Budget 2021: The Indian Economy’s Post-pandemic Life-raft
By: Armaan Abedin
Since the Colonial Era, The Indian Economy has had its fair share of uptrends and downfalls. However, through the impetus brought in form of Globalisation following the economic changes of 1991, or the hindrance brought by the events leading up to the State of Emergency in 1975, the Indian economy has always managed to provide a sense of stability to most of its citizens despite numerous factors resulting in occasional setbacks for the same.
This year’s budget once again comes at a time of economic uncertainty with the economy entering technical recession last year, meaning that India faced a back-to-back decline in its Growth Domestic Product for two consecutive quarters. However, a commendable effort has been made to set realistic goals for the economy, without sacrificing the ambition which has become a hallmark of the Indian way.
According to Finance Minister Nirmala Sitharaman, this year’s budget further emphasises on the vision of ‘Aatmanirbhar Bharat’ and hopes to continue the pursuit of the ideal of ‘Make In India’ in order to boost the Indian Economy.
In an effort to bridge losses in employment that were created in the face of the Coronavirus Pandemic, the government has set the goal of creating approximately 140,000 new jobs across several governmental ministries by March of 2021.
Out of these ministries, the Ministry of Jal Shakti, Ministry of Consumer Affairs, Food and Public Distribution, and Ministry of Communication showcase the highest annual increase in allocations, with an increase of 64%, 48%, and 31%, respectively.
Significant changes have also been made in the sphere of Income Tax. Senior citizens above the age of 75, whose sole source of income is pension and interest upon the same are exempt from paying income tax, with the condition that the interest income is earned at the same bank at which the pension is deposited. Verification safeguards have been put in place for the same as well.
One of the most important changes with respect to the present time is the colossal impetus given to the healthcare sector this year, alongside a much-needed 137% increase in allocations, which brings the total allocations to ₹2.23 lakh crores, with provisions of ₹35,000 crores for Covid-19 vaccination initiatives.
The Finance Minister also announced the introduction of a central government-funded scheme christened the ‘National Aatmanirbhar Swasth Bharat Yojana’, the sole purpose of which is to aid the government in its quest to systematically diagnose, cure and prevent existent, as well as emerging diseases across the vast population of the country. Proposals to open new WHO regional offices, Level III biosafety laboratories, and new National Institutes of Virology have also been discussed. Given the size of the population present in the Indian subcontinent, any reinforcements provided to the healthcare sector will have a positive effect; however, the practical application of said reinforcements in a manner that allows every citizen to reap the aforementioned benefits remains a more complex matter.
In addition, the Union Budget has announced provisions for completion of national highway projects in Tamil Nadu, where a proposition for 3,500 Km of roadwork is set to take place at the cost of ₹1.03 lakh crore, inclusive of the construction of the new Madurai-Kollam economic corridor. While in Kerala, 1,100 KM of national highways see tentative construction with investments of ₹65,000 crore, including the funds for the Mumbai-Kanyakumari corridor.
Given its poll-bound status, the central government considered West Bengal to be an important infrastructural target, and decided that 675 Km worth of highway works will be undertaken at the cost of ₹25,000 crore, inclusive of the Kolkata-Siliguri highway. In Assam, 1,300 Km of national highway will be built over the course of the next three years, considering the history of infrastructural lacking faced by the north-eastern state in the past, completion of this particular target will have a beneficial effect that will be immediately noticeable with regard to the regional economy of the collective Northeast.
The education sector has come to bear significant loss in the face of the Pandemic, with the UN Secretary-General warning of an education catastrophe across the world. This, in combination with the government’s already stagnant expenditure in the country’s education sector in previous fiscal years poses a special problem with regard to uniform development of institutions as well as students across the country. The allocations for education under the Union Budget of 2021 have been reduced by 6% in comparison to last year. To compensate, the government has focused more on policy-driven changes for this budget that are in line with the National Education Policy of 2020, the most significant reform to be introduced in this regard is the establishment of a single education regulatory body, which will allow for better consolidation of different syllabi under the Indian education system. In addition, 15,000 schools will be identified and selected for upgradation under the Adarsh Vidyalaya Scheme, which will also allow for greater infrastructural development and hence better quality of education for select schools. However, the impact of the changes brought about in this regard seems to be hampered. Considering the relatively small number of schools to be selected, as well as the further reduction of already stagnant monetary support, at a time as crucial as the post-pandemic present.
Realistic Post-pandemic goals
The projected target for fiscal deficit has been set to 4.5%, to be reached by the financial year 2025-26, this is a significant deviation from the initial target of 3.3%, but a justified change, considering the sheer scale of adverse economic repercussions brought on by the Pandemic.
Reception to the Budget: Uncertainty abound
Reception to the Union Budget has been mixed, with some terming it a show of resilience in the face of adversity, crediting the government for its approach to emphasise the strengthening of the pillars of its economy. Experts claim that the provisions put forward for employment and immediate relief remain lacking in certain areas, while the leaders of the Trinamool Congress have chastised the government’s efforts, terming the budget ‘vision-less.’ The budget was brought under heavy scrutiny by Derek O’ Brien, spokesperson of the Trinamool Congress, who claimed that the Centre’s current plans for the budget would only further propel the rich into wealth, and the poor into their unfortunate circumstances, also saying that the middle class receives “nothing.’’ Given the unstable nature of the world economy in the present, as well as aspects of political instability that plague regions of the Indian subcontinent, the application of the proposals in an effective manner seems uncertain. Despite affordability remaining one of the top priorities of the government, how it plans to make the various facilities that have been proposed available to at-risk sections of the population in real time is also unclear at present.