The Budget comes at a time when India’s employment rate has plummeted. Historic unemployment and faltering growth not only exacerbated inequalities of income and wealth but also led to an increase in the absolute number of poor people in India — an unprecedented and embarrassing reversal in poverty alleviation. In the years leading up to Covid-led technical recession, there was much disagreement about the government’s approach.
The Economic Survey, tabled just a day before Sitharaman will announce the Union Budget 2022-23, emphasized the need for the government to provide a buffer against stresses such as the uncertainty in the global environment, the cycle of liquidity withdrawal by major central banks, etc.
The Survey has pegged that in the government’s efforts to build a post-Covid economy, demand measures alone will not provide the solution. This is based mainly on the fact that a wide variety of factors such as consumer behaviour, technological developments, geo-politics, supply-chains, climate change could interact in unpredictable ways, and India will need to develop a supply-side strategy to deal. with the long-term unpredictability of the post-Covid world.
Last year, the government decided to set up an asset reconstruction company that will take over the bad loans of banks, giving them the flexibility to finance the economic recovery. Just days ahead of the Union Budget 2022-23, this proposal to set up a ‘bad bank’ was cleared. State Bank of India Chairman Dinesh Khara said the proposed ‘bad bank’ has “now” received all necessary permissions including from the Reserve Bank of India. It is ready to commence operations with 15 cases worth Rs 50,335 crore to be transferred by March 31, he said.
Must-Reads on Budget 2022-23: