Budget 2021: FM Nirmala Sitharaman explains why government decided to spend big on infrastructure

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With an objective to help the economy tide over the crisis triggered by the coronavirus pandemic, the government chose infrastructure and healthcare sector as two big themes in the Budget 2021.

In the post-Budget press conference, Sitharaman said the government decided to spend big on these sectors to give the necessary demand push.

“We chose to spend big on infrastructure which includes road, bridges, shipping and power generation among others. In the light of what has gone last year, there is a need to spend on the healthcare sector,” Sitharaman said.

She further added that expenditure allocated for healthcare sector had been increased to Rs 2.33 lakh crore. It was earlier Rs 93,000 crore.

She further said that the agriculture sector was not ignored by the government in the Union Budget. “We are bringing in agriculture cess for the sector. It is restructuring which we have done for basic customs duty where it was 12% earlier. End of the day consumer has to pay up that much only or less,” Sitharaman said.

The FM also highlighted various reforms which are introduced in the financial sectors including the continuation of divestment in the PSU space, initial public offerings of LIC in FY22, opening up for 75% of FDIs in the insurance sector.

“These are very clearly progressive steps in financial sectors. One major crying for banks are non-performing assets for which we are giving capital infusion,” she said.

Commenting on the setting up of Asset Reconstruction Company (ARC), Sitharaman said that the decision will help in to clean the books of the banking sector. The ARC will bid for NPAs and it will help lenders to get the amount with some hair cut.