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Thursday, December 2, 2021

Economic Survey 2020-21: Finance Minister indicated major economic reforms in the General Budget

Economic survey has been submitted. If one of the words can be the best way to review a survey, it is Jeejeevisha. Jeejeevisha can be called Religions in English, which means that no matter how bad a situation you have gone through, you are neither broken nor lost and you have a longing not only to live but to move forward. It is not trivial that this survey is for the year that has seen the most frightening economic scene of the past several decades, has seen horrific layoffs, deaths, and an unprecedented decline in the lives of people.

In this perspective, the most important point of the survey written by Chief Economic Advisor Krishnamurthy V. Subrahmanyam and his team is that India can emerge as the fastest growing economy in the world in the next two years. According to the survey, the country’s economic growth is expected to be 11% in 2021-22. This is when, according to the Center for Monitoring Indian Economy, a total of 2.1 crore jobs were lost in 2020 during the lockdown caused by the coronavirus. GDP went down 23.9% in that quarter and according to the survey, GDP is expected to shrink by 7.7% in 2020-21.

The survey said that the fiscal deficit has gone well beyond its target, but despite this, the roadmap given for the 11% growth rate next year has been cited as the biggest catalyst for public sector spending. This is quite interesting because it also indicates the budget to be presented on 1 February. The survey states that there is a need to increase government spending from the current 1% of GDP to 2.5 to 3%. That is, if we assume that the financial loss has already reached 7%, then it means that a loss of about 14 lakh crores has already been done. Now if there is a condition of spending more than Rs 5-6 lakh crore for the 11% GDP growth rate, then it means that the feasibility of this expectation revealed in the survey will be questioned.

If questions do not arise, for this, Finance Minister Nirmala Sitharaman will have to put forward a concrete plan to increase the income of the government. The government has a limit on borrowing and if it plans to raise more than Rs 5-6 lakh crore of debt, it will bring far-reaching consequences for the economy. That is, the government will have to raise Rs 14-15 lakh crore from internal sources. In this, the target of raising 2-2.5 lakh crores from disinvestment can be set, but how successful the government will be in that too, there is a question mark because, year after year, governments have been missing out on the target set for disinvestment by a large margin.

A hint has been given in the survey, which gives some idea of ​​the government’s strategy of fundraising. It said that according to the announcement made in the National Health Policy 2017, OOPE i.e. Out of Pocket Expenditure can be reduced from 65% to 30% of the total expenditure on the health sector. That is, private sector participation in the rest of the expenditure will be ensured. It is believed that a big allocation can be made for the health sector in the coming budget, in such a way, this indication is very important from the Economic Survey. If this signal is changed in the budget announcements, then the upcoming budget can open the door to comprehensive reforms for the private sector on the lines of the economic reforms of 1991. Because if it does not happen, then it will be a dream for India to achieve 11% GDP during 2021-22.

Subrahmanyam compared the V-shaped recovery of the Indian economy to a tour of the Indian cricket team to Australia in the survey role, which managed to win the series after being all out for 36 in the first match. On the same lines, the Indian economy has also reported an estimated 3.1% growth in the fourth quarter after witnessing an economic contraction of 24 percent in the first quarter.

But amidst all these expectations, the survey has also cleared the challenges and risks of growth on its cover page. Economy, life and health risks on the corona scales have been shown to be lightened by improvements, infrastructure, self-sufficient India and weight of vaccine. This scale also has a glimpse of the budget of 1 February. It is clear that this budget of the Finance Minister will be focused on achieving the goal of self-reliant India under the security cover of the vaccine and for this, infrastructure will be built on the basis of reforms.

Shehnaz is a Corporate Communications Expert by profession and writer by Passion. She has experience of many years in the same. Her educational background in Mass communication has given her a broad base from which to approach many topics. She enjoys writing about Public relations, Corporate communications, travel, entrepreneurship, insurance, and finance among others.
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