Behind the Budget numbers: A qualitative shift in expenditure that will aid recovery

Economy


Finance minister Nirmala Sitharaman‘s Budget estimates for 2021-22 rest on buoyant revenue collection aided by a 14.4 per cent surge in nominal growth. The bounce back will help her in maintaining fiscal prudence and stick to the consolidation road map outlined in the Budget.

The total expenditure of Rs 34.8 lakh crore is just a marginal increase from the Rs 34.5 lakh crore expected this year. But the boost in capital expenditure is noteworthy as it tends to have a multiplier effect on the economy.

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Capital expenditure will increase to Rs 5.5 lakh crore from Rs 4.4 lakh crore in the current fiscal. The qualitative nature of expenditure will help lay the foundation of strong recovery in the next fiscal year.

There is a big push for capital expenditure in roads and railways in this Budget. A Development Financial Institution is on the cards that will finance the burgeoning needs of the infrastructure sector.

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Higher allocations in healthcare and for clean drinking water have been made possible with expected reduction in the subsidy bill for 2021-22.

Food subsidy for 2021-22 is pegged at Rs 2.4 lakh crore as compared to Rs 4.2 lakh crore for the current fiscal.

The key to make all this happen is revenue buoyancy. Gross tax receipts are pegged at Rs 22.2 lakh crore, a jump of 16.7%.

A further break down of these numbers will show that with a sharp bounce back, the figures are achievable.

Except for excise, all other heads are expected to register an increase. A reduction in road and infra cess could bring excise collection down by 7% in 2021-22.

The GST collection figures have shown a record increase in the months of December and January. That should give the finance minister confidence about her Budget math.

The revenue stream will further be shored up by a robust divestment programme with sales of marquee assets like Air India expected to take off in the coming fiscal. The move to privatise two public sector banks and one general insurer sends a positive signal.

The revenue from divestment is kept at Rs 1.75 lakh crore.

Net market borrowings will come down to Rs 9.2 lakh crore from Rs 10.6 lakh crore expected in the current fiscal.



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