National, February 02, 2022: Budget has highlighted the strengths of the economy such as, recovery from the pandemic, export growth of 16.5%, Forex Reserves of USD 634 billion and the fiscal deficit at 6.8% of GDP within prudent limit etc. However, it has not discussed about the achievements and failures in the targets of previous Budget. More so, the weakness of economy is neither spelt out nor fully addressed.
Currently, the unemployment is at record high level and the income of poor and middle class is adversely affected.High inflation has enlarged their miseries. Cash transfers and free ration is not a long term solution. Budget could have provided the fiscal and monetary stimulus besides policy support to the Unorganized Sector, Farm Sector and MSME Sector which provides the largest employment.
The growth of import is at record high level which has nullified the benefits of growth in exports. India must cut gold import through modified Gold monetization scheme. The import of primary energy (Oil, Gas and coal) must be reduced by boosting domestic production and energy saving. It is needless to say that; the trade deficit directly reduces GDP.
Higher allocation in the budget for capex and infra spending is indeed praiseworthy. However, alone government investment can’t support the growth target of 8-8.5%,as fixed in the budget. Therefore, India must undertake series of regulatory reforms for boosting private investment.
High inflation (wholesale) could be a game spoiler. Monetary policy can’t resolve this problem. This is due to increase in the cost of basic inputs, mainly the energy, minerals and logistics. For which, suitable policy intervention is needed.
Few policy announcements have been done and I am sure that; in coming days, India shall make more announcements in resolving these impediments. So that, the growth target of 8.0-8.5% in F/Y-2022-23 is achieved and the job crisis is resolved.