Union Budget 2021: An unprecedented level of political resolve has been brought behind these reforms. Now, all of these must be taken to their logical conclusion rather than letting them meander
On February 1, Budget 2021 was presented in a backdrop of a once-in-a-lifetime pandemic that had seriously disrupted the economic and social activity. This followed a slowdown in the previous year. The total revenue receipts are expected to be down by 28.8% and government expenditure up 16% compared to budget estimates. The Fiscal deficit will reach an unprecedented level of 9.5% as the economy contracted by 7.7%. This situation called for measures that were out of the ordinary.
The theorists were looking at a counter-cyclical response in terms of higher liquidity in the system. However, this budget, very wisely, has chosen to accelerate the reforms agenda, which has been a critical component of the government’s pandemic response. It has also put a higher focus on capital expenditure away from populist measures like increasing allocation to direct benefit schemes which will help build productive national assets. In addition, it has also kept the tax regime largely stable; a big signal to the investors, as it removes uncertainties.
Source: Financial Express
