Budget 2021: Setting the blueprint for Economic Recovery
To sum it up, budget 2021 has taken a long-term view for economic recovery in India, by focussing on increasing public expenditure and boasting infrastructure growth. — Abhishek Pratap Singh
The budget of any country is crucial for many reasons. Not just that it provides a balance sheet of the government but it also shapes the macroeconomic environment of the state based on the proposed road map for resources accumulation and its expenditure. It also provides the scope for new economic reforms as it lays emphasis on proposed changes and role for new actors in the economy. Following a contraction in economy it was never too easy to prepare a budget in times of economic stress like this year. Having said so the new budget does lays key emphasis on the path to economic recovery based on increased public expenditure and focus on growth.
The new budget 2021 unveiled by the Finance Minister Nirmala aims to build up the Indian economy in the post coronavirus pandemic phase. It sets the path for economic recovery and is primarily based on six pillars, as said by finance minister, like as Health and Well-being; Physical and Financial Capital; Inclusive Development for Aspirational India; Reinvigorating Human Capital; Innovation and R&D; and Minimum Government and Maximum Governance. The Economic Survey 2021 has already given the blueprint of the proposed budget, which was likely to be focusing more on public investment expenditure to revive the economy. This also necessitated holding up fiscal consolidation goals, keeping in mind the immediate economic interests and priorities.
As the data suggests, the Indian economy is seen to be recovering with positive GDP growth rate in the last two economic quarters. This trend is likely to move upward given post vaccination, leading to rebound in consumer demand and investments.
At the foremost, the issue of affordable health care has become of utmost importance in the times of Corona pandemic. The allocation to the health sector has seen huge jump in the budget 2021. The government is expected to spend Rs. 223846 Crore in the coming years on health care and well being, covering both preventive and curative health care. Moreover, the 35000 crore allocation for Corona vaccination program is a welcoming step in right direction, as economy looks to rebound in post vaccination phase. The industry estimates this to be sufficient for India’s vaccination drive. On the education front, in the light of New Education Policy (NEP) budget proposed for Rs 50,000 crore allocation over next 5 years towards the creation of National Research Foundation (NRF) to promote the ecosystem of research in country. The policy aims to boast and utilise the human capital to develop research capacity in the country.
Moreover, budget has chosen for economic growth over populism, which is a good policy choice in the long run. The proposal for increase in capital expenditure is more likely create short and medium-term employment, also helping for the macroeconomic growth. The proposals on bad loans, like setting to set up Asset Reconstruction Company will facilitate flexibility to finance the economic recovery in the longer run. The proposal for fresh capital infusion of Rs 20,000 crore to the Public Sector banks (PSBs) is good step towards more credit availability for the economy.
Another major development in the budget relates to pushing the establishment of dedicated manufacturing zones and locating budget head for the same. These zones are primarily aimed at curbing the Chinese imports in the power generation sector. Power is a strategically important and lucrative sector in India, and the move is aimed to delink the increased China influence in the power distribution ad transmission in India. The new proposal is part of the larger campaign to encourage self-reliance and reduce dependence on Chinese imports. Given the call for Atmanirbhar Bharat by the PM Narendra Modi, the budgetary proposals in power sector set the path in right direction. On the other hand, the budgetary proposals for disinvestment and economic reforms set the target very high, and needs to be taken up with due care and concern of all the stakeholders as they roll out in future.
To sum it up, budget 2021 has taken a long-term view for economic recovery in India, by focussing on increasing public expenditure and boasting infrastructure growth. qq
The Author is Assistant Professor, Deshbandhu College, DU.