Friday, August 12, 2022

A budget for V shaped recovery, V for Vindication

By EMN Updated: Feb 10, 2021 10:49 pm

Since the past few days, a phrase that had caught the fancy of many people from both sides of the political fence was “V shaped recovery”. If I jog my mind, the last time, the alphabet V had found itself amidst such anticipation was when the artsy British Film “V for vendetta” released. Before the budget, many intellectuals from opposite ideologies had advocated a “V for Vendetta” budget, Increase the Income taxes, heavily tax the corporates, decrease Government spending etc. But, if I have to put a label on this budget, I would call it “V for Vindication” budget. This budget is sheer vindication of this Government’s approach towards economic revival. What the Government has aimed to achieve through this budget is indeed courageous, it surely has not missed the woods for the trees. The budget came amidst a pandemic that had ravaged much of the last year.The Indian economy contracted by 7%, revenue dried up, spending soared, demand stalled, exports flattened and business investments came to a standstill. With the depletion of revenue, the only way by which the country was kept afloat was Government expenditure. Much of this expenditure was in providing food grains to 800 Million people under PM GaribKalyanYojana. In the face of such fiscal challenge, any other Government would have been on its knees, pressured to overtly please its constituents or take recoursein economic patchwork. But this Government accepted the challenge of a burgeoning fiscal deficit of 9.5% to focus on productive growth. The Government astutely increased capital expenditure, or expenditure to create productive assets by 26%, to an unprecedented 5.5 Lakh Crore while decreasing the non-productive revenue expenditure substantially. An increase in creation of productive assets has a multiplier impact of jobs and spending, thus this budget is much more than what meets an untrained eye. When time called for stepping up and taking responsibility for a revival, the Government took a brave stance and provided buoyancy to the other sectors to recover at its own expense. This risk is indeed a certificate of trust and appreciation that the Government has placed on the entrepreneurial spirit of its people.

When Covid disrupted everything, many countries went into panic spending, while India spent incrementally, this cautious yet pragmatic approach coupled with the foresight of the Government saw India emerging as a lone bright spot in the post Covid era. The only thing that could further augment investor confidence on India was a dream budget, thus the bull of the stock market has not stopped running since. One logical question that followed was,if the Government is not increasing taxes then how will it be able to fund this capital expenditure? The answer lies in disinvestment, IPO’s and unlocking the potential of assets that Government holds. Thus, this budget has a disinvestment target of 1.75 lakh crores, monetisation of assets held by Government and state’s PSU’s.

The Corona pandemic laid bare before our eyes the inadequacy of our health infrastructure, the world feared absolute pandemonium but the Government’s deft handling of the pandemic left many global opinion makers at loss of words. In contrast to the western countries, India emerged victorious albeit with a realisation to strengthen our health infrastructure, after all as the Honourable PM had put it “Jaanhaintoh Jahan hain”. The Budget hiked the allocation for health by a whopping 137% to 2.23 Lakh Crore, aone-time allocation of 35,000 Crore for Corona vaccination coupled with a new scheme “PMAtmaNirbharSwasthya Bharat Yojana” with an outlay of 64,6180 Crores will mark a paradigm shift in the health systems of the country. As a stamp of approval for the Jal Shakti Ministry’s tremendous work of providing tap connections to 3.3 Crore households, a number more than the total tap connections provided in the last 70 years, 2,87,000 crores has been allocated to Jal Jeevan Mission (Urban). 1.41 Lakh crore for Swachh Bharat 2.0 for complete faecal and waste water management will push India towards Holistic sanitation. Broadening the ambit of providing social benefits to every Households, the UjwalaYojana has been given a target of 1 crore more households. The allocation of 16.5 Lakh Crore to agricultural credit, allocation of 40,000 crore to rural infrastructure fund, doubling the funds for micro irrigation and bringing 1000 more mandis into e-nam system are statements of commitment towards our annadatas.

The voluntary vehicular scrapping policy is the shot in the arm that the automobile sector needed, the phasing out of unfit vehicles will generate new demand for the auto industry which will translate into massive benefits throughout the value chain. The PLI scheme worth 1.97 Lakh crore has been broadened to 13 sectors, the confidence shown on manufacturers in 2020 through PLI scheme was well rewarded thus this year’s budget envisions India as a world class manufacturing hub for the world. Railways has been given the highest allocation of 1.1 Lakh crore ever. The railways ensured that transportation of goods went on unhindered during the pandemic. The resilience of the Indian railways was at full display and thus, the railways is expected to chug India forward in 2021.

The numerous steps taken for the reinvigoration of Indian economy in this year’s budget will take much more ink and space then possible, but one thing Is for sure, the Government could have gone for a survival budget, a recovery budget, but it showed the gumption to think long term and went for a growth budget, a resurgence budget. India has finally unabashedly embraced growth, the budget is one major step towards the cherished dream of the country, the dream of AtmaNirbharta.

Gajendra Singh Shekhawat, Union Minister, Ministry of Jal Shakt
PIB Kohima

By EMN Updated: Feb 10, 2021 10:49:54 pm