Sitharaman's 'Bahi Khata 2.0' for pandemic-hit India: Experts' expectations - Hindustan Times
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Sitharaman's 'Bahi Khata 2.0' for pandemic-hit India: Experts' expectations

Byhindustantimes.com | Edited by Arpan Rai, New Delhi
Jan 31, 2021 10:57 PM IST

Finding space in the budget for the first time in Independent India will be expenditure on vaccination in FY22 — which could be shared among the central government, state governments and households.

Finance minister Nirmala Sitharaman will present the Union Budget on February 1, expected to repair and tend the pandemic-ravaged economy, as various sectors hope for higher spending by the government. Finding space in the budget for the first time in Independent India will be expenditure on vaccination in FY22 — which could be shared among the central government, state governments and households.

Finance Minister Nirmala Sitharaman during the final touches of Union Budget 2021-22, at Finance Ministry in New Delhi, Sunday, Jan. 31, 2021. (PTI)
Finance Minister Nirmala Sitharaman during the final touches of Union Budget 2021-22, at Finance Ministry in New Delhi, Sunday, Jan. 31, 2021. (PTI)

Sitharaman, who had in her first budget in 2019 replaced the leather briefcase used for decades to carry budget documents with a traditional red cloth 'bahi khata', had earlier this month stated that the budget for the fiscal year beginning April will be "like never before".

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With all eyes on the budget, the government will play a critical role in pulling the economy out of the trough. While the pandemic is showing signs of being less virulent, gradual progress in the vaccination programme is fuelling hope for a better future.

Here's what experts are expecting:

An ideal budget for the Indian economy will have to address a number of issues - health infrastructure, reviving demand, banking sector reforms, fiscal consolidation and implementation of the 15th Finance Commission report, said Brickwork Ratings.

“Expectations are high, going into this budget,” said Samiran Chakraborty, an economist with Citigroup Inc. “Expenditure profile could move from survival to revival as the focus on infrastructure increases.”

The need of the hour is to increase credit flows, especially to the small and medium enterprises sector, as well as investment in education and health sectors to boost production and consumption, GlobalData, a leading data and analytics company, said.

“The government has no choice but to loosen up their purse strings,” said Yamini Aiyar, president and chief executive of Centre for Policy Research in New Delhi. “They will have to be more generous with social security spending like expanding jobs programs to correct rising urban joblessness, health spending, expanded housing and more fiscal support for states and local governments,” she added.

"We expect the upcoming budget to prioritise growth-oriented measures with the commitment to warrant that the momentum of recovery seen in the economy recently remains sustainable," another company Centrum said.

"The expectations from the upcoming budget are mainly inclined towards infrastructure development, tax concessions for elderly to provide a breather for consumers to increase their overall consumption, along with increasing domestic production," Gargi Rao, Economic Research Analyst at GlobalData, said.

Experts say it is high time to change gears and focus on the demand side as well, lest the ongoing recovery begins to lose steam even as the major focus of the government to revive the Covid-19 battered economy has till now been on the supply side.

Some experts expect the budget to be intensive on spending on infrastructure especially that are employment-intensive and have a shorter turnaround time, creation of development financial institutions, continue with relief/income support to the households who are at the bottom of the pyramid and higher allocation to MGNREGS as it provided a safety net not only to rural households but also to the workers who migrated back to rural areas.

The focus will also remain on the further fostering of private investments as well after the initiation of a slew of measures like corporate tax rate cut, NIP and PLI scheme on this front.

(With inputs from agencies)

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