Table of Contents
Fiscal deficit
- Even after the government’s stated glide path of reducing the fiscal deficit over 5 years, the deficit comes down to only 4.5% by 2026.
- This leaves open the danger of a high debt-to-GDP ratio for a few years.
- And if inflation and interest rates were to flare up and growth does not oblige, there is the making of a debt trap
- Growth simply has to kick in. Else we are in trouble.
- What if an external crisis manifests before growth picks up sustainably.
Borrowings & rating downgrade
- The govt is planning to borrow Rs. 12 lakh crore out of which Rs 9.2 lakh crore government borrowing through bonds.
- It can lead to downgrade in India’s rating. The government may have assessed this as “unlikely”.
- But if it comes, may lead to high interest rate for govt.
Introduction of cess
- Introduced a new cess — the Agriculture Infrastructure and Development Cess — in the 2021 Budget.
- The government, however, clarified the cess will not increase the prices of commodities.
- Govt is reducing the corresponding excise and customs duties on those products.
- To garner Rs 30,000 crore
- The cess was imposed with immediate effect on petrol ( ₹2.5 per litre), diesel ( ₹4 per litre) and 12 other agricultural and non-agricultural commodities,
- Including gold, silver, alcoholic beverages, crude edible oils, apple, coal, fertilizers, some varieties of pulses and cotton.
Inequitable growth not addressed
- There is no major attempt to redistribute incomes by increasing taxes on high income groups, as was the case earlier.
- There has been no specific support for sectors stressed due to the pandemic like the hospitality sector
Allocation For Education
- The proposed spending on education stands the lowest in the last three years.
- It was slashed to ₹93,224 crores from ₹99,311 crores in 2020-21.
- Most importantly, school education has been hit by the biggest cut of almost ₹5,000 crores.
- This reduced spending has come at a time when the education system is in dire need to upgrade with the COVID-19 pandemic causing disruption in students’ learning and education.
- Interestingly, the Ministry of Education is also set to start implementing the measures listed under the National Education Policy, 2020, which advocates increased expenditure on education.
Q) Which of the following statements regarding Budget 2021 is correct?
- Revenue expenditure is more than the capital expenditure.
- Collection from capital receipts is more than the revenue receipts.
- 1 only
- 2 only
- Both 1 & 2
- None of the above
Budget 2021 – 2022 | Free PDF
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