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Tuesday, April 16, 2024

FM’s next budget: Structural reforms expected

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With green shoots visible after economic slowdown for several quarters at the beginning of 2020, finance minister Nirmala Sitharaman unleashed a medium term reform agenda in the February Budget this year to make India a USD 5 trillion economy.  But this plan went awry with Corona virus Pandemic afflicting the entire World. With prolonged lockdown in India and elsewhere the Indian economy went for tail spin. As a result, there was recession in most parts of the World and practically all large economies barring China, clocked negative growth, unprecedented for decades. Though it may be too early for India to conclude that the economy has turned the corner, there is a strong possibility of a V-shaped recovery and some analysts have already forecast that India may again be the fastest growing economy overtaking China in 2021-2022. There is certainly a crisis of confidence in the economy at the present juncture and Sitharaman will do well to push big-ticket structural reforms in her Budget next February to return to a high growth path on a sustained basis.

There is no denying of the fact that India is facing the worst economic crisis since 1991 and fourth since Independence. Reviving the economy needs swift measures, which included increased government spending and programmes for robust employment generation. The complete 68-day lockdown and gradual unlock-1, 2, 3 and 4 of the economy of India is showing its effects now. Merely putting money in the hands of the poor to spur demand might not work at this juncture as most of them used up their savings in the last few months in the face of job losses. So putting any money in their hands now will only go to replenish their savings thereby not fulfilling the task of encouraging consumption spending. So better ways would be to step up public spending on infrastructure and on other job creating measures to revive demand.

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India cannot claim to be out of the woods yet but positive signs are visible and the budget if crafted well could make economic recovery sustainable. Covid-19’s disruption has not fully played off yet and one has to be cautious while pushing growth. India needs to increase its rate of employment growth and create 90 million non-farm jobs between 2023 and 2030, for productivity and economic growth according to McKinsey Global Institute. Net employment rate needs to grow by 1.5 per cent per year from 2023 to 2030 to achieve 8-8.5% GDP growth between 2023 and 2030. With stimulus in place and more expected in the forthcoming budget as India’s economy opens up and life fast returns to normal in course of time the country’s GDP is expected to reach USD 5 trillion by FY25 and achieve upper-middle income status on the back of digitisation, globalisation and reforms. The plate is full for Sitharaman and it would be interesting to see how she proposed to steer the economy back to a high growth path and make India a global manufacturing hub through Modi’s Atma Nirbhar programme.

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The Hills Times
The Hills Timeshttps://thehillstimes.in/
The Hills Times, a largely circulated English daily published from Diphu and printed in Guwahati, having vast readership in hills districts of Assam, and neighbouring Nagaland, Meghalaya, Arunachal Pradesh and Manipur
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