The Narendra Modi government’s fiscal outlook has failed to strike a reasonably good balance between supporting public-funded social welfare schemes and the need to drive growth by creating enough opportunities for the private sector.
Authors
Deepanshu Mohan, Associate Professor of Economics and Director, Centre for New Economics Studies (CNES), Jindal School of Liberal Arts and Humanities, O.P. Jindal Global University, Sonipat, Haryana, India.
Aniruddh Bhaskaran, research analyst, Centre for New Economics Studies (CNES), Jindal School of Liberal Arts and Humanities, O.P. Jindal Global University, Sonipat, Haryana, India.
Hemang Sharma, research analyst, Centre for New Economics Studies (CNES), Jindal School of Liberal Arts and Humanities, O.P. Jindal Global University, Sonipat, Haryana, India.
Soumya Marri, research analyst, Centre for New Economics Studies (CNES), Jindal School of Liberal Arts and Humanities, O.P. Jindal Global University, Sonipat, Haryana, India.
Malhaar Kasodekar, research analyst, Centre for New Economics Studies (CNES), Jindal School of Liberal Arts and Humanities, O.P. Jindal Global University, Sonipat, Haryana, India.
Bilquis Calcuttawala, research analyst, Centre for New Economics Studies (CNES), Jindal School of Liberal Arts and Humanities, O.P. Jindal Global University, Sonipat, Haryana, India.
Summary
As finance minister Nirmala Sitharaman prepares to present the next Union budget in a few weeks, a closer review of the attempted precedents set by previous budgets becomes a valuable exercise – not just from an academic lens, but also from a policy review perspective.
The Centre for New Economics Studies’ InfoSphere team undertook a comprehensive exercise to analyse the outlay of macro-trends from previous Budgets and weave these in context to the current macro state of the Indian economy (for this we are grateful to the team at Systematix Institutional Equities who have undertaken a thorough macroeconomic review of the Indian economy here).
The last few Budgets were in principle ‘pandemic budgets’, all set in extraordinary polycrisis situations. The government needed to spend more on immediate spending needs like healthcare (to enable COVID-19 infrastructure, buy vaccines etc.) and boost social sector funding to support the most vulnerable. What it did was: increase public sector capex to take care of growth (seeing most of the private sector was investing/spending less during a pandemic phase).
From post 2016 (twin shocks of demonetisation and hurried GST implementation), India has witnessed a slowing down of growth. During the pandemic, and in months post the lockdown restrictions were lifted, the nation was not just battling a deep economic contraction in its growth trajectory but was also facing chronic issues stemming from high unemployment, a decimation of its unorganised informal sector, a poor performance in the macro-social security landscape (with all schemes focusing on women, children and the malnourished seeing dwindling outlays).
Published in: The Wire
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