Economy
Budget 2021: Colourful but hollow
ABRAR UL MUSTAFA
abrarwrites@gmail.com
The introductory and leading highlight was the outlay for the healthcare vicinity. From a minuscule allocation of 96,000 Crores, this sector is going to win a mega carton of cash as gigantic as Rs 2.23 lakh crores. This is a whopping upgrade of 137%. Hopefully, now common man will be in a position to avail of better healthcare services. We, however, will have to gaze and gawk how the policies are carried out in verity. Besides, this allocation is going to be bolstered in the future years as affirmed by the Finance Minister. Succeeding acuity of Monday’s Budget was Rs 35,000 Crore crate for corona vaccination. On a flip side, nonetheless, we have rationales to surmise that it may be beguiled. That is because, several sub-sectors—that are not directly healthcare sectors—have been accommodated. These are areas like Aayush, etc. This has to be scrutinized in the coming days when there is unmistakable translucence.
Our incomes are axed by taxes. We needed a robust and comprehensive financial policy. We need clear-cut employment, education, livelihood policy. The policymakers at the helm of the affairs should devise practical strategies.
There were a few exemptions concerning Income Tax Return (ITR). Those senior citizens who are over 75—and are earning only pension and bank interest—are exempted from filing of returns. This does not mean that there is any concession in tax for such people. It is just a respite regarding who has to file a return. Likewise, ITRs for the salaried class would be prefilled with the earnings from salary and bank interest. This would make the filing of return slightly easier. These are not concrete windfalls or exemptions.
One of the heftiest punchlines of Sitharaman’s budget speech was that of Fiscal Deficit. She announced that the Fiscal Deficit is pegged at 9.5%. She also added that this gap would be narrowed down to 4.5% in the years to come. An economic analysis, however, makes it clear that this would not be a cakewalk for the NDA government. She said that the government would resort to borrowings and would approach the market to fulfil the announced appraisals. This, however, seems unlikely. All governments so far have been unable to maintain a narrow fiscal gap. Hand in hand with fiscal discipline and balance, the government has shifted its gear towards spending. This is in line with what was predicted.
There were some statements in the Fin Min’s speech which neutralised each other. For example, she induced an agricultural cess over petrol and diesel. This additional cess was, on the other hand, neutralised by a reduction in import duty. This would leave the overall effect over the prices of petrol and diesel unchanged for consumers. On the same lines, an additional duty was announced over imported apples, etc. This is also unlikely to affect the prices of domestic produce. The overall impact of these changes is negligible.
A ’Bad Bank’ has been introduced. According to Sitharaman’s speech, it would be a new bank that takes care of the bad debts of other banks. It would be like shaking the balance sheet of other banks, accumulate all bad loans and put into the Bad Bank. For now, the idea seems promising. It would focus on the recovery and management of Non-performing Assets (NPAs). The other banks may carry out normal business without bothering about their bad debts. How constructive the plan may prove would depend upon the capital infusion, policy framework, execution and other details of the newly proposed bank.
Moving toward the disinvestment and privatisation front, it has been a lamentable budget. To the amazement of any sane economist, the government announced that an Insurance Company and two Public Sector Undertaking (PSU) banks would be privatised. In common parlance, it means it is going to auction its assets. Their reasons are not reasonable. If some banks are not in a strong position, it doesn’t mean you would sell them. You need to make a targeted and planned intervention and cure their rotten balance sheets. Deal cannot resue. Who sells assets, after all? In multiplication to this, disinvestment will be made in the Life Insurance Corporation (LIC). Where are we heading to? It is just like selling an aeroplane and buying a kite. It would fly for some time. But it would soon come tumbling down. Tough times are truly ahead. On the other hand, a layout of Rs 20,000/- Crores as a capital infusion to Public sector banks has been made. This is aimed at making them able to comply with the regulatory norms.
On the social impact side, some budget outputs would affect common masses. There is a vehicle scrapping policy. Now, old vehicles that are more than 20 years old—and 15 years in case of a commercial vehicle—will have to pass a check before they are allowed to ply on roads. If they fail—which is quite a possibility—you will have to sell it and buy a new car. Another option is to station it in a corner of your courtyard and keep it fresh for memory and display! Coming onto what a common man asks after every budget: What is dearer and what is cheaper? Well, gold and invaluable metals are now cheaper. TV sets, Washing Machines, LED lamps, Air Conditioners, etc will be expensive. A common man and a middle-class man needs food, shelter, clothes, some affordable gadgets. These are dearer now. However, fair news comes for those whose wedding is in the offing. Buy gold now or wait for some more days. The yellow metal is going to get cheaper.
Postscript:
A government is for the people. It must listen to the people. The public has been reeling under joblessness. The education of our children is in the doldrums. Their future appears uncertain and dark. Our incomes are axed by taxes. We needed a robust and comprehensive financial policy. We need clear-cut employment, education, livelihood policy. The policymakers at the helm of the affairs should devise practical strategies. They must not beat around the bush. Hope good sense thrives in the days to arrive.
The author is an MBA, NET, IBPS qualified. He works as Manager Scale-II in the Middle Management of a reputed PSU Bank. The views are personal