Budget 2020-21: As the economy currently sees a growth slowdown, there are mixed views on the budget laying a credible roadmap for a $5 trillion economy.
Budget 2020 India: As the economy currently sees a growth slowdown, there are mixed views on the budget laying a credible roadmap for a $5 trillion economy. Of the 13 economists and policy analysts Financial Express Online spoke to for a pre-budget poll, five expect the upcoming budget to propose a proper roadmap for India to become a $5 trillion economy by the stipulated deadline. While three didn’t expect the same to happen in the budget, five said they were not sure. In the last few months, the economy’s growth engine has slowed down substantially, with global concerns further adding to the woes.
The growth slowdown has also raised concerns about the government meeting its ambitious target. “The economy is undergoing a phase of low demand; low credit growth, and; therefore overall low growth. Therefore, if demand is uplifted it will help in boosting economic growth. For upliftment of demand, new employment generation is required. If Budget 2020 takes care of substantial employment generation, it will be helpful in creating a $5 trillion economy over a period of time”, Anita Gandhi, Whole Time Director, Arihant Capital Markets, told Financial Express Online.
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Budget an opportunity, a lever to trigger growth
“The Union Budget is the fiscal instrument in the hands of the government that can be used as one of the levers for triggering higher growth. The government will not lose this opportunity to provide stimulus for the economy to reverse its recent slowdown and move towards the medium-term target”, Bidisha Ganguly, Principal Economist, CII, told Financial Express Online.
India’s economy is forecast to grow 5 per cent this fiscal, its slowest pace in 11 years, estimates recently released by the government showed, increasing pressure on Finance Minister Nirmala Sitharaman to announce measures to revive demand and boost investments in the upcoming budget. “More measures to expand the economy are likely, but will involve significant fiscal head room, which is lacking at present”, Radhika Rao, Senior Vice President & Economist, DBS Bank, told Financial Express Online.
‘I have a dream’
It took nearly 70 years for India to become a $2 trillion economy, while it became a $3 trillion economy in the past five years, Prime Minister Narendra Modi said while addressing the nation on Independence Day from the ramparts of Red Fort in August last year. Every Indian should dream that India will soon become a $5 trillion economy, he added. “Budget is only one part of the story. Besides, the states’ budget which are even larger than the centre’s have a very important role to play. The private sector has to do well to reach the $5 trillion mark for which issues have to be addressed on the demand side (investment) and finance (long term),” said Madan Sabnavis, Chief Economist, CARE Ratings.
The current size of the Indian economy is estimated at $2.7 trillion. “The economy is weak and the revenues have been overestimated. The flexibility with regards to revenue generation is also weaker. The global factors are not conducive and now Coronavirus is an added factor in terms of unpredictability. The government has limited options, apart from a fiscal push,” said Indranil Pan, Group Economist, IDFC FIRST Bank.