A turnaround Budget focusing on spending?

New Delhi, Jan 30 (GCBusiness) The Union Budget is an annual exercise, but this year all eyes are on Finance Minister Nirmala Sitharaman as she juggles with figures and facts to formulate policies to revive growth that has slid to a 11-year low and that many believe could be less than five per cent when the 2019-20 fiscal ends in March 31.

It is Sitharaman’s first “full” budget and the real change economists point out since last July when she presented
her first budget is the state of the economy. Gross Domestic Product growth is set to be the lowest since the global financial crisis-affected in 2008-09 (April-March). A fall from 6.8 per cent in 2018-19 to 5.0 per cent this year is alarming.

The gross fixed capital formation, a proxy for investments, is projected to be just 1.0 per cent higher while private consumption expenditure growth is seen falling to 5.8 per cent from 8.1 per cent.

Headline inflation surged to 7.35 per cent in December, the highest in five years.

The unemployment rate also increased to 7.7 per cent in December, according to data released by think-tank Centre for Monitoring Indian Economy.

As GDP growth fell, the government came under opposition attack. Former finance minister P Chidambaram has slammed the government saying it is “clueless” about the economy.

The reasons behind the dismal state of the economy are not far to seek. A lack of consumer demand and job creation, absence of risk appetite in the capital and credit markets that has led to credit squeeze, and resource crunch with the government which are impacting growth of the economy.

Three vital sectors — non-banking financial companies, real estate, and infrastructure — which generate employment for a large number are grappling with liquidity and financing issues due to incomplete projects or bankruptcy of companies.

Via UNI-India

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