Union Finance Minister Nirmala Sitharaman began her Budget speech with the markets in the green. They remained green throughout the 90 odd minutes that she was reading her speech, an indication that the investors were giving their thumbs up to the financial statement and by the end of the day the sensex had ended 2,314.84 (5%) points higher. The Budget speech was green in another manner too, as it was the first paperless one to be tabled in the Lok Sabha.
More importantly the Budget was the first to be presented amidst the pandemic that led to a major plunge of the economy following the long lockdowns across the country. The economy is only now slowly getting back on the rails, and the Finance Minister, early in the speech, assured that the Budget will sustain the economic recovery. The general feeling in industry circles is that the Budget will promote growth rather than maintain fiscal discipline, that most other financial statements usually also lay stress on. Sustaining economic growth is most important, as India has been one country, though now doing better than many others, that is still on the recovery path from the pandemic. Any reversal in the growth, even minimal, would not inspire confidence in the people and could have disastrous effects.
If you enjoyed reading this article, you can help support our journalism by adding OHeraldo as a preferred source.
In that respect this was never an easy Budget to present, as it had to take into account variables that would otherwise have been ignored. Sitharaman has managed a difficult budget with strong push in sectors that might have otherwise remained ignored. For instance, the Covid pandemic has no doubt turned the focus on the health sector, and the Budget has made provisions to increase investment substantially in health care, by well over 100 per cent from the last year. On the other hand, the stress laid on infrastructure development will not only create the desired development, but will also boost employment generation in the country and spending. Both will go a long way in supporting the recovery of the economy.
Industry captains have reacted positively to the Budget, terming it growth oriented with next-gen reforms. The economy is projected to contract 7.7 per cent in the current fiscal year, but the forecast is of growth of 11 per cent next year with a spurt expected in consumer demand and investments. Theoretically, this Budget speech is what economists appear to have been waiting to hear. Its success will depend on the implementation in the new financial year. That will be the real test, as with the Budget focussing on growth and recovery of the economy, the aspect of revenue generation has been left out. Direct taxes have remained untouched, and there is no major change in taxes that will bring in additional or enhanced revenue to the government coffers.
In that respect, the Budget has not touched the Income Tax slabs, an area that touches people the most. Tax payers are assured that they don’t have to pay more taxes on their earnings, but they get no rebate either, except for senior citizens above the age of 75 who have been exempt from filing returns. Annually, it is the income tax payers who wait for some relief but often they get little in return. For them, this year is no different. As the country emerges from the pandemic, some sacrifices would have to be made, for tax payers this is one of them.
