Against the backdrop of the disruption caused by Covid-19 to an economy that was already weak with growth tapering, as everyone looked forward to a budget that prioritizes growth over fiscal prudence, the Finance Minister presented a budget which indeed intends to step up public investment in infrastructure by about 34.5% in the coming fiscal compared to the FY21 to revive sentiments and get the economy back on track.
The infrastructure spending by the government, as advocated by the Economic Survey, is supposed to have higher fiscal multipliers because of which it is likely to not only ‘crowd in’ private investment but also augment the immediately required aggregate demand. It is also hoped to address the structural weaknesses that are hitherto holding back the growth potential. Thus, the Finance Minister could boldly declare a much higher than expected fiscal deficit of 9.5% of GDP for FY21 and 6.8% for FY22.
Another noteworthy feature of the budget speech is that out of the six pillars on which the vision of the budget is said to rest, health is announced as the first pillar. Accordingly, it allocated ₹ 223,846 cr towards ‘health and wellbeing’ of people as against ₹ 94,452 cr—an increase of 137%—spent in 2020-21. But there is a catch: it being only a ‘road map’ for spending over the coming six years, the yearly outlay, which alone matters for the current year, lost sight amidst the whopping allocation figures. For, allocation to the Ministry of Health and Family Welfare for the current year does not reveal any significant rise.