The most important message from the Narendra Modi government’s Budget 2021-22, presented Monday by Finance Minister Nirmala Sitharaman, is that India’s worst economic storm in centuries is finally over.
The second message is that throughout this unprecedented Covid-19 pandemic, the government and India’s citizens have demonstrated an admirable resilience and determination. In the past 10 months, India has travelled a great distance, led by a relentlessly hardworking prime minister and his government’s response to the many unprecedented challenges – rapid spread and assault of the coronavirus, healthcare and testing capacity deficits around the country, PPE capacities, transportation of migrant labourers in Shramik trains back to their homes, China’s border aggression, sharp impact on the economy due to global supply chain disruptions and lockdown, domestic political inciting and mongering, uncooperative/under-prepared state governments, vaccine preparation and delivery, etc.
India surmounted all these challenges to save lives and soft-landed the economy, enacted much structural reforms, rebooted and restarted the economy in a sharp V curve, sent a message to the Chinese aggression and, most amazingly, as the finance minister said in her Budget speech, financed and completed 217 projects worth Rs 1.1 lakh crore from the National Infrastructure Pipeline that were kicked off only in 2019.
A gateway to post-Covid world
That we navigated all these challenges, remained united and resilient, achieved so much and today are poised to become the fastest-growing economy in the world, speaks hugely to the leadership of Prime Minister Modi and his government. His vision of an ‘Atmanirbhar Bharat’ (self-reliant India), launched during this Covid crisis, has prepared the country to pursue any opportunity that presents itself in the changing post-Covid world order.
Budget 2021-22 represents a gateway to this post-Covid world. The Budget first addresses the current and future wellness and health of Indians and India, by approaching the issue as a sum of health, infrastructure, nutrition, cleanliness, water, and sharply increasing allocation from the earlier Rs 95,000 crore to over Rs 2.45 lakh crore for the coming financial year. This, along with education, forms the basis of creating a strong social capital foundation for this Atmanirbhar Bharat.
The pandemic revealed the inexorable links between lives, livelihoods and economy and tough choices of placing lives above livelihoods. The resulting costs have been significant. So, PM Modi’s Budget focus on healthcare infrastructure expansion by creating critical care facilities in 602 blocks, testing labs in every state and a National Institute of Virology in four regions amounts to an unprecedented expansion of healthcare capacity in India. These investments and expansion by the Modi government signal that never again will India find itself risking citizens’ lives and livelihoods because of a pandemic like this one.
Building India into a manufacturing hub
It is obvious that in the next few years, the Modi government will remain the most credible entity to drive economic growth, having lived up to the expectations so far. So, the most compelling part of this Budget is its design for growth – the focus is driven by significant government capex spending on the one hand — an increase of over 30 per cent to Rs 5.5 lakh crore — and simultaneously putting into place a new architecture to finance and execute National Infrastructure Pipeline of over 7,000 projects on the other.
This new architecture consists of additional resource mobilisation, brownfield asset recycling, creating new infrastructure financing institutions in public and private sectors, deepening corporate bond markets and providing incentives to state governments to start their own asset recycling efforts. This will release capital and, in turn, create new infrastructure assets.
The focus on making India a manufacturing power continues. The results of the successful production-linked incentive (PLI) scheme will kick in from 2022 onwards. This Budget focusses on further expanding manufacturing with mega textile export parks, and addressing the issue of modernising and making more efficient the overall logistics networks of public sector ports and railways. This vision of a modern Atmanirbhar Bharat logistics ecosystem is noticeable and, if built on, promises to be a big catalyst for India becoming a global manufacturing alternative to China.
I was particularly happy that the finance minister dwelled upon how much the government has done for farmers’ welfare and to modernise the agricultural economy, including its record on minimum support price (MSP). The Agriculture Infra Fund idea further expands the government’s commitment to double farmers’ income.
Expanding resource base
The Modi government is also expanding its resource base and going beyond tax revenues and occasional disinvestment by expanding resources to encourage state governments to recycle assets, privatisation of non-strategic investments and land, and ensuring these resources are used to invest in the social capital expenditure of health and education. The principle of putting public assets to use for the good of the public is visible in Budget 2021. That the government is confident of its spending capacity to drive growth is shown by its fiscal consolidation roadmap from the current 9.8 per cent of GDP to 4.5 per cent in the next 4-5 years. I am confident India will surprise on the upside even here.
Despite all the hard work and achievements as a nation over the past 10 months of this pandemic, the distance travelled to get to this point of Budget 2021, the promise of 11 per cent growth in coming years, and a promise of multiple years of growth – it is more than likely that some from the opposition will carp and complain. But don’t be distracted, because the past 10 months have demonstrated India’s and its leadership’s true strengths and capabilities to both those within and outside. There is real restructuring underway of the Indian economy and a reset of our growth aspirations by PM Modi’s Atmanirbhar Bharat vision. We can all be confident that a globally competitive India can aspire to grow and expand and play a bigger role in the changing world order.
The author is a BJP MP and tech entrepreneur. Views are personal.
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