May 31, 2023

Budget 2021: Kickstarting The Economy

By Sunil Garodia
First publised on 2021-02-02 02:19:11

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Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

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For someone who has consistently criticized the government for not taking the initiative to invest to revive the economy, this correspondent finds that Budget 2021, with its "spend-spend" mantra, is an ideal Budget for these troubled times, provided the government manages to raise the resources and actually spends as proposed. 

Basically, one has to recognize that giving freebies in this age is not kosher. The need to put money in the hands of the people can be done in other ways too. Investment by the government to kick start the economy is one of the best ways. When the core sector starts getting orders production picks up and all sectors benefit. Jobs are generated and money starts flowing in the hands of people.

This Budget is going to do precisely that. By not imposing additional taxes (apart from cess on some sectors), the finance minister has ensured that money is not squeezed out of the people. By not imposing a "Covid tax" on the rich, the finance minister has ensured that wealth creation is not penalized. By holding the hands of startups for one more year, the finance minister has ensured that enterprise, innovation and entrepreneurial drive will be supported. By allocating Rs 20000 for bad loans of PSB and announcing the formation of a "bad" bank, the finance minister has signaled that the problem of bad loans will be addressed this year.

By investing in infrastructure, the finance minister has ensured that growth prospects are enhanced. By investing in healthcare, she has ensured that India takes care of its citizens better and becomes more capable of combating any future pandemics. By investing in defence, she has ensured that the country's security concerns are addressed, especially as China seems bent on acting aggressively. Finally, by investing heavily in agriculture, she has shown that this government is not unmindful of the problems faced by farmers. All these investments will have a direct and positive bearing in reviving the economy and creating jobs.

But the government will have to act fast on the divestment promises. Last year, not even a fraction of the divestment target was met. The ambitious figure set for the next year can be met only if the government does things in a better way. If divestment targets are not met, funds will become scarce and promises made in the Budget might not be kept in full. If the government is able to generate the funds and invest in full as proposed, the economy will revive faster than most people think.