ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Development Banking in the Budget

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The budget 2021–22, in the pandemic context, sees that no particular segment could be subjected to further fiscal burden and has retained the present tax rate structure. It proposes to meet the socio-economic expenditures by expediting disinvestment of `1.75 lakh crore and by monetising disposable assets. The budget has reversed the disbanding of development banks in the mid-2000s. The government would start a new development finance institution (DFI). It hopes to ensure the fiscal multiplier from investment in physical infrastructure that is known to be high.

The budget contains a new approach on institutional funding. For funding national institutional infrastructure, the government proposes reintroducing DFI with capital outlay of `20,000 crore, which could build a lending portfolio of `5 lakh crore in five years. The budget has underlined the importance of a highly professional management for the DFI. Building project financing teams is a gigantic task as the managerial personnel should have an integrated team approach in which there should be expertise in technology, marketing, finance, management and economics, and it should function with perfect cohesion and move hand in hand. This could be done expeditiously by associating retired executives of IDBI or ICICI or Industrial Finance Corporation of India (IFCI).

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