Umesh Pratap Singh
The government has set a target of taking health expenditure to 2.5 percent of GDP in the next five years. The condition of health facilities in rural areas is not hidden from anyone. Therefore, there is a need to increase the allocation for the health sector in the budget. When Finance Minister Nirmala Sitharaman presents the budget on February 1, the industry as well as the common people will have high hopes. Significantly, in February-March, assembly elections are going to be held in Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur. Obviously, the impact of the election will also be visible on the budget.
By the way, at this time the economy is facing the challenge of accelerating economic growth, as well as inflation and unemployment are the major problems. In such a situation, while the economy is slowly recovering from the impact of Corona, the expectations from the budget are big. Consumption and private investment in the economy are still not growing at the expected rate. For the past few years, government expenditure has been playing an important role in boosting the economy. In such a situation, the importance of budget increases.
To get out of the huge decline in the economy due to COVID-19 and the crisis it created, it has become necessary to take steps to increase government spending, private investment, consumption and exports. Growth in government consumption has been a major contributor to economic prosperity in the past few years, growing at an average annual rate of about seven per cent. Investment is about thirty percent or less of GDP, consumption growth is also very slow, while net exports are negative. In such a situation, the increase in government spending will accelerate the economy.
To increase prosperity in the economy and give priority to job creation, the government is increasing capital expenditure and spending huge amount on infrastructure sector. In general, the capital expenditure of the central government has been below 2 per cent of GDP. It increased after 2014-15. In the last two years, it has increased to 2.4 percent of GDP. Increased capital expenditure leads to asset creation and construction in the infrastructure sector. This increases the production capacity of the economy. At the same time, capital expenditure in the private sector also increases and employment opportunities are created.
In the coming budget, it is expected that the government can increase the expenditure on projects related to road, railway sector, etc. by up to 30 percent. This is also necessary. Large-scale investment in sectors like roads, railways, power etc. expands economic activities and generates employment. If the quality of the government’s expenditure is good, then even if the fiscal deficit remains above six and a half to seven percent, then there is nothing to worry about.
The production-based scheme of the government has brought a lot of relief to the COVID-19 affected areas. The government should expand this scheme and implement it properly. This will increase investment, employment and production. The income of the low income group and middle class has been affected the most due to the COVID crisis. In such a situation, there is a need for the government to continue the Pradhan Mantri Garib Kalyan Anna Yojana now. Along with this, expenditure in Mahatma Gandhi Employment Guarantee Scheme (MNREGA) will have to be increased, this will also help in increasing demand in rural areas. To stop the migration from cities to villages, the government will have to start employment guarantee scheme for the poor and workers of the urban area as well.
About seven crore people in India file income tax returns. Out of this, only about 1.5 crore people actually pay taxes. It is also no less than a surprise that even two percent of the population is not paying taxes! There is a need to think seriously and work on how to collect tax from shopkeepers, doctors, lawyers, businessmen or other people who are not paying tax. The salaried class is at the forefront among those who pay honest taxes. Income tax rates and classes are not discreet. Savings exemptions for taxpayers also seem trivial now. Therefore, it is expected from the budget that the government should give some relief on this issue. This is also necessary, as this reform has been pending for years. What is needed is that some kind of incentive step should be taken which will increase the coverage of the taxpayers.
Quality of education and health is essential for making the economy strong and sustainable. The attitude of the governments towards both education and health has been disappointing. Both these sectors seem to have been left entirely to the private sector. The work being done in the field of education and health has remained a mere phantasmagoria. Unless the expenditure on education is increased to five percent of GDP, it will be difficult to meet the demand for labor according to the modern economy. The main basis for the strength of the economy in the future will be the production of knowledge and knowledge.
As far as the health sector is concerned, the government seems to be a little serious in providing better medical facilities to the lower classes. Under the National Health Mission, the Central Government has assisted the State Governments to provide medical facilities in government hospitals. Health facilities are reaching the poor even under ambitious schemes like Ayushman Bharat. But the reality is that only government hospitals are sick, if we look at the facilities from cleanliness to treatment, then it is known that their condition is very bad. The government has set a target of taking health expenditure to 2.5 percent of GDP in the next five years. The condition of health facilities in rural areas is not hidden from anyone. Therefore, there is a need to increase the allocation for the health sector in the budget.
During the COVID restrictions, agriculture and the rural economy became the support for the workers who migrated from the cities to the villages. In such a situation, to strengthen the agriculture sector and rural economy, the budget is expected to increase. The rural economy has to be strengthened especially by building roads in rural areas, expanding irrigation facilities for agriculture and increasing investment in agro-based industries and allied activities. Storage and marketing facilities in rural areas also require massive investment. After the withdrawal of agricultural reforms, it is to be expected that the government will make concrete provisions for the same.
Still many regions have not recovered from the impact of the pandemic. Therefore, there is a need to provide separate incentives for these areas. Small, medium and cottage industries are facing problems since demonetisation and implementation of GST. It is expected that provisions for concessions will be made for them in the proposed budget. Similarly, sectors like tourism, hotels are also expecting special incentives from the budget.
Now environment friendly development or green economy is at the center of all the measures taken by the governments. From accelerating the production of electric vehicles, announcing a new vehicle scrapping policy, the production of green energy is getting a big boost and the private sector is also investing heavily in these. There should be such provision in the budget which is helpful in reducing environmental pollution and has minimum carbon emissions.
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