Focusing on high economic growth in the upcoming 25 years, the Finance Minister’s second pandemic budget was centered on macroeconomic policies and fiscal money spending. All policies announced in the budget were bonafide by words like inclusive model of development and sustainable nation. The Minister has given much importance to infrastructure development and urbanization, where the funds were looking to get credited on a profit basis.
Sustainable development has 17 goals as described by the United Nations. As pareto optimal theory conveys, an economy will be in its equilibrium when one’s consumption does not harm others’ consumption. Similarly, it’s important to attain every sustainable development goal without harming one another.
Unemployment and purchasing power shortage are the prominent problems prevailing in the Indian Economy. Centre for Policy Research has already pointed out the problems centered around unemployment in the pre-budget analysis. The difference between employment demand and supply seems to be 33 percent in the last year, which vividly delineates the supply shortage in the employment sector. But, unfortunately, MRNEGAS has slated to 73000 crores from the revised estimate of 98000 crores. From its initiation, NREGA was the most viable solution for demand creation among rural people as it offers 100 days of guaranteed wage employment. When the nation faces a huge shortage in demand, these acceptable methods were not seeming to be used.
Despite the growing unemployment resulting from the pandemic, the new budget hasn’t incremented the supply but shortened it. From the allocated fund, there is an actual decline in labor-intensive sectors like agriculture and allied activities. It was only the agriculture sector that helped the nation to survive in the pandemic period.
There is no clear-cut solution in the budget that how the new economic order will face the purchasing power shortage of people, which may further lead to hyperinflation and inequality in income distribution. It was disappointing that the minister hasn’t even mentioned about inflation, at a time when people face a huge burden from the price hike of necessary goods. Capital expenditure hyped by 35.4% can only be attained if the GDP mark crosses the mark of 10. But, it’s impossible without increasing the inflation rate. The more worrying part is that the present demand shortage in consumption is backed up by high inflation and unemployment. This will create more crises in the nation. Even at this time, the minister focuses on inclusive development and practicality lacks in many other areas.
Every nation is well-financed now to deal with health emergencies, as many diseases are coming without prior notice. We are still engaged in dealing with micro health emergencies like vaccination and testing. The Finance Minister said that health allocation is going to get minimized, as vaccination has almost been completed. Is vaccination a long-term solution or a precaution? From the budgetary allocation of food subsidies and the grants from the ministry of health and family welfare, it’s clear that the government hasn’t decided anything more to deal with the Covid-19.
Even though Minister says about the economic growth of years, the budget lacks macroeconomic frameworks in the health sector. Apart from addressing these emergencies in sustainable development goals, it’s pathetic to utilize the first part of the budget entirely to Gati Shakthi, which was not the prime need of the hour.
Even though there are a lot of fiscal tools to compete against unequal distribution of income, the government hasn’t even cared about that part. There were no remarks on cutting down of income slabs on new taxes. The new tax on income incurred from cryptocurrencies transaction is an ideological movement to market the newly released digital coin of the Rural Bank of India. The income gap was increased by 40 percent as per reports. Despite this reality, the budget has not imposed any taxes on the rich to surpass this inequality. Moreover, the budget has leveled up the taxes of Cooperative societies and companies by reducing the rate of cooperative societies to 15%.
On one side, terms like sustainable city and inclusive development cheer in the budget, the other side creates hindrances in achieving it. Equality seems to be addressed without caring about unemployment, purchasing power and inflation. The second pandemic budget cannot do much on these values with these prevailing conditions.