Finance Minister Nirmala Sitharaman's speech lasted for almost 160 minutes (Photo Credit: Agency)
The Union Budget for 2020-21, presented in the backdrop of the continuous slowdown and stagnant growth, tries to address a number of problems but also leaves some big ones unanswered.
India's GDP growth has declined from 8.2 per cent in 2016-17 to 5 per cent in the current financial year. The problem was further highlighted when the last financial year's estimate of growth was revised downwards to 6.1 per cent from 6.8 per cent estimated earlier. Finance Minister Nirmala Sitharaman, while giving a very extensive description of changes in policies in different sectors, did not amplify how the slowdown was being addressed or showed any great concern on the seriousness of the issue in her Budget speech.
The speech neither recognized specifically the slowdown nor chalked out an outline of interventions which were proposed. A major concern across all sections of society today is the lack of consumer demand in the market. Government of India has not fully paid to the states their share of GST leading to problems with them.
While there is no specific mention, one would hope that the investments proposed in agriculture and rural development sector and in the field of infrastructure, especially health sector, will help growth in consumer demand. A concession to investment by foreign sovereign funds in infrastructure and Rs 22,000 crore support for infrastructure financial institutions will help leveraging of larger resources and will help create demand.
There are a number of excellent interventions planned which may help improve governance and economic activity. These include support to farmers for setting one lakh solar pumps, scheme for use of hospitals by medical colleges for expanding higher medical education, expenditure of Rs 103 lakh crores planned for a pipeline of projects across the country, schemes for use of rail and air for transporting perishable agri-produce, a sixteen point charter for various interventions in agricultural sector and simplifying payment of Income tax regime.
On the other hand, the decision to disinvest in the Life Insurance Corporation (LIC) will need a very thorough examination by the government. LIC has been a great stabilizing factor and provided competition to private insurers and millions of policy holders depend on it.
The budget, while addressing a number of problems related to different sectors of the economy, does not seem to address the basic problem facing the economy: consumer demand. This is a cause of worry.
(The author is a former cabinet secretary. He was also a member of the Planning Commission of India)
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