Rs. 2,217 crore for 42 urban centres with a million-plus population in the Budget.
She said the Government would separately announce a voluntary vehicle scrapping policy to phase out old and unfit vehicles.
"This will help in encouraging fuel-efficient, environment-friendly vehicles, thereby reducing vehicular pollution and the oil import bill. Vehicles would undergo fitness tests inautomated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles," she said.
Sitharaman said the Pneumococcal Vaccine, a Made in India product, which is presently limited to only five states, will be rolled out across the country. This will avert more than 50,000 child deaths annually, she said.
She said she had provided Rs 35,000 crore for COVID-19 vaccine in the Budget and was committed to providing further funds, if required.
According to her, the Budget outlay for Health and Wellbeing is Rs. 2,23,846 crores in BE 2021-22 as against this year’s BE of Rs 94,452 crores, an increase of 137%.
Sitharaman said the Government had committed nearly Rs 1.97 lakh crore over five years, starting 2021-22, for the Atma Nirbhar Bharat -- Production Linked Incentive Scheme (PLI) to help bring scale and size in key sectors, create and nurture global champions and provide jobs to the youth.
"For a USD 5 trillion economy, our manufacturing sector has to grow in double digits on a sustained basis. Our manufacturing companies need to become an integral part of global supply chains, possess core competence and cutting-edge technology. To achieve all of the above, PLI schemes to create manufacturing global champions for an AtmaNirbhar Bharat have been announced for 13 sectors," she said.
The Finance Minister said a Mega Investment Textile Parks (MITRA) scheme would be launched for the textile industry, in addition to the PLI scheme, to enable it to become globally competitive, attract large investments and boost employment generation.
"This will create world class infrastructure with plug and play facilities to enable create global champions in exports. Seven Textile Parks will be established over three years," she said.
The Finance Minister also proposed a sharp increase in capital expenditure for 2021-22, providing Rs 5.54 lakh crore, which is 34.5% more than the Budget Estimates (BE) of 2020-21.
"In the BE 2020-21, we had provided Rs 4.12 lakh crores for Capital Expenditure. It was our effort that in spite of resource crunch we should spend more on capital and we are likely to end the year at around Rs 4.39 lakh crores which I have provided in the RE 2020-21," she said.
Of the provision for the coming year, she has kept a sum of more than Rs 44,000 crore in the Budget head of the Department of Economic Affairs to be provided for projects, programmes and departments that show good progress on Capital Expenditure and are in need of further funds.
"Over and above this expenditure, we would also be providing more than Rs 2 lakh crores to States and Autonomous Bodies for their Capital Expenditure," she said.
She said the Government would also work out specific mechanisms to nudge States to spend more of their budget on creation of infrastructure.
The Finance Minister said that more than 13,000 km length of roads, at a cost of Rs 3.3 lakh crore, had already been awarded under the Rs 5.35 lakh-crore Bharatmala Pariyojana project of which 3,800 kms had been constructed.
"By March 2022, we would be awarding another 8,500 kms and complete an additional 11,000 kms of national highway corridors," she said.
She said that, to further augment road infrastructure, more economic corridors are also being planned. They include:
a. 3,500 km of National Highway works in Tamil Nadu at an investment of Rs 1.03 lakh crore. These include Madurai-Kollam corridor, Chittoor-Thatchur corridor. Construction will start next year.
b. 1,100 km of National Highway works in Kerala at an investment of Rs 65,000 crore including 600 km section of the Mumbai-Kanyakumari corridor in Kerala.
c. 675 km of highway works in West Bengal at a cost of Rs 25,000 crore including upgradation of the existing Kolkata-Siliguri road.
d. National Highway works of around Rs. 19,000 crore are currently in progress in Assam. Further works of more than Rs 34,000 crore, covering more than 1,300 kms of National Highways will be undertaken in the State in the coming three years.
Sitharaman also provided an enhanced outlay of Rs 1,18,101 lakh crore for the Ministry of Road Transport and Highways, of which Rs 1,08,230 crore is for capital, the highest ever.
She said Indian Railways had prepared a National Rail Plan for India – 2030, which is amed at creating a "future ready" Railway system by 2030.
"Bringing down the logistic costs for our industry is at the core of our strategy to enable ‘Make in India’. It is expected that Western Dedicated Freight Corridor (DFC) and Eastern DFC will be commissioned by June 2022.
She said new dedicated freight corridor projects -- East Coast corridor from Kharagpur to Vijayawada, East-West Corridor from Bhusaval to Kharagpur to Dankuni and North-South corridor from Itarsi to Vijayawada, would also be taken up.
She also listed projects being taken up for electrification of railway routes as well as measures for passenger convenience and safety. The Vista Dome coaches will be introduced on more routes for tourists.
Sitharaman said a record sum of Rs 1,10,055 crore was being provided for the Railways, of which Rs 1,07,100 crore is for capital expenditure.
She also outlined to plans to improve public transport in urban areas through expansion of metro rail networks and augmentation of city bus services.
"A new scheme will be launched at a cost of Rs 18,000 crore to support augmentation of public bus transport services. The scheme will facilitate deployment of innovative PPP models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses," she said.
She also said that Central counterpart funding would be provided to Kochi, Chennai, Bengaluru and Nagpur and Nashik Metro Rail Projects for the next phases of expansion of their networks.
Sitharaman said that, in the power sector, there was a need to provide choice to consumers by promoting competition among distribution companies (discoms), which are now monopolies in their areas.
"The viability of Distribution Companies is a serious concern. A revamped reforms-based result-linked power distribution sector scheme will be launched with an outlay of Rs 3,05,984 crores over five years. The scheme will provide assistance to DISCOMS for infrastructure creation including pre-paid smart metering and feeder separation, upgradation of systems, etc., tied to financial improvements," she said.
She said the Government proposed to launch a Hydrogen Energy Mission in 2021-22 for generating hydrogen from green power sources.
The Finance Minister said that, in the Ports, Shipping and Waterways sector, seven projects worth more than Rs 2,000 crore would be offered by the Major Ports on Public Private Partnership mode in FY21-22.
In the petroleum and natural gas sector, she said the Ujjwala Scheme which has benefited 8 crore households would be extended to cover 1 crore more beneficiaries. As many as 100 more districts would be added in the next three years to the City Gas Distribution network.
Among other projects, a gas pipeline would be taken up in Jammu & Kashmir.
Sitharaman proposed to consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 andGovernment Securities Act, 2007 into a rationalized single Securities Markets Code.
"The Government would support the development of a world-class Fin-Tech hub at the GIFT-IFSC.
"To instill confidence amongst the participants in the Corporate Bond Market during times of stress and to generally enhance secondary market liquidity, it is proposed to create a permanent institutional framework. The proposed body would purchase investment grade debt securities both in stressed and normal times and help in the development of the Bond market," she said.
She proposed to provide additional capital infusion of Rs 1,000 crore to Solar Energy Corporation of India and Rs 1,500 crore to Indian Renewable Energy Development Agency.
Sitharaman said the Insurance Act, 1938 would be amended to increase the permissible FDI limit from 49% to 74% in Insurance Companies and allow foreign ownership and control with safeguards.
"The high level of provisioning by public sector banks of their stressed assets calls for measures to clean up the bank books. An Asset Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realization," she said.
To further consolidate the financial capacity of public sector banks (PSBs), recapitalization of Rs 20,000 crores is proposed in 2021-22.
Stating that the decriminalizing of the procedural and technical compoundable offences under the Companies Act, 2013, was now complete, Sitharaman said the Government would next take up decriminalization of the Limited Liability Partnership (LLP) Act, 2008.
She proposed to revise the definition under the Companies Act, 2013 for Small Companies by increasing their thresholds for paid-up capital from “not exceeding Rs 50 lakh” to “not exceeding Rs 2 crore” and turnover from “not exceeding Rs 2 crore” to “not exceeding Rs 20 crore”. This will benefit more than two lakh companies in easing their compliance requirements, she said.
"As a further measure which directly benefits Start-ups and Innovators, I propose to incentivize the incorporation of One Person Companies (OPCs) by allowing OPCs to grow without any restrictions on paid-up capital and turnover, allowing their conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allow Non Resident Indians (NRIs) to incorporate OPCs in India," she said.
"In spite of COVID-19, we have kept working towards strategic disinvestment. A number of transactions namely BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited among others would be completed in 2021-22. Other than IDBI Bank, we propose to take up the privatization of two Public Sector Banks and one General Insurance company in the year 2021-22. This would require legislative amendments and I propose to introduce the amendments in this session itself," she said.
"In 2021-22 we would also bring the IPO of LIC for which I am bringing the requisite amendments in this session itself," she said.
She also said that a policy of strategic disinvestment of public sector enterprises has been approved by the Government.
"The policy provides a clear roadmap for disinvestment in all nonstrategic and strategic sectors. We have kept four areas that are strategic where bare minimum CPSEs will be maintained and rest privatized. In the remaining sectors, all CPSEs will be privatized," she said.
"To fast forward the disinvestment policy, I am asking NITI to work out on the next list of Central Public Sector companies that would be taken up for strategic disinvestment. To similarly incentivise States to take to disinvestment of their Public Sector Companies, we will work out an incentive package of Central Funds for States.
"Idle assets will not contribute to AtmaNirbhar Bharat. The non-core assets largely consist of surplus land with government Ministries/ Departments and Public Sector Enterprises. Monetizing of land can either be by way of direct sale or concession or by similar means. This requires special abilities and for this purpose, I propose to use a SpecialPurpose Vehicle in the form of a company that would carry out this activity," she said.
She said the Government had estimated Rs 1,75,000 crore as receipts from disinvestment in BE 2021-22.
On agriculture, Sitharaman said the Government was committed to the welfare of farmers. "The MSP regime has undergone a sea change to assure price that is at least 1.5 times the cost of production across all commodities. The procurement has also continued to increase at a steady pace. This has resulted in increase in payment to farmers substantially," she said.
She said records of rights had been given to about 1.8 lakh property owners in 1, 241 villages under the SWAMITVA scheme, which would now be extended to all States and UTs.
Sitharaman said the pandemic's impact on the economy had resulted in a week revenue flow.
"This was combined with high expenditure to provide essential relief to vulnerable sections of the society especially the poor, women, SCs and STs.
"Unlike many other countries, we opted for a series of medium-sized packages during the pandemic so that we could calibrate and target our response according to an evolving situation. Once the health situationstabilised, and the lockdown was being slowly lifted, we switched to ramping up Government spending so as to revive domestic demand. As a result, against an original BE expenditure of Rs 30.42 lakh crores for 2020-2021, our RE estimates are Rs 34.50 lakh crores. We have maintained the quality of expenditure. The capital expenditure, estimated in RE is Rs 4.39 lakh crores in 2020-2021 as against Rs 4.12 lakh crores in BE 2020-21.
"The fiscal deficit in RE 2020-21 is pegged at 9.5% of GDP. We have funded this through Government borrowings, multilateral borrowings, Small Saving Funds and short term borrowings. We would need another Rs 80,000 crores for which we would be approaching the markets in these 2 months.
"To ensure that the economy is given the required push, our BE estimates for expenditure in 2021-2022, are Rs 34.83 lakh crores. This includes Rs 5.54 lakh crores as capital expenditure, an increase of 34.5% over the BE figure of 2020-2021. The fiscal deficit in BE 2021-2022 is estimated to be 6.8% of GDP. The gross borrowing from the market for the next year would be around Rs 12 lakh crores. We plan to continue with our path of fiscal consolidation, and intend to reach a fiscal deficit level below 4.5% of GDP by 2025-2026 with a fairly steady decline over the period. We hope to achieve the consolidation by first, increasing the buoyancy of tax revenue through improved compliance, and secondly, by increased receipts from monetisation of assets, including Public Sector Enterprises and land. The Contingency Fund of India is being proposed to be augmented from Rs 500 crores to Rs 30,000 crores through Finance Bill.
"In accordance with the views of the 15th Finance Commission, we are allowing a normal ceiling of net borrowing for the states at 4% of GSDP for the year 2021-2022. A portion of this ceiling will be earmarked to be spent on incremental capital expenditure. Additional borrowing ceiling of 0.5% of GSDP will also be provided subject to conditions. States will be expected to reach a fiscal deficit of 3% of GSDP by 2023-24, as recommended by the 15th Finance Commission.
"In the July 2019-2020 Budget, I introduced the Statement 27 on Extra Budgetary Resources – it disclosed the borrowings of Government agencies that went towards funding GoI schemes, and whose repayment burden was on the Government. In my 2020-2021 Budget, I enhanced the scope and coverage of the Statement, by including the loans provided by Government to the FCI. Taking a step further in this direction, I propose to discontinue the NSSF Loan to FCI for Food Subsidy and accordingly Budget Provisions have been made in RE 2020-21 and BE 2021-22.
"We know that the FRBM Act mandates fiscal deficit of 3% of GDP to be achieved by 31st March 2020-2021. The effect of this year’s unforeseen and unprecedented circumstances has necessitated the submission of a deviation statement under Sections 4 (5) and 7 (3) (b) of the FRBM Act," she said.
"Towards achieving Central Government fiscal deficit along the broad path that I have already indicated; I will be introducing an amendment to the FRBM Act.