Budget to focus on job creation, health today
Union finance minister Nirmala Sitharaman’s Budget on Monday is expected to revolve around the philosophy of “growth with a human touch” and focused on raising farmers’ incomes, generating jobs for the young, improving health care standards and ease of compliance for citizens and businesses,people aware of the development said.
Big infrastructure projects, continued support to micro, small and medium enterprises (MSMEs) and making India self-reliant to become a key player in the global supply chain will be the other objectives of Sitharaman’s third budget, three people said on condition of anonymity.
The Covid-19 pandemic, a 68-day hard lockdown imposed to slow its spread, the restrictions that continue on account of the infections, and the fact that people are still worried about venturing out or travelling are expected to cause the economy to contract by 7.7% in 2020-21, according to an estimate by the National Statistical Office.
Budget 2021-22 is being built on the ₹20 lakh crore Aatmanirbhar Bharat (Self-Reliant India) stimulus packages that were announced between March 26 and May 17, the three people cited above said.
“The packages were designed in such a way that it not only gave instant relief to the poor in terms of free food and cooking gas during the nationwide lockdown, but also provided fiscal and monetary support to the industry to bounce back. The result is the V-shaped recovery. Hence, there is no point to reinvent the wheel. The budget will take it forward,” one of the people said.
A second person said the Union Budget will also lay the foundation of self-reliance and show the road map for Industry 4.0, or the fourth industrial revolution. Last week, Prime Minister Narendra Modi said at the Davos Dialogue that India was working on all four factors of Industry 4.0 — connectivity, automation, artificial intelligence or machine learning and real-time data.
The Indian economy contracted by 23.9% in the quarter ended June 30, but recovered to contract by a slower 7.5% in the three months ended September 30. Based on the recovery trend, Economic Survey 2021-22 on Friday projected growth of 11% for the Indian economy in the next fiscal year on the back of the Covid-19 vaccination drive and a recovery in consumption.
The people mentioned above said the Union Budget may announce some policy measures to boost consumption, particularly by the middle class, as stimulus was mainly supply-driven. “Also, expect some boost to the rural economy, which will remain our engine of growth,” the third person said.
Watch: Finance Minister Nirmala Sitharaman with team ahead of Budget
The people, however, ruled out any major exemptions on taxation this time because of a resource crunch. Chief economic adviser (CEA) Krishnamurthy V Subramanian on Friday hinted that the time is ripe for the budget to stimulate demand. He said the stimulus packages of the past were focused on necessities and support to the industry through emergency credit and liquidity measures; a policy push to demand during the lockdown could have been a wasteful exercise. The first stimulus package of ₹1.7 lakh crore — Pradhan Mantri Garib Kalyan Yojana (PMGKY) —was announced on March 26 as immediate relief to the poor. Monetary measures worth ₹8.01 lakh crore were taken by the Reserve Bank of India (RBI) between March 27 and April 17. A third package of ₹11.02 lakh crore was announced in five parts between May 13 and May 17 under the umbrella of Aatmanirbhar Bharat Abhiyan.