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A Budget amidst a Deepening Crisis
Budget 2021–22 has been presented in the context of a sharp slowdown in an economy battered by a severe contraction due to the lockdown. The pandemic has only contributed to the worsening of the humanitarian crisis, as is evident from data on hunger, malnutrition and employment. This budget provided a historic opportunity to use fiscal resources to provide a vision for economic recovery, and also to create enabling infrastructure and provide resources for improving the lives of people suffering from the twin shocks of slowdown and the pandemic. Despite the urgent need to invest in the social sector, the failure of the budget to allocate resources will be detrimental to the progress made in the last two decades.
On 18 December, the union finance minister announced that the Union Budget for 2021–22 would be a historic budget not seen in a hundred years.1 The actual budget presented on 1 February may not have been a historic, but it surely missed a historic opportunity to set right the Indian economy ailing on multiple fronts, partly owing to human-led blunders of historical proportions and partly a result of the COVID-19 pandemic. While the pandemic may have hastened the decline in India’s gross domestic product (GDP) by an estimated 7.7% in 2020–21 compared to a year earlier, this rapid slowing down of the economy prior to the pandemic was primarily the result of several missteps of the government in the past six years. Thus, even without a pandemic, it is safe to say that the GDP would have hit historic lows, at least for the last two decades.
In this context, a historic opportunity presented itself, to not only revive but ensure course correction of a slowing economy affected by the pandemic. The challenge was steep, with the declining growth rate of the economy and a slowly unfolding humanitarian crisis, which took a catastrophic turn after the lockdown, was announced in late March 2020. The humanitarian crisis was visible in the form of thousands of migrant workers walking back on foot to their villages, both during the lockdown as well as after it was relaxed in May 2020. But a large part of the humanitarian crisis remains invisible in the form of increase in hunger, malnutrition, job losses and declining income, all of which would have pushed millions into poverty. It has affected education and access to health but has also contributed to increasing misery along with rising inequality in all dimensions. As the data reveals, while the lockdown worsened many of these aspects, they were a reality before the pandemic and the lockdown.
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