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'It's a 6/10 Budget'

By ARCHANA MASIH
February 04, 2022 09:54 IST
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'The most important expenditure in the Budget that indicates employment generation is infrastructure.'

IMAGE: Finance Minister Nirmala Sitharaman addresses a post Budget media interaction in New Delhi, February 1, 2022. Photograph: Sanjay Sharma/ANI Photo
 

"Due to the pandemic, there is a huge drop in purchasing power, but prices have gone up."

"The Budget cannot provide a direct solution to inflation, but should have given some indication that the central government is concerned about the inflationary situation -- but it did not utter a word," notes Professor Prabhat Ghosh of the Asian Development Research Institute.

Professor Ghosh's research in economics focusses on rural development, large scale statistical surveys, evaluating economic projects and regional planning.

"It is a 6/10 Budget," he says as he points out the key takeaways.

It is a welcome change that there are no populist announcements in this Budget.

The growth rate that was faltering even before the pandemic was further disturbed due to COVID-19.

The growth rate had declined to about 6% pre-Covid. The FM said we are more or less back to pre-Covid rate of growth.

First and foremost, India needs to achieve 8% growth rate.

Secondly, employment. As far as employment is concerned no government can claim that it will create x number of jobs.

Governments can give targets about the length or kilometres of roads they will build or the number of houses they will construct, but it is not possible for a government to say that it will create so many jobs.

The most important expenditure in the Budget that indicates employment generation is infrastructure. A substantial expenditure has been assigned to infrastructure which is very good.

PM Gati Shakti includes roads, railway, air and waterways. I sincerely hope that the government invests the amount they have announced and some employment benefit will come out of it.

Secondly, the government has increased allocation for Micro, Medium and Small Enterprises, MSME. I am unsure how effective it will be because MSME has already been promoted before and is a demand-based programme.

To put it simply, the government will spend money only if an entrepreneur comes to it -- if no one comes then the money will not be spent as it is a credit facility.

Inflation:

Another important aspect is inflation. Due to the pandemic, there is a huge drop in purchasing power, but prices have gone up.

The Budget cannot provide a direct solution to inflation, but should have given some indication that the central government is concerned about the inflationary situation -- but it did not utter a word.

At least the finance minister mentioned employment 2-4 times in her speech, but inflation has not been mentioned at all.

In the last 2-3 years prices have gone up by at least 20%.

The government may not be able to do anything directly, but any government has some control over the price system in the economy. That has not been addressed or mentioned at all.

There are three important concerns -- growth, employment and prices. They have addressed growth, employment also to some extent, but have not mentioned anything about the price situation.

The FM said there are four 4 key features about the Budget:

1. PM Gati Shakti: I think it is the most solid and meaningful allocation
2. Inclusive development: This is quite hollow
3. Productivity enhancement: Meaningful, but has no special provisions specified
4. Financing of investment: meaningful because there is a large outlay for infrastructure

Number 1 and 4 have been addressed, nothing specific has been established about the other two.

If I had to give it a score -- I would give the Budget 6/10.

As told to Archana Masih/Rediff.com

Feature Presentation: Aslam Hunani/Rediff.com

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