Hindu Daily Digest - Editor's Pick: An expansionary Budget

(The Editor's Pick is a new newsletter from The Hindu that provides a snapshot of the most important stories from today's edition of our newspaper, along with a note from our top editors on why we chose to give prominence to these stories.)

Union Finance Minister Nirmala Sitharaman loosened the exchequer’s purse strings and delivered an effort at an expansionary Budget for 2021-22 on Monday. The key highlights included a push for infrastructure and healthcare spending, even as the government sought to reduce the fiscal deficit without overly raising the tax burden.

The Finance Minister set aside ₹35,000 crore for the COVID-19 vaccination programme, with a promise to provide more if the need arises. The overall Budget outlay for ‘Health and Well-being’, she said, is ₹2.23 lakh crore, marking a 137% rise over 2020-21. Direct support for some of the sectors and sections worst-affected by the pandemic was in short supply but the government is betting on a real GDP growth of 10%-10.5% in the coming year after the estimated 7.7% decline in 2020-21.

Some big-ticket reform signals for global investors were also announced, such as enhancing the FDI limit in the insurance sector from 49% to 74%, and an ambitious new strategic disinvestment policy which will kick off with the sale of two public sector banks and a general insurance company in 2021-22.

The Budget proposes setting up a new development finance institution to fund infrastructure projects under the National Infrastructure Pipeline, and the creation of an asset reconstruction firm to take over public sector banks’ bad loans to cope with rising NPAs. However, just ₹20,000 crore has been earmarked for recapitalisation of banks, which is lower than expectations given the festering stress on bank’s books in the aftermath of the pandemic.

These are just some of the highlights and a full breakdown of the proposals can be found across all sections of The Hindu today. As we note in our lead editorial, the budget is not without its flaws, but can be seen as the starting point for a year that calls for deft stewardship of the economy.

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