Union Budget 2021: Economists advise on accelerating privatization, emphasis on infrastructure

new Delhi. Prime Minister Narendra Modi held a meeting with prominent economists on Friday before the upcoming general budget. During this time, the Prime Minister mentioned to him the fiscal and other reforms taken by the government during the Kovid-19 epidemic. At the same time, economists insisted on accelerating privatization and increasing expenditure in infrastructure projects. Economists also advised to avoid being challenged by the government’s decisions of international arbitration courts to increase investor confidence in the country. In this pre-budget meeting held through video conferencing with the Prime Minister, economists also said that the government should adopt a liberal approach towards fiscal deficit in the upcoming budget of 2021-22. At this time it is necessary to increase spending for the revival of the Corona virus-affected economy. After the meeting, a note issued by the NITI Aayog states that everyone present in the meeting agreed that all the high frequency indicators are showing strong economic revival.

Expect strong growth in next financial year- This is happening earlier than anticipated. ‘The attendees also broadly believed that strong growth would be achieved next year and they suggested measures to keep this growth rate ahead for India’s socio-economic transformation.’ Prime Minister Narendra Modi, in his address after a two-hour long meeting, mentioned fiscal incentives from the government as well as reforms based on reforms in which historical reforms like agriculture, commercial coal mining and labor laws were carried forward. Modi further said that the management of the Kovid-19 epidemic and its outbreak has created new challenges for all the experts involved in such tasks.

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There was a detailed discussion on self-reliant India. During this time, the Prime Minister also told about his vision behind self-reliant India. Under this, Indian companies will be integrated with the global supply chain in a way never seen before. In the matter of infrastructural development, Modi referred to the National Infrastructure Pipeline (NIP) and said that the government is committed to developing world-class infrastructure facilities. The NITI Aayog note said that the Prime Minister concluded his talk by stating the importance of participation in achieving the goals. He said that such discussions play an important role in setting the macroeconomic agenda.Advice to avoid international arbitration court- A source present in the meeting said, “The government was told that there is a need to increase the confidence of investors. The government should avoid challenging everything (like the decisions of international arbitration courts). This is quite important because despite many reform measures being taken, large scale investment is still not coming in the country. The speakers present in the meeting also stressed on increasing the tax ratio in front of the country’s GDP. He said that this ratio is decreasing since 2008. The government should focus on rationalizing import duty and recapitalization of banks. Some speakers also suggested to create a separate ministry for privatization of public sector undertakings and sale of properties if needed.

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All of them joined the meeting- Prominent economists like Arvind Panagariya, KV Kamat, Rakesh Mohan, Shankar Acharya, Shekhar Shah, Arvind Virmani and Ashok Lahiri were also present at the meeting. Finance Minister Nirmala Sitharaman, Minister of State for Finance Anurag Thakur, Minister of State for Planning Indrajit Singh, NITI Aayog Vice Chairman Rajiv Kumar and NITI Aayog CEO Amitath Kant were also present in the meeting. This meeting is being held before the general budget of 2021-22 on February 1. In this context, it has been a very important meeting. The suggestions given in this can be included in the upcoming budget.

Expect a 7.7 percent drop in GDP- Sources said that some economists suggested to focus on export incentives. He said that it is necessary to promote domestic manufacturing. Most economists insisted on taking concrete steps to increase investor confidence. According to estimates released by the National Statistics Office (NSO) on Thursday, the gross domestic product (GUP) is expected to fall by 7.7 percent in the financial year ending March. Manufacturing and services sector has been affected due to Kovid-19 epidemic. From this, the Indian economy is projected to grow by 4.2 percent in the last year 2019-20.