- The Finance Minister’s third Budget proposal for the year 2021-22 was not only much anticipated but also expected to come out with a comprehensive blueprint to steer the country’s economy battered by the unprecedented pandemic in the previous year. Fiscal prudence in times of extraordinary circumstances where every veritable economic activity was shut for a considerable period would require tremendous efforts to pick-up threads to resume. Because of the same, showcasing to what extent the country’s leadership has its ears to the ground as well knows the pulse of the economy to calibrate synchronized measures to kick-start resumption is key.
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- There were few mini Budgets presented by the Finance Minister during the pandemic year soon after lifting of the lockdowns wherein stimulus packages aimed at provisioning relief to all concerned was announced intermittently. None were left untouched by the vagaries perpetrated by the virus-induced lockdowns would be an understatement as the debilitating effects are still visible on the ground. Micro Small and Medium Enterprises (MSMEs), the bulk of the unorganized segment as also common citizens were the biggest casualties, so sadly represented by millions of migrant laborers, feeling the heat in unimaginable proportions during the initial days of lockdowns.
- Most hearteningly, the people responded overwhelmingly to the call of the Prime Minister by showing admirable grit, determination, gumption, and resilience to fight it out despite encountering precious loss of lives and livelihood. The country finally appears all set to revert to pre-pandemic ways since the plummeting confirmed infection cases as well as the economic green-shoots firmly visible on the back of crucial sectors gradually showing much-sought ascendancy. In this backdrop, the Budget presentation had assumed greater importance to showcase the way forward to position the country’s fortune intertwined with that of the people.
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- As expected, the Budget did focus primarily on sprucing up the infrastructure front which is considered a prerequisite to initiating relative cascading effects on ancillary sectors which would enable the creation of job opportunities all around. Hence, the Budget’s financial sector changes are linked to its aspirations for infrastructure development. The outcome is the most significant change noticed in switching back to a development financial institution model backed by Rs. 20,000 crores as government equity to catalyze infrastructure funding. Note that the experience of relying on banks to bailout has been disappointing as the lending institution are not yet out in the clear. Also, healthcare infrastructure has received due attention on expected lines.
- Another notable component that always attracts attention is direct taxes. Here, the status quo on the slabs are maintained and salaried employees’ hopes of substantial relief are stymied with a pragmatic decision. Notably, the fiscal deficit for the current financial year is expected to be 9.5 % of GDP, which the government aims to lower to 6.8 % in 2021-22. Nobody in their financial senses would question the overrun in fiscal deficit by 6 percentage points given the extraordinary situation. Ultimately, the Budget without any big surprises on the tax front focuses on changing infrastructure financing in India. Hopefully, the intended potential gets actualized in the coming days.
