Budget 2022: Need to increase spending on important schemes; Increase in direct taxes will pave the way

Any budget is an equitable mix of economy and immediate political needs. This time the budget will also be similar. In fact, this time the budget will be inclined a little more towards political needs, because within 10 days of the presentation of the budget, assembly elections will start in some states.

Budget 2022

any budget (Budget 2022) Economy (economy) and an equitable mix of immediate political needs. This time the budget will also be similar. In fact, this time the budget will be inclined a little more towards political needs, because within 10 days of the presentation of the budget, assembly elections will start in some states. The most important state for the ruling party BJP is Uttar Pradesh, where youth (Youth)Workers and farmers are continuously agitating. Apart from the families of farmers and youth, most of the population of the state is also affected in some way or the other. Therefore, there will definitely be a possibility of addressing the concerns of these groups in the budget.

Income, employment and privatization are the major issues. It has come out from many recent surveys that while the unemployment rate has remained at the highest level, due to Corona, the income of about 80 percent of the people, including farmers and laborers, has fallen drastically. At least 60 per cent people are now poor as compared to 2015-16. Those who got free food items, cooking gas and some cash, they definitely benefited, but this system also did not prove to be fully effective to deal with this challenge.

Officially, the GDP of the second quarter of 2021-22 has come down to the level of 2019-20. But this situation cannot be said about unorganized and connectivity services. This is the reason that even after the weakening of the third wave as compared to the second wave of Corona, the difficulty remains the same. Customer confidence and capacity utilization rates in the organized sectors of the economy have not reached pre-pandemic levels. This is the reason why the recovery of the economy is slowing down. These issues need to be addressed in the budget for 2022-23.

It is expected from any budget that along with removing the immediate difficulties, it should also plan for the future. Since the problems being faced are basic, the size of the budget has to be increased substantially. In 2021-22, there was a marginal increase in the size of the budget as compared to the revised estimates for 2020-21.

Moreover, the government has not aggressively spent the allocated funds. For example, the available data till November 2021 shows that capital expenditure has lagged far behind. Now that inflation is at its peak, in reality the government is far behind its target. But there has been a jump in tax collections due to inflation and growth of corporate profits and organized sector. If all these reasons are seen together, then it can be said that the fiscal deficit which should have been till November 2021 is much less than that. But this is not a good thing, because the government did not get the expected boost to the economy.

What can the budget of 2022-23 give?

Due to persistent inflation, the size of the 2022-23 budget will have to be increased significantly. So that more money can be allocated for the really important sectors of the economy. Due to which not only the concerned sector but the overall economy can get a boost. To boost employment, more budget will have to be allocated for areas like MNREGA, rural infrastructure as well as education and health. An employment generation scheme will have to be announced for urban areas on the lines of rural employment guarantee. The crisis in the agricultural sectors due to cost escalation will have to be overcome. I

Since the prices of money, fertilizers etc. have risen sharply, more subsidized budgets will be required. Micro sector will have to provide working capital as it provides 97.5 per cent of MSME employment and is in crisis. It needs to be differentiated from the small and medium sectors as these sectors take away all the concessions given to MSMEs. Also some announcement has to be made about how to deal with cryptos as they can destabilize financial markets and banks.

direct tax to be increased

Adequate resources will be required to carry forward the above schemes, otherwise the fiscal deficit will increase significantly. Indirect taxes cannot be used because it is a recession created by inflation. Disinvestment would not be a good idea in the current gloomy situation. So the only source left is direct taxes, especially at a time when the affluent classes have performed well. A judicious mix of wealth duty and gift tax along with high fiscal deficit and wealth tax is necessary. The corona pandemic has taught us that we are a group. So, those who have gained have to come forward to help those who have lost something. Those who think of taxes as a distribution of poverty are short-sighted because if the poor get more, demand will revive and the rich will benefit.

(The author is Malcolm Adisheshaya Chair Professor at the Institute of Social Sciences and Professor of Economics at JNU.)

read this also: Budget 2022: New steps should be taken to promote startups, these are the expectations of the industry from Finance Minister Sitharaman

read this also: Budget 2022: Know what domestic investors and foreign investors do on the budget day?

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