A Budget For Growth

It addresses Covid’s shadow on the economy, while also taking a longer view

- N Chandrasekaran

Markets have reacted euphorically to the Budget. First, it clearly addresses India’s economy in the second year of a global pandemic. Yet, at the same time, it takes a longer view. The Budget not only shows the kind of policy support necessary for the economy at this moment, but also provides a foundation for the country that India will need to be in the next decade.

The announcements about health, protections for informal workers, infrastructure, and strengthening the financial sector clearly show this intent – a pattern of reforms focussed on boosting growth and removing bottlenecks across several industries. And by not touching direct taxes, it has protected purchasing power and encouraged demand – a move that will be rewarded as the pandemic recedes. It provides direction to businesses and people, rather than create a punitive environment.

The Budget clearly signals a move to return India to a higher growth trajectory after the record contraction caused by the pandemic. The fiscal target has been relaxed very rightly, and the government has chosen gradual consolidation over the medium term. I believe this is the right thing to do at this particular moment in history. In this phase of the business cycle, the government’s approach will help with job creation, supporting income and reducing the economic scarring caused by the pandemic.

On a fundamental level, choosing growth over fiscal consolidation at this stage makes sense, given the nation’s low per capita GDP of around $2,000. The country’s aspirations are higher than they have ever been. We see it in our consumers, our youth and our jobseekers.