Union Budget must focus on core strength to boost growth

By Dr Satish Misra. Dated: 2/1/2021 12:33:29 AM

Millions within the country as well as on the foreign shores are eagerly awaiting the Union Budget for 2021-22 that would be presented in the Lok Sahha by Finance Minister Nirmala Sitharaman on February 1 with hopes and trepidations because this year’s proposals can either pave the way for the revival of the economic growth that had sunk into negative growth zone in two successive quarters of the 2020-21 financial year resulting in massive losses of jobs as well as shrinking of economic activities.
In the gloomy backdrop of Covid-19 pandemic pushing the country’s economy contracting around 10 percent in 2020-21 resulting in recession, the Finance Minister has a unique opportunity to put the country back on the rails of faster economic growth by taking initiatives in certain key areas and sectors.
Union Budget is a decisive tool to turn the economy to once again attain the position of being world’s growing economies which will not be an engine to the revival of country’s financial, economic fundamentals but could contribute to the economic growth of the region as well as the world.
There is an urgent need for out of box steps and the Finance Minister would need to abandon the path of conservative economic thinking, The Government, hopefully, does not get remain trapped in bureaucratic exercise of reduction of fiscal deficit because more resources and funds would help the country to accelerate GDP. The Finance Minister, hopefully, has identified areas and sectors that could prepare India to take a quantum jump in next few years.
It is time that the Government went in for massive borrowing to finance the budget for achieving ambitious targets, Path of fiscal prudence needs to abandoned in this years’ budget so that no projects suffers from lack of funds. Domestic savings received a fatal blow during the pandemic as not only rate of interest rates on deposits came down but savings became source of sustenance and survival of citizens from lower and middle classes. The Finance Minister could bring some cheers to these sections which would boost domestic savings for future use.
Infrastructure is one area which needs sustained attention of the government. All indications are that the budget is going to allocate large funds for building up physical infrastructure like roads, ports, airports, health sector etc. But what is significantly crucial that the Union Budget lays special focus on building up health infrastructure in the country that was found to be woefully lacking during the pandemic.
While building up the health infrastructure, if the Finance Minister take steps to give a decisive boost to country’s pharmaceutical sector in which India has been having an edge. The Union Budget would do well to take policy measures as well as substantial resource allocation for research in certain key areas of certain diseases so that Indian pharma industry gains from the development of medicines. It would help in making the country one of the leading manufacturers of newer drugs. This would require a long-term policy.
Another area where the Budget needs to focus is agriculture where food processing is the key. While food processing would enable value addition and create mechanisms to stop massive food wastages, it will also boost country’s exports making India part of the global supply chain. With adequate resource allocation, tax incentives for exports and a long- term policy in place, India could emerge as world’s food factory.
Time is opportune for the Finance Minister to take measures in the field of technology and automation. The budget, therefore, should announce incentives for the industry for bringing in newer technologies for making production more efficient and cost-effective that will not only contribute to government’s mission of make India ‘Atramnirbhar’ or self- reliant-one of the declared goals of the Modi government but would also make industrial sector globally more competitive.
Education and skilling of those joining the job market is yet another sector where massive resources are required as India has about two decades when youth dividend could be reaped. The New Education Policy, that was announced in 2020, aims at universalisation of education at primary and high secondary levels which are crucial to empower school going generation to face the future challenges confidently. The Finance Minister must ensure that the implementation of NEP does not suffer from paucity of funds because it alone would sustain economic growth in next few decades.
There is an urgent need to create demand in the market so that industrial production and manufacturing could accelerate. The budget, therefore, should announce steps to being down income tax levels so that there is more money in pockets. The Finance Minister could also further rationalise GST brining the maximum rate to 18 percent which would provide relief to small and medium industries and businesses.
Since the pandemic has hut the micro, small scale and medium enterprises the most resulting in massive job losses, there is an urgent need to give this sector relief, Therefore. if the Finance Minister announced further relief through tax cuts and other incentives, it would go a long way to not only create employment but would also contribute to overall economic well being.
The country stands at a crucial juncture and if the government failed to take bold and innovative steps then it would become impossible to become one of the three biggest global economies. Choice is limited and time is limited.
[IFS]

 

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