Budget 2023: Growth Should Be The Mantra
The India Commentary view
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By Our Editorial Team
First publised on 2023-01-30 10:19:36
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The India Commentary view
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Finance Minister Nirmala Sitharaman will present the last full budget of this government on February 1. There has been intense speculation over what the budget has in store. Most economists point to the fact that with the country's economy in relatively good shape and inflation now somewhat controlled, it is times for the government to go for a reform and growth oriented budget. The government has the political incentive to do so as it is practically the election year budget. So will there be many sops for the taxpayers? Knowing Sitharaman and the way the NDA government functions, that is not likely. Instead, the government, buoyed by good tax collections and a relatively comfortable fiscal deficit position, might go for increased spending on infrastructure projects to fuel growth and generate jobs.
It is a fact that despite India achieving the best growth rate among the large economies in the world, growth has suffered in the last few months for many reasons, not the least among them being high interest rates (the measure resorted to by the RBI to combat rising inflation) and lower exports due to a slowdown across the world. The slowdown has also meant that job creation is at the lowest in many months and more and more people are being thrown out of their jobs, especially in the information technology and related services sector. Hence, the budget must go the whole hog for giving a solid push to the economy.
For this to happen, apart from government spending on infrastructure, private investment must rise substantially. Rapid job creation in the private sector is absolutely essential to revive sentiment. With inflation below the RBI tolerance level for two consecutive months now, the RBI must maintain status quo on key policy rates, or even reduce them, to spur investment. The government must, instead of providing benefits for savings to taxpayers, lower taxes to increase the spending power of the middle class. That would increase demand for goods and services and fuel growth. Measures such as production-linked incentive have been a huge success and the government is extending them to other sectors. The budget must build on this and introduce other such measures, undertake financial reforms and bat for growth.
