Even as Finance Minister Nirmala Sitharaman’s Union Budget for 2021-22 thrashed out bold reform measures amid severe fiscal constraints, experts said that implementation will be critical to get back to the growth path especially in the wake of the unprecedented economic and health damage caused by the Covid 19 pandemic.
“As far as intent goes, the Budget announcements are encouraging but most importantly we have to see the execution part. Implementation of policy measures has always been an area of concern,” Nirupama Soundararajan, senior fellow and head of research, Pahle India Foundation (PIF) told Indianarrative.com.
The disinvestment exercise will be crucial for the government for garnering revenue in the next financial year to be able to adhere to the projected macro-economic targets. The Centre has pegged the fiscal deficit target for this fiscal year at 9.5 per cent of GDP while it is estimated drop to 6.8 per cent in 2021-22.
“To be able to attain the ambitious targets, it is important to stick to the disinvestment target as it is one main sources of revenue generation,” Soundararajan said.
The Budget has outlined privatisation of two public sector banks along with a general insurance company as part of its disinvestment policy besides launching the initial public offer (IPO) of the public sector life insurer behemoth Life Insurance Corporation of India.
“The government has been missing its disinvestment targets and in the coming year privatisation of two public sector banks will pose challenges especially with the unions. It is important to carve out a mechanism right in the beginning of the financial year so that the exercise is complete,” an analyst said.
BJP’s national spokesperson Gopal Krishna Agarwal said that execution of most measures that have been announced by the government are either underway or complete. “There have been many important announcements in the Budget which will press the growth pedal. The focus in on infrastructure, manufacturing and agriculture and many announcements are related to these areas, where we see no implementation problem. Disinvestment is only one area where things may not have moved the way we would have wished but the government has made its intent clear and the focus in on reforms,” Agarwal said.
While privatisation of two public sector banks and a general insurance company may not be easy, insiders said that the government may decide to hit the market with further public offering (FPO), Offer for sale (OFS) and strategic sale to ensure that the disinvestment exercise yields the desired results. Besides, the government is also planning to launch the initial public offering (IPO) of the insurance behemoth Life Insurance of Corporation (LIC) of India.
While budget outlays are made by the Centre towards various welfare schemes, many of these come under the ambit of the state governments. States, therefore, need to chip in.
This year’s budget has also provided for an additional Rs 2 lakh crore to States and Autonomous Bodies for their capital expenditure.
Sources also said that much of the execution plan of the budget announcements will depend on the state governments.
Issues related to health, education and even agriculture come under the ambit of the state governments. “Here it is crucial for state governments to cooperate especially at a time when India is battling an acute contraction in the economy,” an analyst said.