A budget that lays the foundation for growth in the new decade

FM Nirmala Sitharaman / Lakshmana Venkat Kuchi *

Criticism is that the Modi Government too has used the Union Budget to target key poll-bound States of Tamil Nadu and West Bengal with huge allocations. Besides, the attention to North Eastern States continues and the States in this region have received an increased allocation of Rs 14,000 crore this time around too.

Yes, these States have received favourable treatment, as had earlier Governments bestowed to regions that faced elections, but what remains the focal point of the Union Budget presented by Finance Minister Nirmala Seetharaman is the lead sector treatment given to the infrastructure to revive the COVID-19 hit economy.

Surely this is the springboard for growth and indications of this growth path was available in 2019 itself when the Government came out with its National Infrastructure Pipeline which today has 7400 projects–which include roads, metro, railways, and urban infrastructure.

As many as 250 allied industries are linked to the various infrastructure projects, and once this sector gets going it will kick off a chain reaction, in the process perking up demand–which is the key requirement as per a host of economists. The contraction in demand was seen as the main problem that afflicted the country’s economy. The Government spending on infrastructure is what the doctor has ordered, and the setting up of a Development Financial Institution for long term financing needs of the infrastructure projects.

This approach is a departure from the past in terms of direction, something that many in the country were waiting for the past several years. Without levying fresh direct taxes, the Finance Minister has tried to raise resources from non-tax arenas, without burdening any specific section of society or industry. Raising money through monetization of assets, ambitious disinvestment targets to finance Government spending and the Government appears confident of raising revenues, in fact, increasing revenues in 2021 through asset monetization and other non-tax avenues.

The Finance Minister has listed a route of monetization of idle and non-core assets. She has also listed disinvestment of assets like BPCL, Air India, Shipping Corporation of India, Concor, BEML, and others during the financial year. The Railways too will be monetizing its assets, including railway stations, land, and freight corridors, and use the revenues for financing newer projects.

The ambitious targets of disinvestment of Rs 1.75 lakh crore in the year 2021-22 would be a challenge. However, there is another challenge : trade unions, including the Sangh affiliated BMS–have called for saving jobs and would try to protect them. The BMS is also against the privatization proposals mentioned in the budget as are Left oriented trade unions that have already chalked out an agitational path.

Insurance and bank unions have planned protests against privatization. The Opposition too is waiting and watching how the bank and insurance unions stir shapes up before firming up its position inside the Parliament. Now returning to big-spending areas, the Government has identified health and agriculture as the big investment areas other than infrastructure.

What the Modi Government is doing is to lay the foundation for the new decade, which can be the bus we need to catch if the living standards of the masses are to be raised substantially. For sure, with one million people adding to the workforce monthly, it is working out a growth strategy to absorb the increasing labour force in meaningful employment.

The other high expenditure area, health, needs the full attention of the Government. And at a time when we are slowly coming out of the pandemic, health and well-being are the two key areas for spending money. This is why the Government has earmarked a sum of Rs 2.23 lakh crore. A major chunk of this will go towards the coronavirus vaccination drive, and an equally big portion would be spent on strengthening the basic health infrastructure.

Agriculture is the most important concern area, as the Government has drawn up an ambitious reforms programme, which has run into strong opposition from the farming community, to start with from Punjab. Slowly, this spread to pockets of Haryana and Uttar Pradesh. Several rounds of talks have been held between the farmers and the Government, and as things stand today, both sides are sticking to their respective stands.

If not anything, the Government has hinted at softening of its stand, expressing a willingness to wait and hold the three Farm laws in abeyance for one and half years. But in this move, the farmers see a ploy to break the mobilization of the farmers. They also fear that these laws would make a quiet comeback, in this or a similar form.

The Opposition, comprising many parties, is united on the farmers issue and wants the Government to repeal the three contentious Bills and framing of new laws with due consultations with all stake holders. But the Government has indicated that there will be no going back on the laws, at any cost.

In fact, a combined delegation of Opposition Members of Parliament was denied access to the protesting farmers at the Delhi borders that have been heavily barricaded and fortified after the January 26 violent incidents at the Red Fort.

The farmers agitation is not just about to end anytime soon, if the announcement of its leaders is any indication. They are ready for the long haul and have also begun to get some international attention, which the Government can ill afford. Though the attention of the Government is somewhat divided and diverted due to the ongoing farm stir, it is focused on the task ahead.

Over and above what the Government has done in the budget – making an announcement that can spur demand and growth, welcomed with gusto by the stock market–the Government ought to put money in the hands of the poor, so that they go and spend it to raise demand and accelerate economic activities hit by COVID-19 and its aftermath.