Greater Expectations

FM has to decide whether to feel optimistic or pessimistic about the future. Either way, she has to focus on reforms and growth

- Vishav

Finance Minister Nirmala Sitharaman is angry and frustrated. For months, she told people close to her that critics, especially the media, overstated theeconomic problems, and underplayed the good news. In her mind, the Centre did everything it could to revive growth in this crisis. The results are there for everyone to see. According to her, and the Reserve Bank of India (RBI), the country’s economy will witness a V-shaped recovery, and be back on the high-growth track by mid-2021.

However, some experts aren’t sure. They feel that while a few sectors can bounce back early, others will require regular policy interventions until 2022. Even the central bank seems divided.

One of its senior officials predicted growth stability to come only in 2022, which may point to more of a U-shaped trajectory. The real fear is that by the end of the pandemic, the informal sector, which accounts for a large proportion of Gross Domestic Product (GDP), investments, and jobs, may be decimated.

The contours of Budget 2021, Sitharaman’s third one, will be dictated by this contradiction, and the dichotomy of views. If the FM is convinced of a quick revival within the next quarter or so, her speech will be an incremental extension of the decisions and actions, which include the various stimulus packages, in the past nine months. She will feel that she has to merely tread the same path of policy reforms, investment boosters, and demand rejuvenation.