What Must be the Priority of the Budget?

As the economy steps into the third year of the pandemic, the overall scenario is far from encouraging. The International Monetary Fund estimates that the global growth rate will slow down from 5.9% in 2021 to 4.4% in 2022 and further to 3.8% in 2023. India’s growth rate is also set to slide from 9% each in 2020–21 and 2021–22 to 7.1% in 2022–23.

Similarly, the first advance estimates of the gross domestic product (GDP) for 2021–22 by the National Statistical Office also show that the economy remains weak with many downside risks. The GDP in real terms is to pick up only marginally by 1.3% in 2021–22, over the pre-pandemic period (2019–20), after plunging by 7.3% in 2020–21. This feeble recovery was mainly fuelled by a double-digit growth in government spending over the pre-pandemic levels and a marginal pickup in fixed capital investments. However, a major reason for worry is that the real private consumption expenditure, which accounts for the bulk of the demand in the economy, still remains marginally lower than the pre-pandemic level in 2021–22.