With the coronavirus pandemic wreaking havoc on India’s economy, the 2021 budget was one of the most anticipated budgets in recent memory. In response, the government has come out with a budget that shows expected growth from the massive slump faced last year.
The budget is heavily influenced by the pandemic. The expected expenditure of the government is higher than this time last year, with much of the additional expenditure going towards healthcare and public projects. The expenditure on healthcare is much needed considering the situation we find ourselves in right now, and the expenditure on public projects is an attempt to reduce the rate of unemployment, which has ballooned during the pandemic.
The expected receipts have also decreased compared to this time last year, with the revenue from tax and disinvestment expected to be 5.5% and 16.6% lesser compared to last year’s budget. Overall, the budget predicts a fiscal deficit of 5.1%, more than double the 2.1% that was predicted by the 2020 budget.
However, comparing this year’s budget to last year’s does not show much, as the previous budget had not accounted for the impact of the pandemic. The numbers highlighted above just serve to show the impact of the virus on the economy.
A better yardstick to compare the 2021 budget to would be the revised estimates for the 2020 budget. On comparing these 2 budgets, a clear story of growth emerges. The government projects that they will earn around 15% more through tax than last year (as per revised estimates). They have also redoubled their disinvestment goals, and while their target figure is not as lofty as the figure quoted in the 2020 budget, it is more than 5 times the revised estimate, showing that the government still believes that the public is willing to buy shares of public sector enterprises. Given the scarce availability of money, however, it remains to be seen if even the target of Rs. 175,000 crores are attainable.
The government also foresees a massive drop in the fiscal deficit, falling from 7.5% of the GDP in the revised estimate, to 5.1%. To help meet this target, the government has decided to increase the customs duty on certain items such as cotton, silk, some auto and mobile parts. This also boosts the government’s Atmanirbhar scheme. The budget also includes some agricultural cesses and the establishment of some social welfare organizations.
Overall, the budget does not bring in any radical changes that are expected to boost the economy immediately. The path to recovery is a slow and steady one, and it is with this in mind that the government has made this budget.