First, last one year the pandemic hit economy, leaving an imprint of a loss of GDP of around $400 billion. That is equal to a whole year’s GDP of score of medium level countries.

Secondly, the ravaging pandemic couldn’t have come at a worst time for India. As 2020 opened, we were down in the growth path. Our growth levels were gradually coming down for the previous four years. Exports were sluggish, industry was slowing, financial sector was saddled with non-performing assets. Some experts were pointing out at the inherent limits of Indian growth story: The economy was riding on a single engine, that is, domestic consumption.

So then, when budget was formulated in February 2020, it was in the shadows of a struggling economy, complete vacuum as to how best egg on the economy on its regular growth path.

But we did not know what was to hit us subsequently.

No wonder, under the weight of the economy’s slugishness, last year’s budget would have been an act of faith. As the pandemic struck, it went asunder. The wide spread disruptions lashed by the disease had wrecked havoc to the Indian economy.

As the lock-downs were imposed, sections of the economy had ground to a screeching halt. Railways stopped moving men and materials, airports were deserted, hotels did not have guests, banks were debarred from depositors, employees were directed to stay away. No wonder that the first quarter GDP figures had shown a contraction by close to a quarter.

Since then, the lock downs have been progressively withdrawn and economic activity had returned, though only partially. Overall, the economy will shrink, but not by the shocking extent of the first quarter. We, in the end, seem to have escaped the devastating disease impact with significant loss, though not a crippling one.

The last budget and its calculations, as if, have been blown apart by a huge implosion. The deficit estimation, at 3.5% of GDP, would have slipped to over double that number. Used as an indicator of government’s solvency, the figures reveal a grim reality. Any responsible government, like a responsible household, would naturally seek to bring balance to the books.

But in these extraordinary circumstances, governments behaving like responsible households, could bring disaster in its train. Instead of trying to balance the books, at these times the government should consider the overall hardships and start ameliorating these. It can do so because it has the imprimatur to create resources rather being limited by these.

Hence, next year’s budget, which has already been cast by the finance minister, would be judged pn different yardsticks, It should be examined in the background of the extensive damage we have suffered and how imaginatively the budget sets about mending the damages and start nurturing new growth impulses.

From this perspective, the government would have faced two basic impulses. Make an effort to initiate some measures trying to set about correcting the big dents in the public finances. The easy way would be seeking higher revenues through a few critical revenue mobilisation moves. Raising the rate here, imposing a cess there. Already we have heard noises about these possible measures.

Against these obvious steps, the formulators of the budget would have considered how best giving a boost to the economy and help people who have suffered the most.

The top priority for the makers of the budget this year would be to restore employment. There have been large scale loss of employment and consequent harassment from loss of income. Already, several moves have been launched to take care of these immediate needs of the worst hit. Major income supplements schemes and outright income generation programmes, have been launched. MNREGA had come in handy, PM Kisan schemes for the farmers have given some relief.

Notwithstanding shortages of finance and revenue slippages, these schemes would have to be continued now. In fact, for sometime now, the ambit of such income supplement and creation schemes would have to be extended. A recent survey on unemployment has revealed that the urban poor and urban literate have been very badly affected in the first flush of lock down and these debilities are continuing.

A survey has shown graduates and skilled people have been hit hardest and unemployment among them is still rising. While a CMIE surveys had disclosed jump in unemployment to close to 25% immediately in the aftermath of lock-downs. These had improved an unemployment overall had fallen to 7% by September. But the latest finding is that unemployment, particularly among urban literates, has inched up to 9% in December again.

This is a pointer that the vulnerable still needs a nursing hand. Indeed, there is need for a urban poor scheme of a more inclusive nature, in this case, the inclusion of those who are educated.

If creating sustainable employment s the biggest issue, then helping those who would offer such employment have to be given incentives.

This is the second priority. Companies have revealed they extent to which they were forced to retrench labour faced with sudden shrinkage in economic activity and demand. Industry level surveys indicate that even in December, well after phased withdrawal of lock-downs, the corporates have not shown much enthusiasm for restoring lost employment and cuts to salary levels.

While the interim stimulus measures, announced several times, did have some incentives for companies for generating fresh employment, the urgent need is to continue these. The budget should continue these aides and further extend these to other areas. There is a problem though. Over half of private employment is in the unorganised, small and medium enterprises. Extending such help to the really small units would have been a major hurdle. A portfolio of more helpful measures for employment intensive sectors in the small scale should really be useful.

Some corporate sector bodies have asked for tax concessions linked to creation of fresh employment. Such schemes should be helpful in addressing the problems of urban poor and educated unemployed, in particular. (IPA Service)