India will look beyond fiscal deficits to get the economy back on its feet. That’s the message conveyed by Finance Minister Nirmala Sitharaman in the annual budget for 2021-22, presented on Monday (February 1, 2021).
India’s spending plan aims to jumpstart the economy that has been going through a protracted slump in 2020-21 fiscal year with the GDP growth projected to contract by 7.8 per cent. That’s hardly surprising since all other major economies have taken the fiscal boost route to revive the flagging economic growth.
Under the current environment, government spending is a significant component to boost production, consumption and job creation. Of course, it has long-term consequences in terms of potential debt overhang, a surge in inflation, huge interest in government borrowings and currency instability and potential payment crisis in the future.