The Indian economy is on course for a “fairly steady and sustainable recovery” as the chances of another major Covid outbreak have diminished thanks to the country’s inoculation drive, finance secretary TV Somanathan said in an interview. He also ruled out any significant impact from the ongoing power crisis on output, as flagged by some experts, saying the coal shortage was a temporary problem.
“Without the third wave, without a big recurrence of Covid, I think we are now on course for recovery,” Somanathan said.
The government will ensure that lack of funds does not act as a constraint on capital expenditure and budgeted spending will take place, said Somanathan, who is also expenditure secretary.
The sale of Air India, he said, will lower the government’s interest liability with the new buyer taking over part of the debt. The government will save about ₹20 crore a day that it has been ploughing into Air India.
The airline is being taken over by the Tata Group.
The privatisation process of two public sector banks is continuing with legal and regulatory issues being sorted out.
“Work is going on – it’s not that they are not being processed, it’s being done,” he said.
As the inoculation drive has been stepped up, the chances of a third Covid wave have faded.
“I think with vaccination having crossed 50% for the single dose and with the emerging numbers and the fact that vaccination will also be continuing on a daily basis at a fairly good pace, the third wave looks unlikely,” he said. “Without the third wave, without a big recurrence of Covid, I think we are now on course for recovery.”
The finance secretary acknowledged that there were some downside risks, such as a rise in international commodity prices and supply shortages outside the country that could hamper the recovery.
“Nevertheless, I am reasonably optimistic that we are on course for fairly steady and sustainable recovery,” he said.
He termed the power crisis as a passing matter.
“I think there was a weather-related problem which affected coal supplies, domestic coal supplies. I think it is a temporary problem,” he said.
Somanathan said the finance ministry will ensure that fund flows are adequate and support the capital projects of ministries.
“Capital spending, within the budget estimate… we will ensure that lack of funds doesn’t restrain capital expenditure,” he said, adding that he was optimistic about the capex target being met.
Asked about the government biting the bullet on some long-pending issues such as the retrospective tax, the telecom relief package and Air India privatisation, he said the starting point was the Atmanirbhar Bharat policy measures of May 2020.
“Many of those reforms were quite radical,” he said, highlighting the new public sector policy, which was outlined then and announced in the budget. “I think it is more a change that has developed over a period of time; it’s not some sudden shift. But what you are seeing is execution.”