V for Vindication: A Budget for V-shaped recovery

By Gajendra Singh Shekhawat
Since the past few days a phrase that had caught the fancy of many people from both sides of the political fence is ‘V-shaped recovery’. If I jog my mind, the last time the alphabet ‘V’ had found itself amidst such anticipation was when the artsy British Film ‘V for Vendetta’ released. Before the Budget, many intellectuals from opposite ideologies had advocated a ‘V for Vendetta’ Budget—increase income taxes, heavily tax the corporates, decrease government spending, etc.

But if I have to put a label on this Budget, I would call it the ‘V for Vindication’ Budget. This Budget is sheer vindication of this government’s approach towards economic revival. What the government has aimed to achieve through this Budget is indeed courageous; it surely has not missed the wood for the trees. The Budget came amidst a pandemic that had ravaged much of the last year. The Indian economy contracted by 7%, revenue dried up, spending soared, demand stalled, exports flattened and business investments came to a standstill.

With the depletion of revenue, the only way by which the country was kept afloat was government expenditure. Much of this expenditure was in providing foodgrains to 800 million people under the Pradhan Mantri Garib Kalyan Yojana. In the face of such fiscal challenge, any other government would have been on its knees, pressured to overtly please its constituents or take recourse in economic patchwork. But this government accepted the challenge of a burgeoning fiscal deficit of 9.5% to focus on productive growth.

The government astutely increased capital expenditure, or expenditure to create productive assets by 26%, to an unprecedented Rs 5.5 lakh crore while decreasing the non-productive revenue expenditure substantially. An increase in creation of productive assets has a multiplier impact of jobs and spending, thus this Budget is much more than what meets an untrained eye.

When time called for stepping up and taking responsibility for revival, the government took a brave stance and provided buoyancy to the other sectors to recover at its own expense. This risk is indeed a certificate of trust and appreciation that the government has placed on the entrepreneurial spirit of its people.

When the Covid-19 pandemic disrupted everything, many countries went into panic spending, while India spent incrementally—this cautious yet pragmatic approach coupled with the foresight of the government saw India emerging as a lone bright spot in the post-Covid-19 era. The only thing that could further augment investor confidence on India was a dream Budget, and that’s why the bull of the stock market has not stopped running since.
One logical question that followed was: If the government is not increasing taxes, then how will it be able to fund this capital expenditure? The answer lies in disinvestment, IPOs and unlocking the potential of assets that the government holds. Therefore, this Budget has a disinvestment target of Rs 1.75 lakh crore, monetisation of assets held by the government and states’ PSUs.

The Covid-19 pandemic laid bare before our eyes the inadequacy of our health infrastructure—the world feared absolute pandemonium but the government’s deft handling of the pandemic left many global opinion makers at loss of words. In contrast to western countries, India emerged victorious, albeit with a realisation that we have to strengthen our health infrastructure; after all, the Prime Minister put it ‘Jaan hai toh jahan hai’. The Budget hiked the allocation towards health by a whopping 137% to Rs 2.23 lakh crore—and a one-time allocation of Rs 35,000 crore for Covid-19 vaccination, coupled with a new scheme, the PM Atmanirbhar Swasth Bharat Yojana, with an outlay of Rs 64,180 crore will mark a paradigm shift in the health systems of the country.

As a stamp of approval for the Jal Shakti Ministry’s tremendous work of providing tap connections to 3.3 crore households, a number more than the total tap connections provided in the last 70 years, Rs 2,87,000 crore has been allocated to the Jal Jeevan Mission (Urban). Also, Rs 1.41 lakh crore for Swachh Bharat 2.0 for complete faecal and waste water management will push India towards holistic sanitation.

Broadening the ambit of providing social benefits to every households, the Ujjwala Yojana has been given a target of 1 crore more households. The allocation of Rs 16.5 lakh crore to agricultural credit, Rs 40,000 crore to rural infrastructure fund, doubling the funds for micro-irrigation and bringing 1,000 more mandis into the e-NAM system are statements of commitment towards our annadatas.

The voluntary vehicle scrapping policy is a shot in the arm that the automobile sector needed; the phasing out of unfit vehicles will generate new demand for the auto industry, which will translate into massive benefits throughout the value chain. The PLI scheme worth Rs 1.97 lakh crore has been broadened to 13 sectors; the confidence shown on manufacturers in 2020 through PLI schemes was well rewarded and this Budget envisions India as a world-class manufacturing hub for the world.

The Railways has been given the highest allocation of Rs 1.1 lakh crore. The Railways had ensured that transportation of goods went on unhindered during the pandemic, and it is expected to chug India forward in 2021.

The numerous steps taken for reinvigoration of the Indian economy in this year’s Budget will take much more ink and space, but one thing is certain—the government could have gone for a survival Budget or a recovery Budget, but it showed the gumption to think long-term and went for a growth Budget, a resurgence Budget. India has finally unabashedly embraced growth, and the Budget is one major step towards the cherished dream of the country, the dream of atmanirbharta.

The author is minister of Jal Shakti, Government of India. Views are personal