UNION BUDGET 2020: A MIXED BAG TO HELP REVIVE THE ECONOMY

Budget 2020-21 is built on three major themes of Aspirational India, Economic Development and Caring India

- Dr. V K Vijayakumar

Union Finance Minister Nir-mala Sitharaman presented the Budget 2020-21 under challenging economic conditions. GDP growth rate has slumped to a 11-year low; unemployment is disturbingly high, tax revenues are far below targets and there is palpable slowdown in businesses activity. RBI has been providing the monetary stimulus through rate cuts; but five rate cuts in succession totaling 1.35 per cent have not produced the expected monetary transmission. With monetary policy becoming less effective, the FM was expected to provide the extra fiscal stimulus through the budget. Did the FM rise to the occasion?

Budget 2020-21 is built on three major themes of Aspirational India, Economic Development and Caring India. The nominal GDP growth rate of 10 per cent for FY 2021 is achievable. Actual fiscal deficit, including off-budget borrowings, would not be 3.8 per cent and 3.5 per cent respectively for FY20 and FY21 as reported, but 4.5 per cent and 4.3 per cent respectively if we factor in the off-budget borrowings of PSU entities like the FCI. If we take the total deficit of the Centre, the states and the borrowings of the PSUs like FCI, then the total Public Sector Borrowing