Union Budget to be challenging and a critical one

S Sriram, Chief Strategy Officer, iValue InfoSolutions

"Union Budget for 2021-22 is going to be challenging and a critical one with fiscal deficit challenges on one hand along with the need to revive/sustain growth momentum across the board. Q1, Fy21 saw the biggest contraction by over 27% in GDP. Q2 was a good recovery moving H1 GDP to -11.6%. H2 GDP projection is estimated at 3.4% GDP growth implying Fy21 GD P numbers at -4.2%. Even before pandemic hit us, the GDP was decelerating steadily from 8.2% in Fy16 to 4.2% in Fy20 and now moving down to -4.2% in Fy21 which is an 8% fall in a year. Many small businesses have shut and many more have downsized in a big way leading to employment losses never seen in our history. The key need hence is to revive the economy, business and employment to drive consumption. Fiscal deficit worries need to be de-prioritized with a clear focus on growth revival and job creation.

Government has to lead recovery through CapEx both at central and state level. More money has to be put in the hands of business and people through direct and indirect tax cuts, to enhance spends. We have seen only corporate tax cut but nothing significant on personal and indirect tax side. Special incentive schemes need to be extended to businesses increasing headcount. Technology investments came as a saviour for businesses due to the sudden lockdown to manage the business continuity. With awareness at an all-time high on the need to go digital and online, Government has to incentivise technology adoption drive for all sizes of business in the near term to build resilience for managing possible second/third waves. The government also needs to take technology investments to overdrive mode for enhancing productivity, transparency and efficacy of its interface with business and people. Initiatives like 5G rollout needs to be fast-tracked with special focus around areas such as cybersecurity, AI, ML, IoT, Analytics, block-chain, etc. for a sustainable recovery with a view to keep India ahead in the coming years."