Finance Minister Nirmala Sitharaman is about to present her much-awaited budget today. It is expected that in this budget, efforts will be made to provide relief to the common man troubled by the epidemic and to revive the economy by increasing the expenditure of sectors like Healthcare, Infrastructure, Defense.
It is expected that this ninth budget of the Modi government emerging from COVID-19 will focus on increasing employment, rural development and leaving more money to spend in the hands of the common taxpayer. Apart from this, there can also be a focus on attracting foreign investors in the budget.
Finance Minister Nirmala Sitharaman presented her first budget in 2019 through a traditional red fabric ledger instead of a leather briefcase. The finance minister had said at the beginning of January that the budget for this new fiscal year starting April 1 would be unprecedented. Experts say that in this budget, the Finance Minister will have to start by connecting the pieces of economy scattered with the COVID epidemic. In this budget, the Finance Minister will have to start afresh by moving beyond just ledger or ledger account. This budget will have to be more than the old wine in the new bottle.
This budget requires a further vision from the Finance Minister for the world’s fastest growing large economy. There is a general consensus among economists that FY2021 will see a 7–8 per cent decline in annual GDP, which is one of the weakest growth in developing countries. The government will now have to play an important role to get the economy out of the pits. Meanwhile, the good thing is that there are signs of corona epidemic becoming less dangerous. In addition, gradual progress in the vaccination program is raising hopes of a better future. Policy reforms will be needed for a sustainable economic revival and this is where the role of the budget becomes important.
Corona’s attack in the country took place at a time when the economy was already going through difficulties. GDP reached its 11-year low of 4 percent in 2019-20. The declining investment rate was a major concern before Corona. Meanwhile, the lockdown implemented across the country due to Corona acted as a scourge in the leprosy and economic activity across the country came to a standstill, leading to a steep decline in GDP for two consecutive quarters of FY 2021 and the country’s economy in recession. Has gone.
To address these challenges, the government took various policy steps under the self-reliant India package 1.0, 2.0 and 3.0 to support the economy. These packages came in the form of grants, measures to increase equity and liquidity by the central government, all reliefs given by the state governments and the Reserve Banks. Although the amount of the relief package which was in the headlines was Rs 21 lakh crore, the real financial impact of this economic relief package was around 3.5 lakh crore which is 1.8% of GDP.
Apart from this, it is also a matter to keep in mind that there has been a contraction in the size of India’s economy from the last budget to this budget. It has come down from 2.24 lakh crore to around 1.94 lakh crore. There has been a decline in tax collection due to the impact of the Corona epidemic. In comparison, spending has increased. The budget will keep an eye on how much will be spent on the vaccine in FY 2022 and how much will the state governments, central government and the common man share in this expenditure. India has started the world’s largest vaccination program from 16 January. Under this, 2 vaccines Kovshield and Kovaxin are being given.
Apart from this, there will also be an eye on how much money the government aims to raise from the disinvestment of PSUs like Bharat Petroleum (BPCL), Air India and Shipping Corporation of India (SCI).
It is expected that in this budget, the target of borrowing from the market will remain high and external deficit financing will also see an increase. In addition, this budget may have a large financial allocation for the National Infrastructure Pipeline -NIP program and the recently introduced Production Linked Incentive Scheme. Explain that a total investment target of Rs 111 lakh crore has been kept for NIP from 2020 to 2025. The PLI scheme is aimed at attracting foreign investors to promote domestic manufacturing.
Acuit Ratings & Research Limited states that the government has two important goals under the current circumstances. The first of these is to propel the economy’s growth to a stalled vehicle and focus on fiscal consolidation in the medium term. Government’s efforts to boost growth should see an increase in demand in the near term and the economy should continue to grow in the medium to long term.
Arun Singh of Dun and Bradstreet says that unprecedented situations also require unprecedented steps. In such a situation, the government will have to focus on development of infrastructure, large amount of private and foreign investment in all sectors of the industry, development of service and agriculture sector, personal consumption of people to give sustainable momentum to the economy. Public private partnership can play an important role for this. Apart from this, there should be a special focus in health and education.
Global data, a leading data and analytics company, says the need of the hour is to increase the credit facility for small and medium enterprises. Along with this, investment in education and health sector should be increased to increase production and consumption. Gargi Rao of Global Data says that the upcoming budget on February 1 is expected to focus on infrastructure development, tax exemption for senior citizens and increasing domestic production.
The Indian Chamber of Commerce (ICC) says that this budget will come as an economic vaccine for the economy facing the Corona epidemic and will increase demand, consumer confidence and purchasing power of the Indian economy. . This statement of the ICC further said that it is expected that this budget will bring incentives for sectors like textiles, readymade garments, leather, food processing, construction and retail.