Madan Sabnavis, Chief Economist, CARE Ratings, spoke to BusinessLine on the progress made in the Central Government’s pet projects. Excerpts:
What are your views on this Government’s ‘pet projects’?
We can broadly put the Government projects in three buckets. There are those involving direct expenditure through Budgets; policies which are oriented towards the lesser privileged and policies which are administrative in nature and ease the conditions on doing business. Under the first, we can see roads, railways and urban development being the focus areas taking large investments. Under the second, affordable housing, farm insurance and healthcare would be the top ones.
Swachh Bharat has not been so much a growth driver. It has been more about attitudinal change and has had only reasonable success. In terms of doing business the relentless focus has been on unshackling procedures which is an ongoing task.
How have these projects fared in the last year?
Roads and Railways continue to be main areas of expenses and have been success stories. On urban development, allocations have come down and it looks like the Government has had to revisit allocations given the budgetary pressures. Affordable housing policies have worked and can be seen in the growth in home loans and the construction sector.
Health is a new scheme and it has to be tested with time. Insurance has not quite worked out as can be seen from farmer distress this season. The performance of ‘ease of doing business’ has been good as witnessed by the improvement in rank this year.
How would you compare the performance of the BJP Govt vis-a-vis UPA?
The performance of the current Government has been very good so far in terms of various schemes as the results show. There have been some slippages in urban development where States too have to be taken along.
Also, some schemes like the farm insurance has not quelled the travails of the farmers this year. Here too States have a bigger role to play. The Central Government has to work with States to get things done which is always a challenge. The biggest achievement has been improvement in rank in ease of doing business. In fact, streamlining of polices relating to natural resources has been a big achievement of this Government.
How would you rate these pet projects on efficiency of spend?
This has always been a problem where we have been good at starting projects but wavered in implementation.
While direct expenditure on roads and railways has been good, the same has not been seen in urban development.
Both insurance and health is a challenge as it has to be tested with the beneficiaries both covered and reimbursed. This has been our Achilles heel even in the past.
Do you feel that these pet projects could boost GDP growth in the coming years?
The direct expenditures do give direct thrust to GDP. But overall the Central government expenditure is just ₹3 lakh crore of which 75-80 per cent is on non-defence. Given the size of our GDP the amount is too small to drive a base of ₹180 lakh crore of GDP.
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