On Monday, when the stock market welcomed Finance Minister Nirmala Sitharaman’s growth-oriented annual budget with a huge jump of 2,315 points, there were questions raised by the opposition about whether the budget would generate more employment. Appearing in my prime time live show in ‘Aaj Ki Baat’ on India TV, Sitharaman said she was confident that money that will be spent on agriculture and infrastructure will “definitely have a multiplier effect”.
“Each rupee of public spending on infrastructure generates a value of not less than Rs two or two and a half”, Sitharaman told me. “Even before work on infrastructure projects commences, it will generate employment. The employment cycle will continue for the next two to five years as work on infra projects continue. It leads to both assets creation and generation of employment. This will also create employment in core sectors like cement and steel, which will be getting orders from infra projects. This is called virtuous cycle which has a multiplier effect in giving a boost to the economy”, she explained.
Sitharaman rejected the Opposition’s charge that the budget has not given money in the hands of the poor and middle class, like the US which gave cheques up to $2000 to every American family during the pandemic. The Finance Minister pointed out that within 48 hours of the imposition of lockdown, the government started releasing money to the bank accounts of the poor, needy, handicapped and old people through Direct Benefit Transfer under Pradhan Mantri Garib Kalyan Yojana. We learnt a lesson from that. People who got the money did not spend it immediately. I am not holding them responsible. Since there was uncertainty about the pandemic, people chose to save that money. There is no straight solution by putting money in the hands of the people.”
She said, “I will not name countries, but those developed countries who gave out money up to 15 per cent of their GDP, and gave incentives to corporates for sending their employees on furlough, are now going to increase taxes to mop up revenue. On the contrary, we, in this budget, did not raise taxes nor did we increase prices of commodities.”
She hit out at those who were questioning how the government would bridge its fiscal deficit. Sitharaman said: ”These people had earlier given suggestions to increase spending by printing currency and not to worry about rating agencies. The same people are now raising questions about fiscal deficit. I was in favour of spending more and I had then said that if I do not spend now, I will be halting growth. We did not hesitate in spending.
Asked how the govt would arrange funds for spending more, Sitharaman said, “Yes, I have announced the calendar for borrowing this year, we will be announcing borrowing for next year too, we are in discussion with RBI for borrowing at reasonable rates. Government will surely go in for borrowing. Our aim is to borrow to a limit, and then gradually reduce fiscal deficit so that the growth of economy is not hampered.”
In her budget, Sitharaman has proposed a whopping 137 per cent increase in outlay for health for the first time in history, but this factors in Rs 35,000 crore that will be spent on Covid vaccines. A new scheme – Pradhan Mantri Atma Nirbhar Swastha Bharat Yojana will be launched to ramp up primary, secondary and tertiary healthcare. Similarly, the highest ever budget outlay of Rs 1.18 lakh crore for road transport and highway ministry makrs an increase of 18 per cent. This will be spent on six-lane highways, speed radars and new expressways, with a target of reaching 11,000 kilometre of national highways to be built this year. National Highways Authority of India will raise Rs 65,000 crore from the market, and the daily highway construction average will be increased to 40 km per day.
There is no gainsaying the fact that Nirmala Sitharaman has prepared this budget under exceptional post-pandemic circumstances. For almost one whole year, most of the industries remained closed due to pandemic and lockdown, revenue resources of the government were limited while expenditure was unlimited due to the pandemic. It was the government’s responsibility during the lockdown period to ensure that every Indian got food. Already, as Modi and Seetharaman said, the government had already announced five tranches of economic stimulus packages during the last one year, which were almost like “mini-Budgets”. We had heard Seetharaman for the past one year explaining details about the Rs 20 lakh crore stimulus package. There was not much left for this budget, and most of the people were apprehending huge hike in income tax, corporate tax, and indirect taxes. There were fears about rising prices and inflation, while the infra sector was expecting a huge dip in outlay due to lack of funds. Subsidies were going to be slashed, but nothing of this sort happened.
Nirmala Sitharaman has done a miracle. I think this is a positive budget and there are no negativities in it. Sitharaman implemented the ideas and vision of Prime Minister Narendra Modi. There was no fresh burden on the common man. The government has opened up new avenues of augmenting funds, creating more jobs, kept ‘vocal for local’ in mind, and these were confident steps towards an “Atmanirbhar Bharat”. The Prime Minister praised the Budget saying it was “a pro-active budget that will give boost to wealth creation as well as wellness”. The year of 2020 that saw a world reeling under Covid pandemic, also affected Indian economy. It was a grave challenge to our Prime Minister, who had to ensure that 135 crore Indians must not die, either due to pandemic or due to starvation. And he has come out of the torrid challenge with flying colours. Today the pandemic is more or less under control, the work of vaccination has begun and the economy is looking up. Only the farmers are on ‘dharna’ for more than two months, and Modi has kept the interests of farmers, too, in his mind. Through the budget, he has sent them the message that the government is determined to enhance their income by 150 per cent.
Similarly, in the manufacturing sector, the government has come up with the Voluntary Auto Scrapping Policy, under which all vehicles more than 20 years old, will undergo automated tests and will be scrapped. This will generate Rs 50,000 crore worth revenue and create more jobs in the automobile sector, which faced the full brunt of the lockdown last year. At that time, thousands of car showrooms had to be closed down as sales dipped.
Overall, looking at the budget, I find there are three sectors on which the government is concentrating : Health, Agriculture and Infrastructure. All these sectors offer a great challenge. The Covid pandemic made us sit and realize that there was lack of a comprehensive healthcare infra. There were not even PPE kits, ventilators, testing facilities, oxygen cylinders and other vital medical equipments. There were acute shortage of doctors, nurses and paramedics. Many districts lacked primary health centres. The speed that was noticed during the last one year in the fields of manufacturing PPE kits, ventilators and readying testing facilities was extraordinary.
Similarly, in agriculture, three path breaking laws were enacted, but the opposition along with self-appointed farmer leaders tried their best to mislead farmers about these laws, and still continue to do so. The government, through 11 rounds of talks, tried its best to assuage the feelings of farmers, and offered even to put the laws on hold for 18 months, and yet the farm leaders are stubborn and adamant. The result: the farmers are sitting on a dharna for more than two months and the nation’s image has been besmirched due to violence and disrespect to national flag. The government continues with its efforts to allay the fears of farmers, and the Prime Minister has already said that he was “only one call away” if the farmers want to resume talks.
In industry, goods are being manufactured and transported, but the malls are empty and most of the shops have hardly any buyers. Transport sector, textile, toy industry, and several other sectors are looking at recession because consumers do not have money to buy. The tourism, travel, aviation, hotel and food industry sectors are in doldrums due to lack of tourists and consumers. The real estate sector is limping as there are very few home buyers. These were the sectors that used to give employment to lakhs of people. It is in this context that the government has come forward to spend a huge chunk of the budget on infrastructures like road, railways, ports and airports, to generate employment.
Once the economy is geared up, and people have money in their pockets, the world will come to India for business. On its, part, the government has tried its best to move the wheels through this budget. Even as naysayers in the opposition may say that the budget has nothing new to offer, I believe that this budget will surely give a boost to growth in our economy. Indian economy will definitely rebound and stand on its legs, and with Atmanirbhar Bharat as the aim, this will nurture a new India we shall all be proud of.
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