Budget marks directional change for economy: FM
NEW DELHI: Budget 2021 marks a clear directional change for the Indian economy by not imposing any new tax and relying instead on non-tax resources to raise revenue to fund the enhanced capital investments that will spur growth in the pandemic-ravaged economy, finance minister Nirmala Sitharaman said on Thursday.
Despite the devastating impact of the coronavirus (Covid-19) outbreak on the economy, the budget has not levied any new tax, Sitharaman noted in a closed-door virtual meeting of the Federation of Indian Chambers of Commerce & Industry (Ficci).
“I underline that we have not burdened any section of Indian society with any additional demand for even an additional rupee,” the finance minister said. Sitharaman on Monday unveiled a budget with significant increases in health and capital expenditure to revive an economy that shrank by a record 23.9% in the quarter ended June 30 mainly because of the 68-day hard lockdown imposed on March 25 to curb the spread of the coronavirus. The economy recovered to contract by a slower 7.5% in the next quarter as lockdown restrictions were eased. For the full year to March 31, the economy is forecast to contract 7.7% according to the National Statistical Office.
The Covid-19 vaccination drive launched on January 16 has delivered another boost to the economy, which is expected to grow 11.5% in 2021-22, according to the International Monetary Fund, and by 11% by the Economic Survey tabled in Parliament last week.
“This budget marks a clear directional change for the Indian economy and that directional change is not what the government has offered as a sudden response, but it was something that was preoccupying Indian minds for over 30 years,” Sitharaman told Ficci’s national executive committee meeting on Thursday.
This budget is trying to raise resources that are non-tax resources at a time when India needs a lot of money to spend, Ficci, in a statement, cited her as saying. “It’s a budget which raises resources but not on the back of increased taxation. There is a directional change in the budget which is so distinct that it will fuel the entrepreneurial spirit which the Indians show given the right opportunities,” she added.
Stating that revenue generation would improve through this year, she expressed confidence that non-tax revenue would be robust.
Sitharaman also urged industry to come forward to make investments. “I hope the industry will understand the spirit with which the budget is placed before you and therefore also come forward to participate in this inevitable exercise. Industry, having cleared all its debts and finances, should now be in a position to invest money to expand and grow and clearly show signs that it is now ready to receive any joint ventures for the sake of technology that it prefers to have,” she said.
For providing immediate stimulus to the economy, the government will be spending in a big way on public infrastructure and three large areas where big ticket expenditure will happen include utilities, health and agriculture.
“Government alone, even if it brings bags full of money, cannot just meet the demand of a growing and aspirational India,” Sitharaman said.
The government has made public a confident, trustworthy and transparent accounting statement in the budget, Sitharaman said. “There is no patching up or whitewashing. It was an honest attempt to give an honest statement of the government’s finances and the reforms announced along with the stimulus. It is clear that this government is not sitting cautiously, and it is coming forward with faith in Indian industry and business leaders,” she added.