This was the major thrust in the Union Budget for 2021-22 for Growth Recovery presented to Lok Sabha on February 1 by Finance Minister Nirmala Sitharaman. The was widely cheered from the Treasury benches with Prime Minister repeatedly thumping his table while opposition awaited in vain for what was being proposed for farmers and jobs for the millions.

The Budget was essentially an economic recovery exercise after the pandemic-hit collapse, a global phenomenon since 2020, mainly through higher spending on public health and infrastructure (road and rail). After contracting by over 7 per cent in 2020-21, GDP is estimated to grow by 11 per cent (14.5 per cent in nominal terms) in 2021-22.

The fiscal deficit, which shot up to 9.5 per cent in the current year, is to be kept down to 6.8 per cent of GDP in fiscal 2022. The Budget targets a rise in capital expenditure by 34 per cent over fiscal 2021 to Rs. 5,54,236 crores. The resource mobilisation is sought to be achieved through divestment of assets of all non-strategic sector enterprises while the level of holdings in the four strategic sectors can also be lowered if essential. The asset monetisation would also cover the land of undertakings

However, the Prime Minister Modi said of the Budget, “We have taken the approach of widening new opportunities for growth, new openings for our youth, a new high to human resources, develop new regions for infrastructure, walking towards technology and bringing in new reform in this budget”.

It is assumed that "stimulus measures and reforms" initiated by the Government and liquidity measures from RBI would begin to support industrial activity and demand. The movement of various high frequency indicators in recent months is officially said to point towards broad based resurgence of economic activity. (V-shape recovery)

The Finance Minister Nirmala Sitharaman took care to add that Government was firmly committed to the path of fiscal consolidation while raising the levels of public expenditure to higher levels. She expects to keep down deficit to 4.5 per cent of GDP by 2025-26.

Most analysts do not think that it would become feasible to reduce fiscal deficit even to 4.5 per cent of GDP at the present level of expenditure and demands of the economy.

Government says " We hope to achieve the consolidation by first, increasing the buoyancy of tax revenue through improved compliance, and secondly, by increased receipts from monetisation of assets, including Public Sector Enterprises and land. The Contingency Fund of India is being proposed to be augmented from Rs 500 crores to Rs 30,000 crores through Finance Bill."

The Finance Minister avoided direct taxes, raising or lowering. but effected several changes in customs duty such that investors could tend to see in them protectionist sentiment. There would be some cost push specially consumer goods but on top of this the Centre has added a new cess agro-infra cess which would not be shared with States. This has been viewed as a disincent.

Nevertheless, the Finance Minister has earned laurels for a major push to the economy at this juncture but progress overall would also depend on the way the Covid-19 is controlled with efficient application of vaccines entering the markets. (IPA Service)