Relax budget consolidation in budget, increase health spending, economists urge at FM
Economists urged Finance Minister Nirmala Sitharaman to ease the consolidation of the budget deficit in budget 2021-22 (FY22) and make efforts to increase the country’s exports. They also called for increasing health spending and focusing on agricultural infrastructure (infra), without which recent reforms would not hold up.
In a pre-budget interaction on Saturday, they said the budget deficit framework could return to normal after a few years. Another meeting with economists is scheduled for Wednesday.
Amid an income crisis and pressure on spending to stimulate economic activity during the Covid-19 pandemic, the budget deficit has already exceeded Budget Estimates (BE) by 20% at the end of October.
The budget deficit in the first half of the year hit 10.71 percent of gross domestic product (GDP), against a BE of 3.5 percent. Everyone agrees that BE is no longer true after the lockdown triggered by Covid. The real criterion should be the market loans of Rs 12 trillion. The budget deficit has already reached Rs 9.53 trillion. The government has room for Rs 2.47 trillion budget deficit in the next five months.
Most economists said spending in the social, health and infrastructure sectors should be increased. On health, the general consensus was that health spending should be increased to well over 1.25 percent of GDP.
Some said that agricultural infrastructure should be strengthened and that marketing reforms would not be sufficient if not complemented by a strong focus on developing agricultural infrastructure.
The Rs1 trillion agricultural infrastructure fund is expected to be spent soon, they added.
Some economists also raised issues that arose in the recent National Family Health Survey and said declining levels of nutrition in children should be seriously addressed by strengthening programs such as Integrated Family Development Services. the child.
It was also suggested to provide a fixed deadline for payment to micro, small and medium enterprises (MSMEs), so that they do not have to wait long for their payment.
Meanwhile, PHD Chamber of Commerce and Industry President Sanjay Aggarwal, in his interaction with the Minister of Finance, suggested a 10-pronged strategy for the FY22 budget. This included refueling of consumption and demand, encouragement of private investment, establishment of investment in infrastructure, establishment of development finance institutions to finance industrial and infrastructure investments, strengthening of MSMEs , lowering the cost of doing business, ease of exporting, increasing the tax-to-GDP ratio, emphasizing agriculture and the rural sector, and effective reforms in social infrastructure.
He endorsed lower personal income tax rates, saying such a move would increase the tax base and the tax-to-GDP ratio.