SHORT SHRIFT TO RURAL ECONOMY

The Union Budget 2021-22 prioritises spending, but fails to provide agriculture and the rural sector the boost needed to revive growth

- SHAGUN KAPIL, PRATHA JHAWAR, ISHAN KUKRETI AND SUSHMITA SENGUPTA

THE CONTEXT of the Union Budget 2021-22 makes it exceptional. A raging pandemic struck when the country was already under economic slowdown and a severe agrarian crisis, pulling down consumption that accounts for over 90 per cent of GDP (gross domestic product). The Centre estimates that the GDP for 2021-22 will shrink by 7.7 per cent, the sharpest decline since 1952. Technically, this is India’s first budget in the recent past to be presented amid an economic recession triggered by a health crisis, like elsewhere in the world. The Economic Survey 2020-21 laid the foundation of the Budget when it recommended that “in an economy operating below full capacity, the supply of savings may grow from greater government spending through demand creation and thereby greater employment”. Hence, it is but natural to track the Budget on the proposed commitment to expenditure that would trigger employment and thus spending. Did the Budget live up to this expectation?

The effective increase in the fiscal stimulus is only 5 per cent. In contrast, some economies have invested up to 25 per cent of their GDP to fight the pandemic. R Ramakumar, professor, Centre for Study of Developing Economies, Tata Institute of Social Sciences, Mumbai, says, “It is surprising as the government alone has the resources to revive the economy by giving more to the people. Instead, it chose to go on an austerity drive.”