The Union Budget announced by Finance Minister Nirmala Sitharaman retains the Modi Government’s commitment to economic reform. At the same time, necessary lessons have been learned from the Covid-19 pandemic, leading to an important initiative to considerably boost the nation’s health infrastructure. This also means that the government is unfazed by the farmers’ protest against its new agriculture laws, as also the attempt by the opposition parties to take political advantage of it. It is reflective of the effective manner in which the pandemic was managed in that the forward movement towards a developed economy continues undeterred. This can be seen in the way GST collections have remained healthy after the initial hiccups.
The important goal of disinvestment and privatisation is also being pursued despite the continuous attempts to discourage it by various vested interests. In fact, as usual, this was one of the primary targets of the opposition immediately after the budget announcement. It also means that the government is confident that these moves will pay off in the not so distant future. This is a level of confidence and commitment lacking in the past. Reform and liberalisation took place, earlier, because circumstances forced them on India, or were prescribed by international institutions for bailing the country out of trouble.
This does not mean, of course, that political considerations have been ignored, but these are not a forced defensive posture. Instead, the government is on the front foot, taking the battle into opposition bastions. All of this can only become possible if a lot of hard work is being done by the backroom boys. The political and economic agendas have been laid down in general policy terms for the domain experts to turn into reality. Of course, every sector of the economy will be looking at the provisions and allocations based on its particular perspective, and the reactions will become known over time. The rise in the stock market post the budget shows, however, a general approval – the fear was that some panicked draconian measures could upset the general movement of the economy.
The fiscal hit in the past year has been sought to be overcome through higher borrowings. However, these will be spent on major projects that will almost immediately put money in the hands of the people while achieving the bigger goals when completed. It is possible that, had the year been a normal one, there would have been further relief for taxpayers. The relief, at present, is that things have not been made worse and collections will be dependent on the expected bounce back in public expenditure. Overall, it is a clear statement of intent – India has proved to be unexpectedly strong and will continue to advance.