ANI
22 Jan 2021, 15:25 GMT+10
Mumbai (Maharashtra) [India], January 22 (ANI): The Union Budget for 2021-22 should focus on boosting aggregate demand, expenditure reprioritisation and mobilising higher non-tax revenue, India Ratings and Research (Ind-Ra) said on Friday.
So far, the government's major focus to revive COVID-19 battered economy has been on the supply side. "But it is high time to change gears and focus on the demand side as well, lest the ongoing recovery begins to lose steam."Ind-Ra said there is nothing wrong in addressing supply-side issues as it indeed was needed to restore and augment the broken supply chain -- especially in an economy where micro, small and medium enterprises play an important role in terms of generating employment and output.
However, the absence of adequate demand may jeopardise recovery and may even lead to a second-round impact.
Even if the supply side gets restored on account of various measures announced by the government and the Reserve Bank of India (RBI), it may soon run into difficulty due to the lack of adequate demand for goods and services.
Ind-Ra said the economy has lately shown some green shoots and several high-frequency indicators are reaching the pre-Covid level of production, bolstered by a combination of festive season and pent-up demand.
However, after two consecutive months of positive growth, a contraction in factory output (index of industrial production) in November 2020 shows the fragility of ongoing recovery.
An appropriate demand-side measure therefore is as important as supply-side measures. This includes spending on infrastructure -- especially that are employment-intensive and have a shorter turnaround time.
The government could continue with relief and income support to households who are at the bottom of pyramid. There could be higher allocation to MGNREGS as it provided a safety net not only to rural households but also to the workers who migrated back to rural areas.
Ind-Ra also called for more support to real estate given its backward-forward linkage in the economy -- especially affordable housing segment.
Although a lot has already been done resulting in credit support to the developers and leading to the home loan interest rates falling to its lowest level in over 15 years, the scar is still visible and may require further support on the tax front for a specified period such as GST waiver for under-construction homes.
Micro, small and medium enterprises continue to face headwinds in meeting their financing requirement. Hence, they need and require government support to remain viable and afloat in FY22 as well, said Ind-Ra. (ANI)Get a daily dose of Paris Guardian news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Paris Guardian.
More InformationATLANTA, Georgia: The United States is facing its worst measles outbreak in more than three decades, with 1,288 confirmed cases so...
In the past month alone, 23 Israeli soldiers have been killed in Gaza—three more than the number of remaining living hostages held...
LONDON, U.K.: At least 13 people are believed to have taken their own lives as a result of the U.K.'s Post Office scandal, in which...
WASHINGTON, D.C.: Travelers at U.S. airports will no longer need to remove their shoes during security screenings, Department of Homeland...
WASHINGTON, D.C.: An elaborate impersonation scheme involving artificial intelligence targeted senior U.S. and foreign officials in...
SLUBICE, Poland: Poland reinstated border controls with Germany and Lithuania on July 7, following Germany's earlier reintroduction...
REDMOND, Washington: Artificial intelligence is transforming Microsoft's bottom line. The company saved over US$500 million last year...
WASHINGTON, D.C.: A federal rule designed to make it easier for Americans to cancel subscriptions has been blocked by a U.S. appeals...
BASTROP, Texas: In a surprising turn at Elon Musk's X platform, CEO Linda Yaccarino announced she is stepping down, just months after...
NEW YORK CITY, New York: Former British prime minister Rishi Sunak will return to Goldman Sachs in an advisory role, the Wall Street...
LONDON, U.K.: Physically backed gold exchange-traded funds recorded their most significant semi-annual inflow since the first half...
AMSTERDAM, Netherlands: Some 32 percent of global semiconductor production could face climate change-related copper supply disruptions...