With the opening of the economy, the Indian economy is expected to grow rapidly as business activity increases, disruptions decrease and vaccines are introduced. But the pace of the economy going forward will also largely depend on the 2021-22 budget. India surpassed Britain to become the world’s fifth largest economy in 2015, but business was derailed due to epidemics and lockdowns, spending fell, investment fell, employment fell and so on. . The overall effect was that by 2020, India would have slipped to sixth place.
Read more: If the stock market is at the highest level, higher return on investment is possible
The new financial year will start from April this year. A month later, Finance Minister Nirmala Sitharaman will present the budget for the new fiscal. In such a scenario, the focus of the budget will be to revive the economy from the recession. Analysts believe that the government’s spending plan, especially in the infrastructure and social sectors, and the pace of relief for groups affected by epidemics and lockdowns will be revised.
Even before the epidemic, India’s economy began to slow down
Even before the onset of the corona virus epidemic, the Indian economy began to slow down. In 2012, the pace of economic growth slowed to 4.2 percent, down more than a decade from 6.1 percent a year earlier. The epidemic brought about a humanitarian and economic catastrophe for India with the death of nearly one and a half lakh people. Although the number of deaths per million was significantly lower than in Europe and America, the economic impact was even more severe.
GDP reached the abyss in April-June
In April-June, GDP was 23.9 percent below its 2019 level. It said about a quarter of the country’s economic activity was wiped out, with global demand disappearing and domestic demand breaking down with one drastic national lockdown after another. A .5.5 percent decline in GDP in the following quarter pushed Asia’s third-largest economy into an unprecedented recession.
Agriculture boosted India’s economic condition
Subsequently restrictions were gradually lifted, enabling many parts of the economy to get back on track. However, production remains below the pre-epidemic level. Meanwhile, while agriculture has become the driver of India’s economic recovery, including rich grain production, government stimulus spending has been more restrained than other major economies in response to the Covid-19 crisis.
29.77 lakh crore stimulus package
Sitharaman has announced an incentive package of Rs 29.77 lakh crore or 15 per cent of gross domestic product (GDP). This is equivalent to the total budget expenditure of the government for the current financial year, but it is estimated to be 0.7 per cent for incentive programs and about 1.3 per cent of the actual GDP expenditure for five years.
Analysts say the spending is inadequate
Most analysts see this cost as insufficient. In such a scenario, the pace of the economy in the near future will largely depend on the forthcoming budget. This has happened due to low revenue of the government. Due to the lockdown, the government could not even increase the resources to compensate the GST losses of the states, which had to be met in the end.