Economic revival initiatives: Union Budget will be a torch with some new sparks to enlighten the economy...?

Nirmala Sitharaman
Image credit: Zee Business

In our previous series of blogs, we lauded the Indian-American economist and Noble laureate Abhijit Bannerjee for his achievement. We've seen that haw he had to face criticism from his motherland itself for his attempt to show the reality.

We also had an opportunity to discuss his suggestions for the revival. So now continuing the flow we will discuss regarding the shift and action from the govt's side. So here we go...

After a series of hugely embarrassing events regarding the economy of our country which indeed disclosed the way of handling the economy by our so-called "Modi Sarkar", the nation is eagerly waiting for that what they have to offer in the upcoming Union Budget 2020.

Since the Narendra Modi government has returned to power with a roaring mandate, the netizens have found out the actual mood of our country's economy which is extremely shocking.

Earlier the government refused to believe on such allegations [which were in fact real] and replied "sab changa si" and "badhu j majama che". But people refused to fall again in the trap.

everything is fine
Image Credit: Reddit

And gradually the country mined some several shocking figures which narrated the sufferings as well as justified the thin layer of myth which existed and functioned as per its purpose for many years.

The Government kept winning several state elections coming in its way and the brand Modi flourished on its max which in turn hatched them the roaring mandate in 2019 general elections and a rocking comeback with more number of seats than 2014.

But it seems that the picture would be totally upside down if the nation would've been known that what the quote "sab changa si" meant before elections.

It is extremely embarrassing for our fellow Indians who voted on the basis of performance are now aware of the truth but now they have nothing big in their hands.

And then comes the acceptance! It was for the first time that the government accepted the reality and showed a bit of their soft side to the criticizers. But the problem is not gonna be fixed just by realizing, the action is needed.

So now looking forward, the next comes the Union Budget 2020 a.k.a the "Bahi Khata of India" and seeing the mood of the government and our PM Modi, we are supposed to get ready for some major changes.

And remember, we don't want the usual gradual moves this time.

economic reforms
Image Credit: KNN India

So ahead of the delivery the supplier went in between the recipients and product managers to bag within the suggestions and make some last-minute changes.

The Conference tables of NITI Aayog are on fire as the Government is brainstorming with several economists, experts and some business icons to hatch out a fruitful budget in the basement of South Block.

Image Credit:  DNA India

Now coming straight to the point, the budget nutshell and the elements within.

GST, the term which on hearing almost bleeds the ears of everyone in the business. Since its implementation in 2018, it is often projected to the public as big tax reform and an economy transforming initiative. Meanwhile, it has ruined it and the combined effect after demonetisation is even worse.

Image Credit:  DNA India

So to tackle this a one time 25% cut in all the GST rates is demanded. In one go it sounds problematic in such time when the GST collection numbers are already not very exciting but in a longer go, it can prove very beneficial to tackle inflation in the market and overcome "tax terrorism".

It can lead to a similar situation as after the cu in corporate taxes took place in September last year which rose the profits of respective companies by 11%.

And nextly talking about liquidity among the mass. It seems that one of the suggestions quoted by Abhijit Bannerjee in which he said that more money has to be put in the hands of mass. The similar demand has been made in front of the govt.

It can be fulfiled by gearing up many infra projects [including construction, housing, irrigation and transport building which can, in turn, generate ample amount of labour demand] and also through Govt schemes.

Image Credit:  DNA India

Now talking about the fiscal deficit, which means in general language the difference between the revenue and expenditure of the government, where the expenditure is always meant to be less than or equal to the revenue otherwise the country slips in debt.

For India it currently the fiscal deficit is 3.4% of the GDP and there's a demand of experts to rise it by a 1/2% for a short term [about 12-18 months]. It will hand over more resources to spend and the sectors like infrastructure would be beneficial to be spent on as due to more demand, it will encourage the industries to invest in it.

And after the demand by PM Modi, each and every ministry is been preparing their five-year plans which will be reviewed by himself.

So one of the most important aspects on which the government is making its mind to focus on is "Infrastructure" and regarding it, we will talk in our next blog

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