The Union Budget of 2021 is getting positive feedback from industry experts. The Finance Minister, Nirmala Sitharaman says that the economic package will have a multiplier effect. While experts praise the increased government expenditure on infrastructure and healthcare, which will be crucial to raising the aggregate demand, they also emphasize that the positive expectations will only be realised if the government can ensure proper implementation.
With great spending comes great deficit, significant demand and more jobs
The focus on the infrastructure sector is quite evident from Rs.5.54 lakh crore’s planned capital expenditure in 2021-22 which is an increase of 34.5% from the budgeted expenditure of 2020-21. The states are also supposed to get an additional support of Rs.2 lakh crore for capital expenditure and related programmes. Reforms to ease foreign investment in the infrastructure is likely to benefit the major players in this field. Some experts believe that these companies mostly use capital intensive techniques, so even if there is creation of new jobs, the creation may not be so much to address the huge job losses due to COVID-19. There is also no significant change in total expenditure as the 2021-22 figure stands at Rs.34.83 lakh crore compared to Rs.34.50 lakh crore in 2020-21. As C.Rangarajan , former governor of the Reserve Bank of India, points out in his article in The Economic Times – “ As a proportion of GDP, capital expenditure rises from 1.64% in 2019-20 to 2.25% in 2020-21 and 2.48% in 2021-22.This is a significant shift. However, the stimulus to the economy depends on total expenditure that has remained at the current year’s level.” Such an expansionary budget is likely to raise the fiscal deficit. The Minister expects to reach a fiscal deficit of 6.8% of the GDP by FY22 compared to the 9.5% this year. This expectation depends on how much revenue growth will be achieved. Though the budget has not levied any new tax, giving relief to the taxpayers, the government plans to reach its fiscal deficit target “by first increasing the buoyancy of tax revenue through improved compliance and secondly by increased receipts from monetisation of assets, including public sector enterprises and land.”
Health taken care of but suffers nutritional deficiency
The government is expected to spend Rs. 2,23,846 crore for health and well being which is a 137% increase from last year. However, this figure includes expenditures on drinking water, sanitation and nutrition, which are handled by separate ministries. The Health Ministry’s expected expenditure is just an increase of 9% from previous year. A new scheme called the PM Atmanirbhar Swasth Bharat Yojana will be launched with a vision to improve primary, secondary, and tertiary healthcare systems, creating and strengthening of national institutions to cure and detect new and emerging diseases.
Dipa Sinha, Assistant Professor of Economics at the Ambedkar University, in her article in The Hindu has stated that the budget has failed to address the ‘hunger pandemic’. According to the recent field surveys conducted by Hunger Watch and the Azim Premji University, for almost two-thirds of the respondents, the food intake was still lower than pre-lockdown levels. She points out that “Nutrition schemes which have been suffering from poor budgetary support for many years now, do not see greater allocations despite the increasing prevalence of malnutrition.” The allocation for the Ministry of Women and Child Development has also shrank to 0.7% of the budget compared to 0.98% last year.
Many roads walked down by gig workers before we called them ‘significant’
The proposed portal to collect data on gig workers is likely to benefit researchers and policymaking. An umbrella body called National Research Foundation will also be created which will fund research across various disciplines.
Raman effect is the change in the light’s direction that occurs when the light beam is deflected by molecules. What direction the Indian Economy takes being deflected by this budget is what we are keen to see.
