'Higher expenditure provisions in Budget will not fuel inflation'

A top government official on Tuesday allayed fears about inflation from higher spending provisions in the Union Budget at a time when economic growth has moderated. On the contrary, most of the expenditure, channelled into capital expansion, would propel economic growth, he said.

"During the pandemic, when the economy has slowed down, we have to spend in a manner that propels growth. So, a lot of expenditure has gone into infrastructure sector, be it health, rail, road or ports. If our expenditure is accompanied by growth, the inflationary impact will be limited," said Finance Secretary Ajay Bhushan Pandey.

In an exclusive interview with DH, he also dismissed apprehensions that the new agriculture infrastructure and development cess imposed on petrol and diesel translates into a further hike in the pump prices of the two fuels, saying the imposition of cess has been compensated by the reduction in other duties in the Budget.

“The net impact on consumers will be zero. The Budget has reduced duties in other areas,” he said.

After the imposition of cess on petrol and diesel, the government reduced the basic excise duty and special additional excise duties on the two fuels so the net impact on the consumers is nil.

To a question on why the government did not give any relief to income taxpayers, he said every Budget should not be seen as the one which tinkers with taxes. There should be stability in the tax regime.

“It was only in the last year’s Budget that the government brought in an optional tax regime with lower tax slabs in comparison to the old structure. The previous Budget ensured that people with salary up to Rs 70,000 per month were almost exempted from paying any income tax,” Pandey said adding the government has upped spending on infrastructure and the crucial health sector, the benefits of that will accrue to a vast section of the society.

“It is not only through taxes that the government can take care of the middle class.”

On the health Budget, which saw an increase in expenditure to Rs 2.23 lakh crore, being purposely designed to include water and sanitation and finance commission grants, he said one has to take health comprehensively and it was logical to include water and sanitation into that.