All attention will be on Nirmala Sitharaman on February 1st as she presents the Union Budget 2021. Since the disastrous outcome 2020 had on the healthcare, political and economic front, many are anticipating how the Union Budget of 2021 will be allocated. The economic impact that the pandemic had on the country’s GDP was vastly disruptive, which began with a severe first-quarter GDP contraction. This is primarily the reason why the Union Budget of 2021 is a crucial and much-awaited event, as participants anticipate more sops from the government for reviving the economy.
The government, on the other hand, faces the difficult task of reviving the economy against the backdrop of inflation and a growing fiscal deficit. Nevertheless, expectations are high especially when it comes to addressing the concerns of the middle-income population, job creation, improving rural growth, boosting investments while laying out the fiscal deficit roadmap in the upcoming budget 2021. To spur investments while stimulating economic growth, the government has already unraveled its plans to boost growth across a variety of sectors like infrastructure, manufacturing, construction.
Since the contraction of GDP in the first quarter, the bounce-back has been quite a pleasant surprise, while also setting the tone for what optimists are predicting to be double-digit growth in the fiscal year of 2022. Though the five-year long-term plan for ₹102 lakh crore that was announced as on infrastructure projects has generated some optimism, more clarification for the same is awaited in the upcoming budget. Here are three key sector-wise expectations from the union budget in 2021.
1. Health care
As a result of the covid-19 pandemic, the need for countrywide investment in its healthcare infrastructure has been spurred. With five hospital beds and 8.6 doctors for every 10,000th individual, India currently ranks at number 155 in the global human development index. Currently, the country’s overall healthcare spending is at 3.6% of its GDP, which is much lower than what emerging countries are spending. For these reasons, it is anticipated that this year’s union budget will rectify this deficiency.
There is no doubt that there exists a lack when it comes to the manpower as well as the infrastructure need for quality care when there is patient overload. Exigencies in the present situation demand a higher level of concentration, especially on vaccination. However, this should not underscore the long-standing requirement of policy direction that completely overhauls the current healthcare ecosystem. The budget is expected to incentivize massive investments in healthcare facilities, not just in Metropolitans but all over the country.
2. International Trade
The broader the trade deficit, the steeper the fall in exports. There is a massive need to expand the export portfolio while limiting imports only to goods that are non-substitutable and essential. While temporary export incentivizing schemes can help, a dedicated economic partnership is needed, especially in the service sector to ensure that Indian talent is put to its best use. One of the key expectations is that the government will refocus its energies on free trade agreements to increase its bilateral trading.
Promoting local manufacturing, and using tariffs to discourage the importing of non-essential goods, while also delivering a time-bound solution for propelling India’s international trade are some of the needs of the hour. It is anticipated that Budget 2021 will address India’s free trade programs like its Regional Comprehensive Economic Partnership.
In their move to explore international markets to create demand for Indian agricultural produce, the government is also expected to strengthen its bilateral partnerships. As an example, under the India-UAE food corridor, multiple steps are being negotiated such as the project to set up eight food processing units funded completely by the UAE in Madhya Pradesh. It is expected that the food corridor will be advantageous to more than 2 million Indian farmers, while also creating an additional 2 lakh jobs within India’s agricultural sector.
To hit these targets, an imminent need of the hour is to create systematic supply chains that can ensure a robust network of local produce that is high quality. The agricultural expansion will not simply increase productivity but shall also provide greater disposable income in the hands of farmers. The budget 2021 is expected to take steps to reduce the gap between farmers and their consumers while opening new markets, and improving logistical inefficiencies in supply chains.