Union Budget 2020 offers Long-Term Sustainable Growth?

India is caught in a major economic collapse since more than a decade, however Prime Minister Narendra Modi’s Union Budget 2020, revealed on February 1, provides only a few steps towards creating a turnaround.

The Indian government’s $428 billion 2020-21 budget has laid out a chain of uncertain initiatives that included planned investments towards construction of new roads as well as airports along with income tax cuts. Also, government has included an upsurge within bank deposit insurance for reassuring customers anxious of high-profile bank failures.

Nevertheless, budget did not present great stimulus program for boosting employment. Nor did the new budget intend any added support for the country’s declining financial organizations.

India’s economy rose approx. 4.8 % last year, which was a sharp fall from nearly 6.8 % in 2018, as per the data of the International Monetary Fund (IMF). Inflation for the last year rose followed by a halt within business investments; sales of seen slowing down right from clothes to automobiles.

Furthermore, unemployment rose to nearly 7.5 % in the last months of 2019 that had hit hard to mostly city residents as well as young job seekers.  

Moreover, construction was also seen declining with demand for new housing weakening for nearly four years, as per an international real estate consultancy.

Also, just a day before budgets revelation, the government had anticipated that the economic growth would probably rebound to approximately 6.5 % for the fiscal year 2020-21.

International groups including IMF have foreseen an even more modest reversal in terms of growth. However, foretelling any number is very tricky as of now, with the economies across the global are facing jeopardies from the fatal coronavirus outbreak that was started in China, Brexit as well as an unresolved U.S.-China trade war.

In addition, Indian government is facing one of its biggest challenge of decade, where hundreds of residents from across the country are on the streets protesting against the divisive citizenship law proposed by the government.

Union Budgets have always been an aspiring documents filled with treats in order to appeal voters of different section across the country.

Investors in hope of tax cut in terms of capital gains were very much disappointed, which was seen with rising selling pressure in stock market, which resulted in NSE Nifty sinking by more than 300 points and BSE Sensex dipping by 987.96 points on special budget trading session on Saturday.

On the other hand, economists are of mixed views with some anxious about the existing problems that might deepen upcoming months it government fails in taking any aggressive action towards it. Also, a few economists are seeing this budget good for the long-term sustainable growth.