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Low tax to GDP ratio makes infra expansion, investment challenging, says Economic Survey

The survey, presented by Finance Minister Nirmala Sitharaman in the Parliament on Friday, January 29, further stated that, improving the composition and quality of expenditure therefore assumes significance

twitter-logoBusinessToday.In | January 29, 2021 | Updated 14:51 IST
Low tax to GDP ratio makes infra expansion, investment challenging, says Economic Survey
The Economic Survey is a flagship annual document that reviews the development of the country's economy over the past year and provides an in-depth preview of the budget

Low tax to GDP ratio makes it difficult for the government to provide sufficient funds for investment and infrastructure expansion while staying within the bounds of fiscal prudence, according to the Economic Survey 2020-21.

The survey, presented by Finance Minister Nirmala Sitharaman in the Parliament on Friday, January 29, further stated that, improving the composition and quality of expenditure therefore assumes significance.

Budget 2021

"Over the past few years, the quality of expenditure measured in terms of the share of capital expenditure in total expenditure has on an average sustained at a level," the government's annual document noted.

"It is estimated to increase roughly by a percentage point in 2020-21 BE over 2019-20 PA which accounts for an expected growth of 22.4 per cent in capital expenditure over 2019-20 PA. The major sectors apart from defence services, that account for bulk of capital expenditure allocation in 2020-21 BE include industry and minerals, construction of roads and bridges, communication services, and space technology," it added.

Also Read: Budget 2021: Date, time, sector-wise expectations; everything you need to no

The survey further stated that besides budgetary spending, the government has also mobilised "Extra Budgetary Resources (EBR)" to finance infrastructure investment since 2016-17.

"EBRs are those financial liabilities that are raised by public sector undertakings for which repayment of entire principal and interest is done from the Central Government Budget. The government has raised EBRs of Rs 1.35 lakh crore during the period from 2016-17 to 2019-20. It proposes to raise EBR of Rs 49,500 crore in 2020-21 BE which is 0.22 per cent of GDP," it noted.

The Economic Survey is a flagship annual document that reviews the development of the country's economy over the past year and provides an in-depth preview of the budget.

Also Read: Economic Survey: India's real economic growth to be 11% in FY22

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