All eyes on 1 February as pre-budget talks conclude1 min read . Updated: 24 Dec 2020, 07:25 AM IST
- Finance ministry gets suggestions on fiscal policy, infra spending, ease of doing biz
Finance minister Nirmala Sitharaman on Wednesday concluded a series of pre-budget consultations with experts and business executives to prepare for the 2021-22 Union Budget. Sitharaman said her third budget presentation on 1 February under the shadow of the pandemic will be one like “never-before".
“The stakeholder groups made several suggestions on various subjects that included fiscal policy, including taxation; bond markets; insurance; infrastructure spending; health and education budget; social protection; skilling; water harvesting and conservation; sanitation; MGNREGA; public distribution system; ease of doing business; production-linked investment scheme, exports; branding of ‘Made in India’ products, public sector delivery mechanisms; innovation, green growth; non-polluting sources of energy and vehicles, among others," the finance ministry said in a statement.
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Sitharaman has indicated that the FY22 budget will focus on infrastructure, which is considered a growth multiplier. While most economists have projected the economy to contract by 7-9% in 2020-21, the finance ministry expects the it to bounce back to grow in double digits on a low base in the following year.
The Indian economy shrank 7.5% in the September quarter from a record contraction of 23.9% in the preceding June quarter following the covid-19 outbreak and subsequent nationwide lockdown. The Reserve Bank of India expects the economy to post 0.1% growth in the December quarter and 0.7% in the three months ended March, to end FY21 with a 7.5% contraction. The finance ministry also expects marginal growth in the economy from the December quarter.
In the first pre-budget consultation with the finance minister and top ministry officials, industrialists called for a fresh round of fiscal stimulus to support economic growth. Confederation of Indian Industry recommended a three-pronged strategy for budget 2021-22 centring around growth, fiscal consolidation and strengthening of the financial sector that would help overcome the impact of covid-19 on the economy, while the Federation of Indian Chambers of Commerce urged the Centre to consider converging the existing GST rates into three slabs, to reduce complexity and the probability of disputes.
“The participants lauded the government’s efforts to flatten the covid-19 curve and a strong recovery in economic growth in the second quarter of 2020-21. They further stated that India is among very few countries whose economic activity has risen with declining pandemic induced fatalities," the finance ministry said.