Budget 2020: DPIIT seeks more funds to boost infrastructure in hinterland

A year after its Budget allocation was slashed, the Department for Promotion of Industry and Internal Trade (DPIIT) has argued for bigger funds in the upcoming Union Budget as it plans to boost industrial development in backward areas.

The department got Rs 5,674.51 crore for 2019-20, from the Revised Estimate (RE) of Rs 6,140.23 crore in 2018-19. Allocations have been volatile over the past five years, rising or falling almost every alternate year. But after focusing on issues like e-commerce, retail, and initiatives like the ease of doing business and Startup India, the DPIIT plans to return to its core mandated objective of providing uniform industrial development nationwide, especially to backward and remote areas.  

“The initial groundwork for the government’s flagship initiatives like Startup India and ease of doing business and Make In India has been laid and work in these areas would continue. But we need to go back to the basic agenda of providing more jobs through industry in the hinterland,” said a senior source. 

The government had severely cut down on expenditure in this area, with the 2019-20 (FY20) Budget providing Rs 909 crore, down from the RE of Rs 1,707 crore in the earlier one.

As this again becomes a prime focus, the department has argued for major fund infusion that will be needed for creating infrastructure at the ground level, said a senior official. He added that the DPIIT has also pushed hard for more funds to be made available for industrial promotion and the Make In India scheme, which was allocated Rs 473 crore in FY20.

Also, officials expect the DPIIT to see growth in allocations for refund of central and integrated goods and services tax to industrial units in the Northeastern region and Himalayan states, pegged at a significant Rs 1,700 crore for FY20. 

Also, in line with previous years, the department hopes to increase its allocations on the ease of doing business, which saw an additional Rs 100 crore through the eBiz project and Startup India.

As of December, the government estimates the Startup India initiative to have created 285,890 direct jobs since its inception in 2016. More than 25,000 start-ups have been recognised by Startup India. The government data suggests that slightly more than 11 direct jobs are created per start-up. 

“We have seen that each direct job leads to 3x indirect jobs, and as a result, the total jobs created by these start-ups are estimated at more than 560,000,” said a senior official. However, the figures are self-reported by start-ups and not verified by the government.  

This job growth has come at a rough cost of more than Rs 3,000 crore disbursed by the government to fund start-ups as of November 2019. 

In 2016, the Centre had established a Rs 10,000-crore fund of funds under the Small Industries Development Bank of India to meet the financial needs of start-ups.

However, the finance ministry is unlikely to ramp up disbursements to the national industrial corridor projects as well as the new ambitious exhibition-cum-convention centre coming up in the suburb of Dwarka in Delhi, said sources. The centre is expected to be completed by 2025, with trunk infrastructure along with portions of the main project likely to be operational in the current year.