Finance Minister Nirmala Sitharaman will present the fourth budget of the Modi 2.0 government today. All eyes are on Finance Minister Nirmala Sitharaman who will present the Union Budget 2022 at 11 am.
This is Sitharaman’s fourth budget presentation after her appointment as Finance Minister in 2019. The 2022 budget will decide whether India will be able to sustain its growth momentum in 2022.
The budget comes at a time when India’s economy is recovering remarkably after two devastating waves of the coronavirus pandemic. But there are still many challenges that could stifle growth.
Inflation, rising unemployment and an economic slowdown due to the third wave of the coronavirus pandemic are some of the major challenges that experts expect the government to address in the 2022 budget.
Will the budget get rid of inflation?
India’s economy faced a new hurdle when the Omicron version of the coronavirus prompted restrictions in several states, crippling small businesses and contact-intensive sectors in what looked like a second wave last year. But most economists believe that the economic impact of the third wave will wane soon and is not as concerning as an issue such as inflation and rising unemployment.
Even though India’s growth rate in 2021 may have been the best in the world, experts are concerned about the impact on the economy due to the combined effect of inflation and rising unemployment. He believes that the government should announce measures to deal with the issue in the budget.
Rumki Majumdar, Economist, Deloitte India, said, “During the pandemic, high inflation has been a result of supply-side disruptions that did not require the RBI to intervene consistently. This may change going forward as the economy improves.
India must be prepared for high inflation, in which demand is likely to exceed supply and higher commodity prices as a result of geopolitical tensions. Disruptions in the global supply chain will add to the challenge.
Dealing with a job crisis:
According to experts, creating adequate employment for the youth of the country is another area that the government should focus on in the budget. A recent Bloomberg report suggested that 200 million jobs are missing from the economy and it would be difficult to restore the balance without adequate fiscal policy support from the government.
Coming up with an urban job guarantee scheme similar to the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has been a popular recommendation among experts. Eminent economists like Raghuram Rajan and Jean Dreze have been supportive of such a plan ever since the pandemic paralyzed India’s vast informal sector.
In August 2021, a parliamentary standing committee even suggested that the government should introduce a scheme like MGNREGA for urban workers, given the huge number of people who lost their jobs in cities.