The rating agencies have also indicated that business-as-usual approach will make India settle down to 6-6.5 per cent growth path in subsequent years if structural reforms not pursued vigorously. If India were to realize Modi’s effort to achieve $5 trillion economy rapidly, India needed to get back to high 8-9 per cent growth path on a sustained basis. This is possible only if Sitharaman announced more fiscal incentives to push AtmaNirbhar Bharat to encourage more foreign companies set up shop to make India second global manufacturing hub after China.

The seeds have been sown for this purpose with Government announcing three AtmaNirbhar fiscal packages in the current financial year amounting to over 10 pr cent of GDP to pump-prime the sagging economy after Covid 19 pandemic lockdown. Make in India and AtmaNirbhar Bharat are two sides of the same coin and this has been Modi’s philosophy right from he assumed office in 2014. Modi 1.0 laid the foundation for it by creating necessary platform in the economy and hastned by Corona Virus Pandemic in 2020 and the geo political situation, stage has now been set for a big push for AtmaNirbhar Bharat as growth can come only from pressing on the peddle in manufacturing and agriculture. This is because services, which already accounted for over 50 per cent of GDP, has reached a growth plateau after dominating for nearly three decades. Manufacturing of IT hardware provided a major opportunity and rightly government has taken major initiatives as part of AtmaNirbhar fiscal package and more is expected in the budget to this job-generating hi-tech sector.

Infrastructure development holds the key to step up public expenditure, necessary to reverse the sagging economy after the lockdown, the budget is expected to encourage further make in India defence production, announce more dedicated freight corridors and bullet train projects apart from more metro rails as part of AtmaNirbhar package to push growth and jobs in the country. This will also revive sagging labour-intensive construction industry, which will get a fillip due to this public expenditure coupled with more investments on highways, expressways, and airport and port developments in the budget.

After the lockdown and slowing economy during the last couple of years, the need of the hours is to vigorously push demand by putting more money in the hands of the people as advocated by a school of economists. But this is has to be done in a calibrated manner as rightly being done by the government through MNREGA programmess and fiscal incentives for kick starting MSME sector, a major job creator in the economy accounting for over 40 per cent of exports and 45 per cent of manufacturing. At this juncture putting just more money in the hands of the people might not fully work as the poor has mostly spend their savings during the lockdown and if more money is put directly into their hands by government, it would only go into replenishing their depleted savings rather than more spending to revive demand. So better way would be, as adopted by Modi government, is to provide succor in kind by way of free ration food grains, cooking gas and so on, besides more rural works through MNREGA to pump-prime the economy to revive rural demand.

There is already increased spending by 13 per cent this year as part of counter cyclical policy. But this will push India’s fiscal deficit to 7.2 per cent of GDP in 20-21. States too will report fiscal deficit in excess of 4 per cent of GDP, upping gross borrowing to 11 per cent of GDP. Sitharaman need not worry about it as the biggest advantage the government has, at the moment, is low or positive current account deficit and high foreign exchange reserves providing that much headroom to offset the high fiscal deficit. A push to agriculture reform will also help revive rural economy.

The green shoots seen in the last few months will help the economy to rebound adequately in 21-22 as growth is likely to be in double digit and tax revenue may witness strong rebound. Even non-tax revenue from disinvestment and government’s privatization programme and 5 G auctions too is bound to be buoyant in the coming year giving enough space for Sitharaman to step up public expenditure through AtmaNirbhar Bharat while helping to get back to fiscal consolidation. She may increase spending by at least 10 per cent as she contains the fiscal deficit to 5 to 5.5 per cent next fiscal with tax revenue buoyant at over 18 per cent next year. A lot of work has already been done by reducing corporate tax rate, production linked incentives to 13 sectors and improving Ease of Doing business to attract investment.

Even International Monetary Fund dubbed as important initiative Modi’s AtmaNirbhar Bharat. The Indian government through many fiscal relief packages and reform measures have created avenues and opened up opportunities for primary and secondary sectors. IMF said dismantling of mandis in agriculture and labour law simplification for manufacturing will improve income of the people. Production linked incentives to sunrise sectors including auto and tech, is also as much about self-reliance or cutting down imports, as it is about offering cash incentives to boost domestic production, which is expected to create employment.

Ease of Doing Business for MSMEs will build a sustainable eco-system for the MSME sector in India besides fostering innovation, enhance skill development and encourage employment.

As it is often said every crisis brings with itself an opportunity. Likewise, the Covid-19 pandemic brought with itself an opportunity for India and Modi has rightly identified it as Atmanirbhar Bharat or making India self-reliant. When ‘Make in India’ as a concept was announced in 2014, it was successful in igniting the idea and now is an opportune time to execute that idea. Sitharaman is widely expected to provide much needed thrust in the Budget on February one rekindle the animal spirit among investors. (IPA Service)