Finance Minister Nirmala Sitharaman is set to present her third Union Budget in Parliament at 11 am today. The budget is expected to be very crucial for investors (domestic and foreign), various interest groups like the farmers, middle class and corporates.
Due to the worldwide COVID-19 pandemic in 2020, the Indian economy witnessed a rising expenditure and tumbling revenue. Financial activities came to an almost standstill due to the pandemic-induced lockdown.
However, the Indian economy is currently in a recovery mode as on Friday, the Economic Survey 2020 tabled by the government revealed an expected 11% real GDP growth in FY22.
Meanwhile, Nirmala Sitharaman has promised a ‘Budget like never before’. Prime Minister Narendra Modi said on Friday that the Finance Minister had already announced three to four mini budgets and the 2021-22 Union Budget should be an extension of the same effort.
As the nation awaits for FM Sitharaman’s Budget presentation, there are several factors to consider. The economic recovery is still fragile and fiscal interventions are very much required. There are constraints in the government’s execution capacity as well.
We can expect a higher allocation in the Defence sector and incentivising savings for households since it was most affected by the COVID-19 pandemic and lockdowns. The Healthcare sector, Income Tax and Agricultural sector might expect an increased expenditure in the Union Budget 2021-22.