Budget 2021 fulfils hopes but runs short on fears

The Budget is, indeed, positive for the economy, meeting broadly the expectations. It has opened numerous opportunities for domestic and foreign investors and placed the economy on a definite trajectory of growth and competitiveness. For the first time, this budget is depending on the growth effect of revenues to meet its elevated expenditures on sectors that carry multiplier effects, thereby pushing the economy on an auto propelled growth path and in the process enhancing employment generation. Most notably, it is the first digital budget in the history of India. In all these aspects it is a ‘Budget like never before’. Budget proves that ‘good economics can be good politics too’. Some negatives too — silent on efficient and cost effective execution of budgetary policies, which has been for long the bane of Indian economy. Though one among six focus areas is ‘minimum governance and maximum governance’, there is also a need to set up a monitoring panel of experts which should be responsible for achieving the same in the right spirit.

Further, it is a debt-funded budget. Returns from growth have to be far ahead of interest and repayment burden of debt to have an assured sustainable growth. Besides, care will have to be taken that the budget does not prove inflationary. There is a need to ensure bridging of the gap between stock market buoyancy and growth on the ground.

In sum, though the budget sets a perfect direction for the economy, the opening of the economy has a long way to go. Government with cooperation of industry, organisations and civil society need to work together to avoid any slippage in execution and implementation to take place.

The writer is an economist, and a former director of Economic Research & Training Foundation.