On February 1 st, Nirmala Sitharaman, the Finance Minister of the government, presented the all-important budget for the year 2020-21 at the lower house of the parliament.
Indian economy is in shambles. The economists, businessmen, and ordinary people have for long been reiterating the fact that the economy needs to be fixed. The government, after denying it for long, had to come to terms with reality. Since then, the government under the leadership of Prime Minister Modi headed a bunch of meetings with industry professionals and businessmen in order to seek feedback and suggestions.
Ahead of the budget, the two common plights were unemployment and inflation. The banking sector too was the biggest concern.
Does the budget possess the potential to boost the economy?
With delivering the longest speech of any budget session, the finance minister proposed a number of provisions and plans for the country. While it has some noteworthy reforms, not much of it seems to address the problem at hand.
When an economy refuses to accelerate, the primary cause is that people at the bottom of the chain are refusing to spend/invest. The reasons vary from not having enough money to spend to a growing mistrust on the investments. Both of them seem to be a reality in rural India. Agrarian distress and lack of jobs needed to be addressed.
The allocation for the PM Kisan scheme was brought down to 54,370.15 crores from the projected budget of 75,000 crores. The reason, as cited by the government in the document, is the hurdles in implantation in some states. The beneficiaries of the scheme automatically lowered to 14 crore farmers from 14.5 crores. Against the light of this, the government has gone onto propose that the farmer’s income will be doubled by the end of 2022. It is yet to be seen how the government is going to achieve it.
One of the key decisions was the proposal of setting up a National Recruitment Agency (NRA) to intake the candidates for non-gazetted jobs at government and public sector banks. The hope is that it will spread to other sectors in the future. This is a tiny step towards the plight of unemployment.
The most popular move was to reform the tax slabs and ease off the stress on the middle class. To support this, a new regime of taxing was introduced. The taxpayer has two options, either he can opt for the old regime or the new one. There is still confusion about which one of the methods would benefit the taxpayer. This has inevitably caused confusion instead of simplifying it.
The economy, as simple as it is, is better for the nation. Only when a commoner understands the economy and investments will he/she invest in the market. The complex it is, the longer it takes for him to arrive at a decision. This, in turn, will dent the acceleration which the country cannot afford at this point.
The government also increased the deposit insurance to 5 lakh from the previous amount of 1 lakh. The intent was to be fair on the citizen. While it is a welcome move considering the recent fiascos of deposits in co-operative banks, it has contrarily increased the doubts of the citizens on the security of their deposits.
The duty of the finance ministry as it presents the budget is also to take the people into confidence. As social unrest keeps increasing in the country, the country has to trust the government in its finances and it is the government’s job to be trustworthy.
While this budget has certain reforms, it still will be deemed disappointing in context with the economic crisis. The government is expected to nullify the confusion in the coming future and hence introducing more reforms. It is to be seen if that happens.