Centre asks PSEs to spend aggressively

Amid criticism from within the party ranks, the government on Thursday accelerated its firefight to boost a slowing economy and asked public sector enterprises (PSEs) to perk up economic activities by spending aggressively.

In a series of meetings throughout the day, Finance Minister Arun Jaitley reviewed the capital expenditure plans of PSEs and also met exporters and industry captains to ensure solution to problems coming in their way.

To remove teething problems in the GST implementation, he also invited suggestions to improve the new indirect tax system and ensure the compliance burden does not adversely affect businesses, especially small and medium ones.

Capping a day packed with high-voltage activities, late in the evening, Jaitley sought to puncture claims by senior BJP leader and former finance minister Yashwant Sinha that the economy was in a tailspin.

“We have brought the current account and fiscal deficits down, brought rupee under control and opened up several sectors for FDI. Today PSE capital expenditure is Rs 3 lakh crore, FDI remains the largest ever and direct tax collections are 15.7% more,” Jaitley said while countering Sinha, who flayed the government through an article in a national daily.

Sinha also called demonetisation an “unmitigated disaster” slapped on the economy and GST a hasty step. His criticism gave a new handle to the Opposition to mount its attack on the government.

Jaitley said fiscal prudence was not an easy job and it was natural to face criticism. The NDA government changed the old normal of black money and shadow economy. It also ended discretion, the root of political corruption that was prevalent in New Delhi. The finance minister, however, admitted that the government was facing a challenge of a temporary slowdown in the economy due to demonetisation but was taking all steps to address it.

Earlier, Economic Affairs Secretary Subhash Chandra Garg said the government expected Rs 25,000 extra capital expenditure by PSEs. He said the oil, steel and power PSEs are likely to spend extra in the current financial year.

On stimulus package to the economy, he said the banks may be recapitalised by raising funds through bank recapitalisation bonds so that the government’s revenues are not imbalanced.

“The fiscal deficit target of the government will not be breached. It will remain at 3.2% of the GDP,” the secretary said, in a move that could see the stock markets abuzz with activity on Friday.

The government is also preparing special funds and duty credit scrips for exporters who have suffered due to late refunds in the wake of GST, a source said.