HIGHLIGHTS: BUDGET WILL DRIVE ECONOMIC REVIVAL POST COVID-19

HIGHLIGHTS: BUDGET WILL DRIVE ECONOMIC REVIVAL POST COVID-19

 

Finance Minister Nirmala Sitharaman presented her third Union Budget on Monday amidst coronavirus pandemic. The Budget is widely expected to focus on boosting spending on rural development, job creation, generous allocations for development schemes, easing rules to attract foreign investments, and putting more money in the hands of the average taxpayer. The Budget, experts, and economists say, will be the starting point to bringing back the situation to normality after the economic destruction caused by the COVID-19 pandemic and is expected to drive the economic revival through higher spending on healthcare, defense, and infrastructure amid rising tensions with neighbors. The government has to carry out a crucial function in pulling the economy out of the trough. While the pandemic is showing signs of being less dangerous, a steady advancement in the vaccination program is fuelling hope for a better future. A sustainable economic recovery will need a policy catalyst. That's where this budget assumes a special relevance.

The pandemic struck at a time when the economy was already caught in the grip of a growth slowdown. GDP growth recorded an 11-year low of four percent in 2019-20. A gradual decline in investment rate has been the most important factor in causing this drop prior to the coronavirus crisis. And the lockdown as laid down to control the spread of coronavirus in March last year brought economic activities to a standstill, causing a sharp decrease in the GDP in two successive quarters of FY21, pushing the economy into a recessionary phase. In response, the government announced a number of policy measures under Aatmanirbhar Bharat package1.0, 2.0, and 3.0 to support the economy. The package was a combination of equity, grant, and liquidity measures by the central government, state governments, and the Reserve Bank of India (RBI). Now looking at the main points on India's fiscal position we observe that our finance minister pegged fiscal deficit at 6.8% of GDP from 9.5% of GDP in FY 21 due to the coronavirus pandemic to ensure a rise in the economic growth. Budget estimates for expenditure in 2021-2022 are Rs. 34.83 lakh crores. The Contingency fund has also increased from 500 crores to 30000 crores. The government has allowed states for additional borrowing of up to 4% of GSDP with 0.5% under special conditions. The budget also has many positive impacts on Trade Mark Registration service In Delhi

 India’s budgetary response represents a cautious approach—one that reflects the challenging constraints facing an economy in the nascent stage of recovery.