Pronab Sen Says Budget to Widen K-Shaped Recovery, Polarise India v Bharat; Doubts 2 Lakh Cr CAPEX

In a comprehensive 70-minute interview to Karan Thapar for The Wire, Prof. Sen, who is the Country Director of the International Growth Centre, began by agreeing with many of the concerns and questions about the alleged 2 lakh crore increase in government capital expenditure raised by former Finance Secretary, Subhash Chandra Garg, Tamil Nadu Finance Minister, Palanivel Thiaga Rajan and Neelkanth Mishra, a member of the Prime Minister’s Economic Advisory Council. Prof. Sen said some part of the 2 lakh crore CAPEX increase could be used by the states to substitute for earlier more expensive loans. Some part of it reflects a sizeable amount of earlier off-budget expenditure which has now been brought onto the budget. And, in fact, some part of it may not be used by the states at all because it could change the nature of their political relationship with the Centre. To the extent any of these three things happen we will not see a 2 lakh crore increase in government capital expenditure. There are, therefore, “serious questions” about whether government CAPEX will rise by 2 lakh crore.


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