DAILY NEWS ANALYSIS

GS-III : Economic Issues Budget

26 January, 2021
9 Min Read

Budget during COVID-19

India’s GDP is estimated at ? 200 lakh crore.
The first priority for spending should be health and infrastructure.
India has only five beds for 10,000 Indians and ranks 155th on bed availability in the Human Development Report of 2020.
Experts opine that the government should increase healthcare spending from 1.5% of the GDP to 2.5%.
The National Infrastructure Pipeline https://www.aspireias.com/daily-news-analysis-current-affairs/National-Infrastructure-Pipeline aims to invest ? 111 lakh crore by 2025 in over 6,800 projects.
The proposal to set up a Development Finance Institution is still on the anvil.
The Chinese government has entered into building social housing projects. As pointed out by the economists in India Today, expenditure on infrastructure can have a large multiplier effect on economic output.
Suggestions have been made for the introduction of an urban employment guarantee scheme along the lines of the Mahatma Gandhi National Rural Employment Guarantee Scheme. This will be far better than direct cash transfers.
The stumbling block to budgetary efforts to spend can be the resource crunch.
Despite historic lows in fuel prices, the government chose to increase fuel prices to record levels.
The Goods and Services Tax has been a big source of revenue.
There is a strong case for reducing the GST tariff.
Cess or surcharge can be levied on the super-rich.
Disinvestment must go on at high speed.
The average tariff must come down to 10% from its current level of 14% by 2024, as suggested by Professor Arvind Panagariya.
He wrote: “With several key reforms – new labour codes, new farm laws, Insolvency and Bankruptcy Code, low corporate profit tax, single nationwide GST and widespread digitisation – already in place, the addition of privatisation and trade liberalisation would nearly guarantee a double-digit growth and millions of additional well-paid jobs for the masses in the post-Covid-19 decades.”
Ms. Sitharaman has left significant imprints in the Budgets she has presented. The lowering of corporate tax rates, the introduction of the option to choose the tax rate both for companies and for individuals up to fixed monetary limits, the introduction of the Vivid se Vishwas scheme without sacrificing revenue, and the structured infusion of fiscal stimulus without accelerating inflation all point to a right approach to Budget-making.
We can expect a never-before Budget to be presented to meet the crisis created by COVID-19. The super-rich must co-operate without insisting on tax concessions.

Source: TH

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