Business Economy : Top economists don’t see Budget as populist despite state polls

Insight Online News

By Nirbhay Kumar

New Delhi, Jan 9 : Union Budget 2022 would be presented days ahead of crucial assembly elections in five states including Uttar Pradesh (UP) but top economists don’t see Centre splurging and taking populist measures to woo voters.

There could, however, be specific projects for poll-bound states to win perception game.

“I don’t see any overt populism but if you assume that nothing will be done for the poll-bound states, that is being naive,” HDFC Bank Chief Economist Abheek Barua told UNI.

He noted that the central government has been following fairly sound fiscal principles and would unlikely throw them through the winds just because of some states going to polls.

The Centre has successfully managed to ward off pressure from various quarters including economists and Opposition leaders to go for direct cash transfer to the people and instead focussed on building infrastructure to create jobs and boost demand in the economy.

The strategy appears to have paid off with most high-frequency indicators such as monthly GST collection, air traffic numbers and power consumption showing uptrend in economic activities.

The latest data shows fiscal position of the government has also considerably improved as a result of revenue buoyancy. India’s cumulative fiscal deficit, the shortfall in government’s earning and spending, at the end of November came at 46.2 per cent of the FY22 budget estimate.

In actual terms, the deficit stood at Rs 6.95 lakh crore in April-December period of FY22 as against the annual estimate of Rs 15.06 lakh crore.

“Even in the most difficult times, government took most pragmatic approach. I don’t think they would deviate from that,” said NR Bhanumurthy, senior economist and Vice-Chancellor, Ambedkar School of Economics University.

He, however, said that there could be state-specific announcements in the Budget.

It may be noted that during the peak of second wave of Coronavirus pandemic, many leaders of the Opposition parties wanted the government to loosen the purse strings but the advisory was of little or no avail.

Former Finance Minister P Chidambaram had asked the government to borrow or print money but spend aggressively as pandemic swayed the country destroying lives and livelihoods.

Even now, government is largely seen to be unperturbed by such suggestions.

“I don’t think Union Budget will be tailored keeping state budgets in mind. Social programs could be highlighted but unlikely to be cornerstones as far as allocations and economic policies are concerned,” Senior Economist at Kotak Institutional Equities Suvodeep Rakshit told UNI.

The Election Commission of India (ECI) on Saturday announced the dates for assembly polls in five states – Uttar Pradesh, Uttarakhand, Punjab, Goa and Manipur starting February 10.

The Union Budget is expected to be presented on February 1, 2022.


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