Synopsis–This budget is not a traditional ‘consumption-led’ one, but rather infra-led, one that has high multipliers of growth. While it addressed several levers to help the economy pivot towards an accelerated recovery, the planned spends in agriculture and rural development, and healthcare, will help lay a long-term foundation for growth.
The task at hand for Finance Minister Nirmala Sitharaman was rare — to present a budget after a historic economic contraction. The budget needed to be a lot of things — bold, growth-oriented, inclusive. It was all of that, and a lot more.
This budget is not a traditional ‘consumption-led’ one, but rather infra-led, one that has high multipliers of growth. While it addressed several levers to help the economy pivot towards an accelerated recovery, the planned spends in agriculture and rural development, and healthcare, will help lay a long-term foundation for growth.
While there has been much discussion about rural and agri allocations being downsized sharply, this is a ‘normalisation’, given the one-off increases prompted by the Covid-19 pandemic in certain key schemes in FY2021. These normalised budget allocations touch the right levers to enable a self-sustaining, virtuous cycle of income growth for farmers by enhancing credit, key outlays, focus on ‘value-addition’ and priming new areas such as fisheries.
The farm credit target increased by 10% to ₹16.5 lakh crore should boost liquidity for farmers and drive agricultural infrastructure. Micro-irrigation allocations doubled to ₹10,000 crore should help drive adoption and save water. With a focus on transforming lives of coastal communities, the budget for animal husbandry, dairy and fishing saw an increase of 22% to push development of modern fishing harbours, fish landing centres and seaweed farming. A 48% hike for the poverty alleviation programme under the National Rural Livelihood Mission should ensure inclusive growth.
The channelised allocations, along with focus on value addition, makes the budget for agri and rural a thoughtful balancing act.
India’s healthcare sector is significantly underdeveloped, but could emerge as a meaningful driver of growth, as well as employment over the medium term. Not only can it impart domestic depth to the healthcare market but it can also emerge as a forex-earner by leveraging modern technologies.
India’s public health expenditure in 2019-20 was 1.29% of GDP, lower than its Brics peers — Brazil, Russia, China and South Africa. HCS Healthcare, the largest hospital chain in the US, earned about 35 times more revenue compared to its Indian counterpart Apollo Hospitals. Given that the US GDP is about 10 times that of India’s, there is clearly a lot of room for growth in India.
The healthcare budget sees an increase of 137%, signalling a break from the incremental approach. ₹64,181 crore allocated over the next six years under the PM Aatmanirbhar Swasth Bharat Yojna should help aid the healthcare ecosystem to develop capacity for detection and cure of new and emerging diseases across rural and urban India.
The ongoing pandemic will not be the last one we’ll face. This budget does not appear like a knee-jerk reaction to Covid-19, but emphasises a plan that stretches well beyond the pandemic.
GoI kept the income-tax (I-T) slabs and standard deduction unchanged, leaving the salaried and middle-classes wanting for more. It also did not have any major announcements to aid the recovery of stressed sectors such as aviation, hospitality and entertainment. That the FM decided to not opt for the much-discussed ‘Covid-cess’ is welcome.
Focused investments and expansionist plans can translate to growth only if the provisions of the budget are implemented swiftly, efficiently and towards the intended purpose. This could truly turn out to be the landmark budget that will help the economy traverse the path of accelerated growth in years to come.
The writer is president, group strategy, Mahindra Group