On 6th February 2021, Pune International Centre (PIC) organized a discussion on the Union Budget 2021-2022 presented by the Hon’ble Finance Minister, Ms. Nirmala Sitaraman in Lok Sabha on 1st February 2021.
Dr. Ajit Ranade, Chief Economist, Aditya Birla Group and Member, PIC, chaired this discussion. The panel comprised economists, Dr. Pradeep Apte, Gokhale Institute of Politics and Economics, Dr. Pinaki Chakraborty, Director, National Institute of Public Finance and Policy (NIPFP), Dr. Shubhashis Gangopadhyay, Director, India Development Foundation (IDF) and Prof. Sanjay Basu, Associate Professor and Associate Dean of Research and Finance, National Institute of Bank Management (NIBM).
Dr. Ranade opened by applauding the government for transparency in the budget. He welcomed the move towards stepping up not only disinvestment but also privatization. Prof. Apte mentioned that the nature and composition of expenditure had not undergone significant change. There was a fair degree of stabilization, except for an unprecedented jump in subsidy in Fertilizers – which was intriguing. A lot more could have been done as regards excise duty. Further, he said that for migrant worker registration, there was a need for a wider network system. State governments need additional directions and resources as they would implement such schemes.
Dr. Chakraborty highlighted the fiscal aspects of the budget. He emphasized that caution was required in the approach to and maintaining the sustainability of the revenue deficit. He pointed out that we were entering a new model of high debt, high deficit and high growth. Dr. Shubhashis Gangopadhyay mentioned that India needed more police, teachers and doctors, and that the private sector could not be relied on for these services. To generate demand in the economy, focus on health and infrastructure was good. He appreciated the move of monetizing underutilized and unused resources of public sector units and government undertakings. He also raised the issue of minimum support price (MSP) and feasibility of the announcement of providing MSP at 1.5 times the cost of production.
Prof. Basu noted that the announcement of setting up a Development Financial Institution was a good move, which would ease financing for infrastructure projects. According to him, bank privatization was neither necessary nor sufficient. Better debt resolution and recovery would be vital for the success of flagging banks. Further, he said that to sustain momentum in food credit and as a signal of commitment to recent reforms, allocations for agriculture should have been higher.
The panel discussion was followed by a Q & A session and a vote of thanks.