Finance Minister Nirmala Sitharaman on Monday said the money raised through disinvestment will be used to develop infrastructure, which will have a multiplier effect on the economy and not bridging revenue deficit.
The government set an ambitious disinvestment target of Rs 2.10 lakh crore for the next financial year, which includes selling a stake in BPCL and Life Insurance Corporation of India (LIC).
“We are showing clearly where each monies being raised will go. So, it’s not being raised to fill certain hole in the Consolidated Fund of India. The money being raised from disinvestment will go towards infrastructure.
“We are showing the direction. We are telling you where the money is going to be spent so that you can plan your investments and your investments and your expansion well in alignment with what government does… you will facilitate the government and we will equally facilitate the private sector,” she said while addressing industry chamber FICCI here.
Citing an example, she said import of that medical equipment which is not made in India will come at a duty, but duty collected will be utilised to fund creating medical infrastructure in aspirational districts where there are no good hospitals.
She said when the government puts money infrastructure, it has a cascading effect and give rise to economic activity.
On criticism of the government selling family silver through disinvestment, she said the money is not going to bridge revenue deficit but for creating an infrastructure which has a multiplier effect on the economy.
“Money is not going to as fancy as revenue expenditure but going for creating an infrastructure for the country which would probably have a lot more multiplier effect in terms of economic activity than to keep an inefficient public sector largely. There are some efficient one also that is put on the block,” she said.
Recalling the past experience of government fiscal expansion during the global economic crisis, the Finance Minister said the government has learnt from the past experience and decided not to go on the splurge to boost the economy.
“If I have to spend that kind of money, yes we are willing to do but we are clearly saying that we shall not repeat the mistakes of splurging whereas the money spent now with clear intention of asset creation, public asset creation,” she said.