By Uday Shankar
After the gloom of 2020, hope and excitement herald the arrival of 2021. The government has authorized extended-awaited vaccines that will, when and for all, finish the raging Covid-19 pandemic. The world’s biggest immunisation programme is imminent, and the time is also ripe to rebuild a stressed economy.
The government’s prime priority for 2021 must be on pulling the nation via the final phase of the pandemic and allow faster financial recovery to pre-Covid levels of development. The government took quite a few positive methods in this path final year. Successive ‘Atmanirbhar Bharat’ packages had been timely and offered significantly-necessary relief to the market. Some sectors have reported indicators of recovery when other folks, like travel and tourism, continue to stay beneath serious pressure. Industries that are recovering require to be supported to accelerate their development and their struggling counterparts require policy help to get back on their feet. The require for continuous succour to the economy as a result remains, and we anticipate to see the subsequent set of stimulus measures incorporated in the upcoming Union Budget.
Foremost, the Budget should prioritise development-oriented measures more than fiscal considerations. It should concentrate on employment generation and by placing more dollars in the hands of consumers—the twin engines that will increase demand. Infrastructure is 1 sector that has the possible to produce important employment possibilities and higher development. Projects beneath the National Infrastructure Pipeline must be front-ended, with the aim that 50% of them must be completed in the subsequent two years. The government must also contemplate introducing an MNREGA-variety scheme for the urban poor, who suffered the most in 2020 due to the pandemic-induced lockdown. They must be involving them in public operates projects such as sanitation, tree plantation, and the upkeep of roads and public areas, and so on. Besides these, the take-house salary of formal sector workers can be elevated by implementing measures such as interest subvention on housing loans, relaxing the terms of PF contribution for workers and introducing a 3-year vacation for ESI contributions.
There is a require to widen the monetary avenues for extended gestation projects in order to meet infrastructure improvement targets. Therefore, it is crucial to market non-government sources of finance to the greatest extent doable. The incentive framework, introduced final year for investments in infrastructure projects by sovereign wealth funds and pension funds, can be widened to attract capital from all sources. A Development Finance Institution, equivalent to the National Investment and Infrastructure Fund (NIIF), can be thought of to finance mid-sized corporations. Such an institution can raise dollars from sovereign wealth funds and other extended-term institutional investors. Low-expense credit can be the fuel that powers greenfield projects of market, and the government may well contemplate utilising a smaller element of foreign exchange reserves for this objective. There is an urgent require for setting up of more banks in order to strengthen the true economy. The time is ripe to convert nicely-governed NBFCs into complete-fledged banks, and substantial corporate/industrial groups must be permitted to enter the banking sector.
India’s financial development is contingent on the robust overall health of its social sector. Put basically, it desires to be transformed so that each and every eligible Indian can advantage from the government’s welfare schemes, as nicely as reap the fruits of financial progress. It was heartening to see the government implement the new National Education Policy—an crucial 1st step that encourages private participation in the sector. However, significantly more desires to be carried out to obtain this objective. For instance, for-profit Higher Educational Institutes (HEIs) must be permitted to be set up, and their costs be determined by market place forces. The government must also concentrate its energies and spending on revamping India’s healthcare infrastructure, whose fragility was exposed by the Covid-19 pandemic.
Without a moment’s delay, the spending on India’s public overall health facilities must be enhanced with additional spending of .5% of GDP each and every year for the subsequent 5 years. Private healthcare providers, on the other hand, must be appropriately incentivised by extending tax positive aspects, factoring in the costs they incurred on ability improvement activities to fight the Covid-19 crisis.
The focused strategy becoming adopted for the champion sectors, via the PLI and PMP schemes, is strategic and essential to becoming self-reliant. We require equivalent initiatives to strengthen the domestic ecosystem for future development drivers. For instance, get started-ups whose corporations are primarily based on the use of artificial intelligence, machine understanding and other future digital technologies should be incentivised. And, seamless access to robust wireless web services is essential to their good results. The government should allocate substantial funds to make sure that the Prime Minister’s Wi-fi Access Network Interface is implemented effectively. This game-altering project will spawn numerous smaller corporations which can leverage the connectivity provided.
As the finance minister spells out the Budget for 2021-22, financial revival and development must be prioritised irrespective of the monetary considerations. New non-tax avenues must be explored to raise more sources. Besides accelerating the disinvestment programme, the government may well contemplate issuing extended-term pandemic bonds, pledge PSU shares to RBI, monetise non-core assets of government departments as nicely as ‘enemy properties’.
It is that the Covid-19 pandemic has designed an unprecedented financial crisis. However, as Winston Churchill remarked, “We must never let a good crisis go to waste”. Budget 2021-22 is a golden chance to usher in landmark reforms that will unleash the animal spirits of India’s economy. It is also a moment for the nation to bury the ghosts of 2020 and renew its tryst with destiny. The honourable FM’s Budget must lay the foundation for India to embark on that journey.
The author is President, FICCI
Views are individual