The first Budget of the third Narendra Modi government is expected to present the medium-term roadmap for the Indian economy.While the message from the top is that of continuity, structural shifts will be required in some areas. One such key area is the conduct of fiscal policy.
Fiscal backdrop
The last term of the government was perhaps the most difficult in recent memory for fiscal management because of the pandemic-related disruptions. However, after a contraction in the pandemic year, the Indian economy recovered quickly and has been growing at an annual rate of 7 per cent or more.
The biggest policy target thus should be to build on the postpandemic recovery and sustain the momentum for an extended period. The Union government, and particularly the leadership team at the Ministry of Finance, must be commended for not going overboard with expenditure increases during the pandemic, unlike many advanced economies, despite similar advice given for India by well-known economists.
If the government had heeded suggestions like monetising the Budget deficit worth 5-10 per cent of gross domestic product (GDP), India would have been in significant problems. The government rightly made selective interventions such as cash transfers to the most vulnerable sections of society and distribution of free food grains.
The government intervention seemed conscious of the fact that India's fiscal position was not very strong even at the beginning of the crisis, with a debt-to-GDP ratio of around 75 per cent. Nonetheless, the Union government's fiscal deficit increased from 4.6 per cent of GDP in 2019-20 to 9.2 per cent in 2020-21, partly because of a sharp decline in revenue collection on account of pandemic-related disruptions.
Diese Geschichte stammt aus der July 18, 2024-Ausgabe von Business Standard.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der July 18, 2024-Ausgabe von Business Standard.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
Defence stocks take fire: Rally or retreat?
Period of correction follows a prolonged bull run
RIL, TaMorally, benchmarks at fresh highs
Equity benchmark indices Sensex and Nifty hit their all-time high levels on Thursday, driven by a rally in index majors Reliance Industries and Tata Motors.
IPOS sail strong on mkt tailwind
IPOS this year stay on course: Only 10 let Sebi approval slip- a three-year low
India among critical tech leaders, behind only US and China in Al
Among top five countries in 45 of 64 critical technologies
PLANT-BASED LEATHER TAKING ROOT
But limited infra and lack of govt incentives driving up cost of sustainable vegan products
Tax reform dilemmas
For a fairer, more inclusive tax system, taxing agriculture and adjusting exemptions are essential
Stationed in space
Recent experience has lessons for Isro
Ring-fencing a challenge
Industrial parks are expected to help attract investment
Will Amazon ever be Apple of India's eye?
Jeff Bezos is a bonafide global celebrity.
Durov charged for crimes committed on Telegram
Pavel Durov, the chief executive officer of Telegram, was charged in France for complicity in the spread of sexual images of children and other crimes, in a rare example of a tech leader being held liable for the way their platform is used.