Economists have urged finance minister Nirmala Sitharaman to calm down fiscal deficit consolidation in the Budget for 2021-22 and make efforts to reinforce exports from the country. They also known as for raising expenditure on health and specializing in agriculture infrastructure without which the recent reforms would not hold ground.
In a pre-Budget interplay on Saturday, they said that the fiscal deficit framework could be returned to normal after a couple of years. Another assembly with economists is slated for Wednesday.
Amid the stressed revenue position and spending pressure to spur economic activity all the way through the pandemic, the fiscal deficit has already crossed the Budget estimates by 20 per cent by the end of October 2020.
Fiscal deficit in the first half of the fiscal touched 10.71 per cent of gross domestic product (GDP) against the Budget estimates of 3.5 per cent. Everyone consents that Budget estimates no longer hold true after the Covid-induced lockdown. The actual yardstick now will have to be Rs 12 trillion market borrowings. Fiscal deficit has already touched Rs 9.53 trillion. As such, the government has space of Rs 2.47 trillion of fiscal deficit in the next five months.
Most economists said expenditure on social sectors, health and infrastructure will have to be raised. On health the general consensus used to be that expenditure on health will have to be raised to a lot more than 1.25 per cent of the GDP.
Some said agriculture infrastructure will have to be strengthened and marketing reforms may not be enough whether not supplemented by a strong focus on developing agriculture infrastructure.
The Rs trillion agriculture infra fund will have to be spent soon, they said.
Some economists also raised issues that cropped up in the recent national circle of relatives health (NFHS) survey and said that falling nutrition levels in children will have to be seriously dealt with by strengthening schemes such as the Integrated Child Development Services and products (ICDS) etc.
A suggestion used to be also made to supply a constant timeframe for payment to MSMEs in order that they don’t have to wait for their payment for long.
Meantime, industry chamber PHDCCI president Sanjay Aggarwal in his interplay with the finance minister suggested a 10-pronged strategy for the Budget 2021-22. This includes refueling consumption and demand, encouraging private investment, front-loading infrastructure investments, setting up development finance institutions to fund industrial and infrastructural investments, strengthening micro, small and medium enterprises, reducing cost of doing commerce, ease of exporting, increasing tax-to-GDP ratio, specializing in agriculture & rural sector and effective reforms in social infrastructure.
He batted for lower personal income tax rates, saying the sort of move would raise the tax base and tax-to-GDP ratio.
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