Video | Finance Secretary on crypto, ‘paracetamol effect’ & state booster

Creating jobs quickly is the primary focus of Union Budget 2022-23  and the Centre is banking on the multiplier effect that the capital expenditure will create, Union Finance Secretary T V Somanathan has said.

In an exclusive interview with The Federal’s G Ganapathy Subramaniam, Dr Somanathan said each rupee invested in infrastructure building would generate an impact equal to that of 3 Rupees of expenditure. This three-fold impact would lead to a significant increase in employment. In view of this multiplier effect, the government had decided to go big on investments in public infrastructure, he said. 

‘Paracetamol effect’ 

The Union government had not opted for direct cash transfer to the poor since such doles would only have a palliative effect, Dr Somanathan said. Such transfers were not a cure and, therefore, it was not in the interests of the people, he said. It would be better to provide proper employment than temporary relief through cash transfers. Nobody wanted to be dependent on the government and the people needed real income, he added. 

Vaccine shield 

The Finance Secretary said that high levels of vaccination would guard against COVID-19 waves in future. While it was difficult to hazard a guess on the probability of another wave, Dr Somanathan felt that the economic impact would be much smaller, (as compared to 2020, 2021).

Crypto challenge

Taxation of digital assets, proposed in the Budget, was not an endorsement of crypto assets. While these were not illegal, people should know the risks involved. Risks can pay off too, the Finance Secretary said

Crypto tax 

Under law, everything is taxable and profits from cryptos were no exemption. Even [income, profits from] smuggling, corruption was taxable, he noted in a lighter vein.  

State booster 

Dr Somanathan dismissed questions about the ability of States to use the ₹1-lakh-crore additional debt facility announced in the Budget. In 2020-21, States fully utilized the ₹12,000-crore additional debt facility provided to them and made full use of the ₹15,000 crore provided in 2021-22. The loan facility was easy to access, repayable in 50 years, and does not carry any interest burden, the Finance Secretary said. 

Also read: If virus deigns to retreat, Budget 2022-23 would foster growth recovery

Also read: A feel-good Budget that skirts around some critical areas