According to Financial Minister Nirmala Sitharaman, the Union Budget for 2021 is going to be special, “never like before”. It is the first post-pandemic budget that the country would witness. At the moment we are a part of an ailing economy as we all know. Hence, a trail of factors remains extremely important as the budget for the year gets boiling and ready to be served.
1.Concern over the Economic Recovery
FM considers economic recovery to be the biggest concern and the major highlight of the 2021 budget. There is a plan to confirm higher spending on defense, healthcare and infrastructure to drive this economic growth.
2.India’s Fiscal Deficit
The fiscal deficit of India has been anticipated to rise to 7.5% of GDP. This figure is twice as much as the target set.
3.Bolder Steps Required
Given the condition of India’s prevailing economy, FM Sitharaman needs to take steps that are bolder than ever. The route of fiscal consolidation needs to figure out afresh by the government. Steps like partial monetization of government borrowing, big-ticket privatization and divestment display the required impudence at this hour.
4.Fiscally Conservative Approach under Threat
The BJP government has followed a fiscally conservative approach. This might not work out with the new budget of 2021.
The good news for the Finance Minister just before the day of budget declarations of 2021 is that the GST revenues on January 2021 have reached the highest records since the introduction of GST. This is 8% higher than the GST collections in January 2020.
A lot of money has been spent by the government in the process of managing the pandemic. With the production and application of vaccines on the go, we are expectedly dealing with the later phases of the world pandemic. Repressed propensity to spend would now go on a boom with all the general restrictions being updated or withdrawn. A major flow of production, supply, and demand is expected this year. The unrest around import and export both due to the pandemic as well as banning of certain country’s products would also have a major impact on this year’s budget.