Government Push Spending By Infrastructure Ministries

With growth in mind, finance ministry asks infrastructure ministries to ramp up spending. The decision to increase infrastructure spending comes at a time when the Indian economy is forecast to contract by more than 5 per cent in 2020-21. The finance ministry has reached out to major infrastructure ministries like railways and roads and highways, asking them to step up spending to meet budgeted expenditures, as it looks to revive economic growth and boost job creation. Ministries like health and family welfare, rural development, textiles and food and consumer affairs were some of the exceptions — they were allowed to spend freely as required. But infrastructure ministries like railways, housing and road transport and highways were allowed to spend only up to 40 per cent of the full year budgeted amounts in the first half of the fiscal. However, with the pandemic, and the consequent lockdown and disruption in economic activity, leading to a sharp growth contraction in the first quarter of 2020-21, the government is keen to revive spending by infrastructure ministries. Economists expect the Indian economy to contract between 5-12 per cent in 2020-21, but rebound in 2021-22.