What could be a silver lining in this Covid Budget
Budget has been prone to being a non-event for the markets. The expectations this time are low and the prime minister himself has talked about how we have had four mini Budgets over 2020 alluding to a slew of incremental reforms that the government has tried to put in place through the year. What could be the silver lining this time around?
The allocations to capital expenditure should increase but the fact of the matter is that in terms of fiscal deficit per se, we need to look at figures. This year, the government is expected to borrow around Rs 11.5 crore which is almost 4 lakh crore more than what they did last year. With the improvement in growth, tax revenues, etc, the expected borrowing is expected to be Rs 2 lakh crore more than what it was in 2019-20.
As normalcy returns, as extraordinary liquidity of the RBI gets removed, managing the borrowing programme by itself will become a challenge. Although growth revival will be strong next year, the challenge will be to borrow non-structurally so that interest rates do not go u People will be interested to know if the government comes out with the actual borrowing figures. This includes the state government borrowing, of course. That is one critical part.
The second is an extra Rs 50,000-70,000 crore will be required for the vaccination programme which the government will front. I just hope that they do not come out with a cess for that. I do not think that will be taken positively at all. At a time when we need to boost revival in the consumption as well as overall basket, any new cess will not be taken positively. I would hope that they will avoid that. They do not go in for another cess.
The other factors are that in terms of the disinvestment, every year they come out with a huge figure which is not met. There needs to be a serious attempt to achieve what they set out to do and that can only be done through professional management of the disinvestment process.
I do not think the bureaucracy can handle that. There has been talk about some professional fund manager or a system being implemented to take care of the disinvestment process. I hope they go ahead and do that because that is the only way they will be able to get one — maximum value, secondly achieve the targets they set out for themselves. Ex of that, the global events are much greater than an Indian budget.