Growth, growth and more Growth should be the mantra
Job opportunities for job seekers and the creation of more job givers must be the focus, the focus on seeing the big picture will drive economic expansion.
When Finance Minister Nirmala Sitharaman rises to present her fourth rolling budget on February 1, the dedicated app, tablet or “bahri katha” will most likely sing “Naya Bharat” – New India – in a big way. This sweet chant should not be missed for the determined bid she will make in laying down threadbare plans to build the ‘New India’ of her leader, Prime Minister Narendra Modi’s dreams. As the country prepares for the next cycle of economic prosperity, 75 years after independence, this plan and vision to make India a global economic powerhouse would certainly be significant. Finance Minister Sitharaman, who is credited with steering the economy through the Covid-19 pandemic, cannot afford to ignore or sideline the challenges that beset India’s economy in the medium term. Well, if the third wave of coronavirus infections fades as experts believe, it should signal a comprehensive plan to rebuild what has been lost to the pandemic and feed the dream of economic muscle by 5 trillions of dollars that drives global growth impulses. GDP growth of 9.2% projected for 2021-22, the highest in 17 years, should serve as a basis for rolling out the big picture while firmly gripping the handle to maintain this growth momentum for the next five years. consecutive years. Crude prices hitting $100 from the current $86 a barrel could be the first big challenge it needs to factor into its budget. Fuel-induced inflationary pressures are what could dampen his big plans. Let’s not forget that fuel inflation was 10.95% in December 2021, 13.35% in November 2021 and 14.35%. With oil imports crossing $100 billion again in the next fiscal year, controlling consumer-centric inflation will still be a tricky proposition given that it hit 5.59% in December 2021. Pointing to inflationary pressures leading to interest rate hikes is not to distract the finance minister from her top priority of putting the economy on a high growth path. We should be able to live with price inflation of 4-6% over the next 3 years, even if Nirmala Sitharaman methodically proceeds with fiscal consolidation putting the economy in firm expansion mode. Unlike the United States and Europe which are swept up in 30-40 years of high consumer inflation, India still has room to maneuver in managing inflation as well as moderating interest rates. ‘interest. Growth, growth and more growth should be the only mantra dictating the finance minister’s budget package which has been side-tracked for the past two years due to the handling of Covid-19 and related spending. A conscious call will have to be taken on initial capital and infrastructure investments with an increase of at least 10% in budget expenditure which has been set at Rs 34,83,236 crore for 2021-2022. The government will have to support national and foreign investors to maintain a healthy growth dynamic with an expansion of industry, services and exports. Given that farmers have delivered and continue to do so with agricultural growth of around 4%, the focus should be on industrial expansion and double-digit growth in services with a focus on external markets . In this big picture, keeping the budget deficit at 6% may not be child’s play in the next financial year, but it is doable given that the 6.8% target set for 2021 -2022 is about to be reached. Healthy growth in Goods and Services Tax revenues is a major asset in managing the deficit. About the collection of Rs 1.29 lakh crore in December 2021 and Rs 1.31 lakh crore the previous month only hints at pent-up consumer demand which is driving sales and consequent revenue. Merchandise exports at around $400 billion in 2021-22 are again a possibility. From January 1 to 7, 2022 alone, exports increased by around 25% to $7.63 billion. Even in December 2021, India recorded export growth of 36.2% to $23.8 billion in just three weeks. This momentum needs to be maintained to hit a potential $500 billion over the next fiscal year as a whole. Putting together a big package to increase India’s share of world merchandise exports is something Finance Minister Nirmala Sitharaman can do. Given the adage that taxes are not exported, raising tax revenue through exports is not what should happen. Instead, export-linked manufacturing will help increase job opportunities that have been hard to come by. The establishment of an export-related manufacturing infrastructure will drive growth in the near future. This brings us to the oft-discussed question of growth versus employment. Without creating jobs for millions of budding youths or an environment for job givers, the $5 trillion dream means nothing to 1.4 billion Indians on the move. Official data shows that 1.39 million net new jobs were created in November 2021, recording a 37.9% year-on-year increase. Finance Minister Sitharaman will have to create opportunities for workers in the informal sector where millions of people may have to enter manufacturing, services and the production of export-related goods. It has to get a bit innovative, if its budget package is to be accepted and supported. (The author is director and CEO of the New Delhi-based nonpartisan think tank, Center for Integrated & Holistic Studies)