What Should India’s 2021 Budget Look Like?
A group of experts discuss the essential ingredients that would make a good budget recipe for India in 2021, including a robust domestic output growth, a temporary backseat for fiscal deficit and an aggressive sale of assets by the Indian government
As the International Monetary Fund (IMF) projected an impressive 11.5% growth rate for India in 2021, an expert panel spoke to a channel exclusively about what the country needs to focus on for its annual budget this year to ensure an upward market trend. As it becomes imperative for the Indian government to draw a strategy to revive the economy in the aftermath of the Coronavirus pandemic, it is also essential for it to ensure a greater overall spending with lesser inflation.
Giving her insights on whether fiscal consolidation should be parked on the side for now, Vidya Mahambare, Program Director at GLIM said that the budget should focus on persistent challenges of durable growth. Citing an example of the Goods and Services Tax (GST), she reasoned that while the move by the centre was a monumental one, it has still not stabilized, making it difficult for businesses to operate with the uncertainty and periodic revisions of the GST structure. She further added that while India aspires to get integrated into the global supply chain, it contradicts this proposition by raising its import tariffs.
Anant Narayan, Associate Professor at SP Jain College of Management and Research called for a robust domestic output growth, a feat India has been unable to achieve for more than two decades according to him. Added to this, he stated that the creation of sustainable jobs in the country will eventually solve all other issues including fiscal balance and economic growth. Speaking about the importance of the government’s need to spend on education, sanitation, healthcare and nutrition, Narayan pointed out that only with this will the future generations be able to create better value. The power, telecom and financial sectors would also need some path guidance in the upcoming budget session according to the professor.
Throwing light on India’s need to follow the ignoring of fiscal deficit as adopted globally too by many counties, economist Lord Meghnad Desai revealed that all old fiscal roles have been dismissed internationally, with even the World Bank urging countries to protect livelihoods first. Disclosing that the Indian economy had slowed down even before COVID hit the world, he said that the focus should be on aggressively selling private and public sector assets. Further, he also added that India missed the manufacturing bus long time ago and should stick to what it does best in the future, which is provide services and export labour.
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