Economy & Policy
| 03 February 2021
After a harrowing
year, both on the economic and health front, along with disruptive changes to
lifestyles and work structures, there are finally some signs of a recovery. This
left the government with the very delicate task of fuelling the recovery
without doing anything to dampen consumption or production sentiment.
With all due credit to
the finance minister and her team, she appears to have delivered a brave and
robust budget, befitting a young and aspirational nation. The proposals
announced rested on 6 pillars, all of which were structured to enable the economy
to recover sustainably in the short term and grow unhindered over the long
term. These included, Health and Wellbeing; Physical & Financial Capital
and Infrastructure; Inclusive Development for Aspirational India;
Reinvigorating Human Capital; Innovation and R&D and, most importantly and
in continuation of pervious initiatives, Minimum Government and Maximum Governance. Effectively, it was a budget crafted by the head
and led by the heart.
healthcare over all else, the budget allocated an outlay for Health and
Wellbeing of Rs 2,23,846 crore, which marked a whopping 137% increase over past
allocations. Interestingly, this amount will be channelled to causes that are
clearly ‘inclusive’ as they aim to provide better quality of basic health
mobilizers such as clean drinking water, air and environment, in addition to
the vaccine, which is a current exigency.
Intangible ROI from capital expenditure
When it came to
government spending, the visible choice has been projects that will deliver
tangible returns in terms of infrastructure and job creation as well as intangible
returns such as better lifestyles for those at the bottom of the pyramid and
greater global competitiveness for those at the top.
Inclusive Development for Aspirational
The budget had a host of practical proposals and suitable allocations
to uplift and support those in agriculture and allied sectors, rural
India and migrant workers. Better prices, credit and wages, access to markets,
improved rural infrastructure and all-round financial inclusion were some of
the themes that were in focus. These measures would go a long way towards
building an eco-system that would create sustainable livelihoods and thereby,
boost consumption patterns among the huge untapped markets of India, which
demonstrate immense potential.
Leaning heavily on
advancements in technology and digital learning and skilling opportunities, the
budget had something for youth all along the education chain – from basic
learning to higher education and widespread skilling to cutting-edge research
and development. Standard-setting, accreditation, regulation and funding would form the
basis of these initiatives and the aim appeared to be ensuring that the decade
ahead would enable India to optimise the potential of its young and restive
citizens. The unmentioned corollary would be that this form of capital
investment would have a longer gestation but deliver the highest returns in
A step closer to
When dissected for the impact that its
proposals would have, not just the near-term recovery but significantly shape
India`s long-term growth trajectory, the budget would score well. While a lot
more could be done to encourage grass root enterprise and their financiers, the
progress-triggering measures that will positively impact Aspirational India
will have a cascading effect on recovery and growth at a broader level.
Apart from the above,
the stability in tax structure for individuals and corporates is a welcome
step. This move though unexpected, will go long way in re-assuring the
investors, both domestic and global. Creation of bad bank to acquire
stressed assets, though criticised by some, is a step in the right
direction. Opening up of Insurance sector by increasing the FDI limit
from 49% to 74% will bring in more vibrancy and vigour to this sector.
Clear goals on disinvestment and procedural simplification on tax appeals &
assessments are also being lauded.
the budget was a blend of sunshine, soil and water that could go a long way to
nurture the green shoots that are visible in the economy. At the same time, it
touched on reforms that could see India flourish in the new normal. The biggest
challenge now will be ensuring that the proposals are executed with the same
intensity of spirit as the intent demonstrated in Budget 2021-22. Overall
the Budget has the potential to support rapid growth and bring out the best is
the objective of moving India closure towards USD 5 trillion economy.