Union Budget 2021 India: IMF has projected an 11.5% growth for India in 2021, making the country the only major economy of the world projected to register a double-digit growth.
By Ashwajit Singh
Indian Union Budget 2021-22: IMF has projected an 11.5% growth for India in 2021, making the country the only major economy of the world projected to register a double-digit growth. 2020 has been a tough year and the road ahead still seems bumpy, with an expected contraction of 7.7% in the pandemic year. If India has to achieve the IMF projected growth, the 2021 budget has to be a landmark budget to help revive the economy and counter the detrimental impact of the pandemic. I look forward to a budget that is pro-market, pro-ease of doing business and pro-job creation. It is time to loosen the purse strings and not to worry about fiscal deficit. It required bolder measures to raise funds for stimulus. More funds in the hands of the consumer is needed to boost consumption – this could be done by additional funds in schemes like MNREGA, PDS, PM Kisan Yojna, direct benefit transfers or new schemes.
I expect that a larger portion of government spending will go into improving health and education systems vis-à-vis last year thus pushing the need for better and well-funded public and private hospitals and well-managed inclusive educational institutions. While these sectors take centre stage, a focus on infrastructure, textiles, construction etc. can further propel growth and generate employment. With millions of jobs lost in the formal sector alone in the past few months, the budget is an opportunity for the government to action out the conversations initiated around creating an urban equivalent of MNREGA which have the potential to create jobs and, provide social security to a large section of the population. It is important to provide income support through funding public infrastructure through such schemes.
The government should consider adequate budgeting for improving people skills thus increasing their employability. A swifter adoption of New Education Policy 2020 and possibly an integration of National Apprenticeship Promotion Scheme (NAPS) with PM Rozgar Protsahan Yojana (PMRPY) could bring in the desired incentives for employers to take in fresh hires thereby increasing formal employment. Additional support needs to be provided to the Jan Dhan Yojna and the Mudra scheme to encourage entrepreneurs
MSMEs contribute over 40% to the Indian export basket. Ease in the Foreign Exchange Management Act, 1999 can help them work swiftly with global partners, contribute to global trade and push market demand. The government needs to continue with the Atmanirbhar sentiment in Budget 2021 to bolster the confidence of MSMEs. I hope the government ensures more credit flow to MSMEs in the upcoming Budget. With India now in the top 5 spots globally of being a start-up generated economy, the government must consider introducing more tax benefits especially for start-ups. This is of even greater consequence now that businesses are trying to crawl out of the Covid-19 induced penumbra. Adequate support on the adoption of latest technologies such as artificial intelligence (AI) and machine learning at lower costs is also desired from the budget.
(Ashwajit Singh is Managing Director, IPE Global (international development consulting firm). Views expressed are the author’s own.)