Union Budget 2021: India’s second 1991 moment?
The Budget balances macro-economic reforms and public policy areas
Late president APJ Abdul Kalam in his vision document, India 2020, envisioned India as a developed nation of 1.2 billion. Whenever history is written, FM Sitharaman has ensured, February 1 will get a star-studded recognition.
Indeed, the economy required a massive course correction, and the fiscal deficit perspective was to be viewed liberally. The FM has made full use of the opportunity.
It is remarkable for the FM to set enough legroom for boosting growth without increasing the tax incidence.
Another recognised mode of boosting government revenue is monetisation of non-core assets, owned by the government and PSEs that majorly consist of surplus land, either by way of direct sale or concession or by similar means. This shall largely help resource mobilisation.
The focus on thrusting employment generation was conspicuous concerning key emerging sectors like Mega Investment Textiles Parks (MITRA), augmentation of public bus transport services through the PPP model, etc.
One of the criticisms of past Budgets, is not only that outlays for agriculture have remained conservative but, more importantly, the expenditure has gone to unproductive avenues–interests and subsidies rather than capital investment. Under Pillar 3 which covered ‘Inclusive Development for Aspirational India’, a host of measures and enhanced government expenditure announced include increasing agricultural credit to farmers; enhanced allocation to Rural Infrastructure Development Fund and doubling the Micro Irrigation Fund. Further, the scope of ‘Operation Green Scheme’, presently applicable to tomatoes, onions, and potatoes, has been enlarged to include 22 perishable products. The customs duty on cotton has been raised from nil to 10% and on raw silk and silk yarn from 10% to 15%. Also, a new ‘agriculture infrastructure & development cess’ on certain items, earmarked cess for improving agricultural infrastructure, has been announced. Being sensitive in nature, the agricultural reforms shall hopefully provide some relief to the famers’ current concerns.
On health and well-being, the FM rightly recognised that there is room for public investment to establish a first-rate primary health care system. There is a stupendous outlay of `2,23,846 crores, a historic increase of 137%. Such expenses shall cover already existing initiatives such as Swachh Bharat Abhiyan, National Digital Health Mission, Ayushman Bharat and Mission COVID Suraksha.
The adverse situation of migrant workers and the unorganised sectors caused by the pandemic will be addressed by nation-wide implementation of One Nation One Ration Card scheme. Moreover, a portal is being launched that will collect relevant information on gig, building, and construction workers, among others.
Measures towards upgrading infrastructure and technology for efficiency and lowering financial losses has come as a relief to power discoms that have been suffering from revenue loss due to theft, poor transmission infrastructure, etc. The need for promoting competition to enable a greater choice to consumers to eliminate the monopoly of discoms is on the horizon.
Continuing with the promise of Aspirational India, the budget has allocated a generous amount for National Research Foundation and support for space research and missions. A Deep Ocean mission shall ensure that India rubs shoulders with western counterparts.
A new customs duty framework for addressing Atmanirbhar Bharat has been announced to be made effective from October 1 after reviewing exemption notifications. Rationalisation of tariffs was announced on several products–mobile phone parts, gold and silver, etc. A roadmap for review of 400 odd exemptions this year through extensive consultation has also been announced.
While the dream 1991 budget was highly growth-oriented, it was widely criticised for not addressing some of the basic problems especially in employment, agriculture, and health sectors. Expectations for meeting the checklist for a historic budget have been adequately met by balancing macro-economic reforms and equally important public policy areas of agriculture and healthcare.