Budget today: India awaits FM's vision on relief, growth
New Delhi, Jan. 31: Finance minister Nirmala Sitharaman on Monday will deliver her promised budget like no other that is expected to provide relief to the pandemic-hit common man as well as focus more on driving the economic recovery through higher spending on healthcare, infrastructure and defence amid rising tensions with neighbours.
As India emerges from the Covid-19 crisis, the ninth Budget under the Modi government, including an interim one, is widely expected to focus on boosting spending on job creation and rural development, generous allocations for development schemes, putting more money in the hands of the average taxpayer and easing rules to attract foreign investments.
Ms Sitharaman, who had in her first budget in 2019 replaced leather briefcase that had been for decades used for carrying budget documents with a traditional red cloth “bahi-khata”, had earlier this month stated that the budget for the fiscal year beginning April will be “like never before”.
The Budget, economists and experts say, will be the starting point for picking up the pieces after the economic destruction caused by the Covid-19 pandemic. And it must go beyond being just a “bahi khata” or a ledger of accounts, as well as canning old schemes in a new bottle. It has to be a vision statement, a roadmap to get the world’s fastestgrowing major economy back on track.
There is a larger consensus among economists that the annual GDP for FY21 will decline by 7-8%, one of the weakest performances among the developing nations.
If history is a guide, the recent rough ride for Indian stocks will continue after Monday's budget.
The Sensex has climbed in the month after budget day on only two of the past seven years since Prime Minister Narendra Modi came to power, while falling or staying range-bound on other occasions. Risks are compounded in 2021 given stretched valuations.
"There are expectations that the government will keep aside fiscal prudence and open its pockets to spend more," said Ajit Mishra, vice president of research at Mumbaibased Religare Broking Ltd. "Investors and businesses are pinning high hopes on the budget and any disappointment could lead to profit-taking."
The Sensex had a blistering advance last quarter--even as data showed that the economy had plunged into recession. But there are signs the rally is petering out: the index clocked its biggest weekly declining since