new Delhi. A report released by India Ratings states that the central government should focus its attention on the demand in the announcement of the Union Budget 2021. According to the report, ever since the outbreak of the corona virus epidemic began, supply-related problems have been resolved to boost the economy. The report suggested that if the demand is not taken care of, how much better the supply becomes due to the policies of the government and the Reserve Bank of India, in no time, the demand for goods and services will start to suffer due to lack of sufficient demand.
There have been indications from some high frequency indicators that the production level had reached the time before the corona. Along with this, the economy had also reached a better position due to festive demand. However, after two months of good results, factory output declined in November 2020. Sunil Kumar Sinha of India Ratings said that it is very important to support the demand side.
He said that this is the right time to change policies. The government should also remove problems related to supply as well as demand. Even if it slows down the recovery process itself. There is nothing wrong in trying to overcome supply-related bottlenecks and this was necessary to regain the supply chain that was disrupted. Not only this, recovery can also be affected due to decrease in demand.
Government should accept these suggestions:
- Spending should be increased on infrastructure projects that are employment-enhancing and of short duration.
- Set up development-oriented financial institutions like ICICI, IDBI and IFCI.
- The financial help of poor families should be continued.
- The maximum budget should be allocated for MNREGA. This will provide employment not only to the villagers but also to the laborers who returned to the village due to Corona epidemic.
- More help should be given to real estate and especially cheap housing sector needs more help.
- MSMEs are finding it difficult to get finance and they will need government support for better performance.
- The government should re-prioritize its revenue and capital expenditure in the budget. Vaccination / public health should be given priority on a broad scale.
- The amount of expenditure needs to be met through higher tax revenue.
- States should be given adequate funds and central assistance should be ensured if required.