Bhopal: Former Deputy Chairman of the erstwhile Planning Commission, Shri Montek Singh Ahluwalia stressed the need for considering rewriting the Fiscal Responsibility and Budget Management Act in the changing contexts in view of the increasing financial needs and fiscal limitations of States.
He said there is a need for enacting a law for public-private partnerships to overcome the budget constraints for socially important economic infrastructure projects, he added.
Ahluwalia was addressing a workshop organized by the Finance Department on the subject of ‘Alternative Finance for Projects’ at the local Minto Hall in Madhya Pradesh capital Bhopal on Wednesday.
Financial institutions and the govts should change their thought-process, says CM: Addressing the workshop, Chief Minister Shri Kamal Nath said that the global economic scenario is changing rapidly. Therefore, the financial institutions and the governments also need to change their thought-process.
‘Increased budget resources are required’: Nath said that a vast country like India has largest society of aspirational youth and increased budget resources are required to fulfill their ambitions. Therefore, banks, state governments and private sector institutions need to adopt the change.
Stress on innovative ideas in budget-making process: Nath laid stress on deviating from the process of conventional budget making process and working on alternative processes and innovative ideas. He said that it has become necessary to focus attention on the economic activities that generate jobs.
Efforts to make farming fully modernized: The Chief Minister said that in a State like Madhya Pradesh, there are abundant natural resources but in expanding economic activities, they are far behind. He said that efforts are being made to make Madhya Pradesh’s agriculture fully modernized so that the economic activities associated with agriculture can also be expanded.
Govts have social responsibilities, says Ahluwalia: Shri Ahluwalia said that governments have limited financial resources for ambitious projects. The governments have many tasks, responsibilities, priorities and social obligations apart from economic infrastructure projects. There are many challenges in completing them simultaneously. As a result, the speed of projects slows down and they start lagging behind.
‘Pvt sector is fearful of risks’: Ahluwalia said that there is a need to think beyond the conventional approach of depending on budgetary resources. In such a situation, States look towards the private sector for assistance. The private sector is fearful of risks and threats while the governments are bound by the welfare principles beyond the loss and profit. Both have their limitations. Therefore, there is a need for a law to work in cooperation between the two.
Shri Ahluwalia said that instead of managing finances for large economic infrastructural projects, the system of providing guarantee by the state should also be considered. The governments should assume the role of a friend in managing the financial risks for the projects. For example, in order to deal with the ill effects of climate change, infrastructure projects of economic importance should be given a guarantee.
The workshop was attended by top officers of banks, budget experts from the corporate sector, scholars with special abilities in budget formulation and senior officials of departments.