Balance sheets show good capex rise in some companies: DEA secretary

On the SME fund, DEA Secy Anuradha Thakur says the ₹500-crore allocation signals commitment to a separate fund, clearly targeting SMEs distinctly from MSMEs

Private investment cycle is picking up across many areas, Department of Economic Affairs (DEA) Secretary Anuradha Thakur tells Ruchika Chitravanshi and Asit Ranjan Mishra in a post-Budget interview in New Delhi. The conversation ranges from the government’s fiscal maths to capex push, borrowings and more. Edited excerpts:

 

How did you approach the Budget from the DEA viewpoint?  

The key areas of focus are very neatly enshrined in the three kartavya  embedded in the finance minister's speech.  Given the external environment, the three-pronged approach has been sustaining, maintaining and growing this growth rate, and that cannot be compromised. We have to continue to grow like this and higher for the next several years with our eye on Viksit Bharat 2047. Also, the way the country is changing (as crores of people come out of poverty) is a pointer to a youthful, ambitious and aspirational India. And, while we are all growing, there are pockets in our country, remote corners, different communities, sectors, regions, segments that need to be taken along. We tried to address all of these together while maintaining fiscal discipline.  

There’s an opinion that you have achieved the fiscal deficit target in FY26 by compressing expenditure — both revenue and capital. What would you say to that?  

That's not correct. We don't ask any department not to spend. Expenditure happens at the pace that departments and entities of the government expend. At the RE (revised estimates) stage every year, some amount of money may get unspent in certain heads due to some problem or the other. And, they may ask for reappropriation of some amount under some other heads. That is a regular exercise that happens annually. I would totally say that it’s  not correct to say that we have compressed expenditure to reach the fiscal deficit target.  

Do you think this was the year you could have done the heavy lifting on bringing down debt? Does the path going forward look more difficult given the fiscal impact of pay commission in FY28 and general elections in FY29?  

There are views on both sides. Because there is trust, we don't want to lose it. Because that is a non-compromisable, non-negotiable thing now. We are committed to that path of declining debt to GDP and we will continue on that and fiscal deficit is a key operational means of doing that. Directionally, it has to be correct. It has to be on the gliding path. Having said that, the first pillar of the Budget is growth being non negotiable, not only at the sustained rate, but much higher. A momentum has built up that we don't want to lose but build upon it… We are putting our weight behind certain sectors like biopharma, ISM (India Semiconductor Mission) so that private investors, both foreign and Indian, can see this as an opportunity and invest in the country.  We are absolutely committed to the glide path. 

Is there a direct correlation with fiscal deficit? 

Fiscal deficit is the operational target. This question was also given as feedback from the investor community. We will also keep seeing it and therefore reporting it. But the metric that we are keeping in front of us, in tune with global standards, is the debt to GDP.  

The market has reacted negatively to the gross borrowing figure. How do you look at that?  

We would have borrowed for redemptions because there's a requirement. It happens to be a year in which I am confronted with a large amount of redemption. So there is no going around that. I have to borrow to return the amount which I had borrowed from the stakeholders many years back. Therefore, it is higher. We are hoping that the market can see that as well. There is transparency in how we intend to borrow. At best, we can offer a switch or we can do a buyback. Buyback, if I have cash lying around. But if I don't have cash, that occasion will not arise. From RBI and our side, the goal is to be able to borrow in a way that is cost effective for the government. 

 

What is the reason for keeping SME (small and medium enterprises) growth fund allocation for FY2027 at ₹ 500 crore? 

 

The ₹500 crore allocation is to show the commitment that it is going to be a separate fund, to give the indication that we are targeting small and medium enterprises separately from MSME. The ₹500 crore allocation has been put there to indicate that we will get it going fast. If there is more at the time of reappropriation, we will be able to  reappropriate and give more. We want to show and give a clear thought because we are targeting small and medium in this way for the first time. Because the focus is on micro, a lot of the time, and rightly so, they need a lot of support. We will continue to do that. 

 

It seems the government is depending heavily on the RBI dividend for revenue generation. Is  it a good sign?  

The Reserve Bank of India’s economic capital framework is very robust. Being on the board of RBI, it is our primary responsibility to make sure that the central bank of the country remains robust. Once the RBI determines through its own committee how much dividend can be given, it's fair for the government to get that dividend. So we don't want to disturb that at all. 

 

On capital expenditure, what is giving you the confidence of increasing it to ₹12.2 trillion? 

What gives us confidence is that the variety of capex that different ministries are now ready to look at, is becoming wider. We do hope to engage with ministries early on in the coming year to make sure that ministries will be able to spend it including those which may not have been able to show the same pace of expenditure in the past. Based on the new types of items that are being taken up as well as the focus of the infrastructure in this Budget itself, on enhancing diversity, capex can be achieved. 

 

Why is it not leading to crowding in of private investment?  

It is heartening to note that private investment is picking up and some of it is in those sectors in which the government has made the first move, such as electronics. The balance sheets of a certain group of companies, certain sectors show that investment has really risen in the last one year. And then like any investment cycle, once it starts picking up, it keeps going. These are the things that are giving us confidence moving ahead.

 

What is the status of the discussion paper on cryptocurrency? 

Our stated position is that it is unregulated. And there's a good reason for that. The draft discussion paper was made, but so much changed in the world after that. In that sense, it really needs to be updated. But the position now is that the so-called gains in the crypto sphere are gains which are very hard to get and very hard to achieve. Whereas the problems in the crypto world, because of the fact that there is no underlying asset, are so difficult. The findings of the discussion paper stop at a particular point. The basic risk around crypto remains as it is.