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Budget 2020: Why It Should Be A Expenditure Focused Budget?


Though fiscal deficit target for the FY20 has already been breached and government as per its recent communication is in a expenditure cutting spree with a cut of Rs. 2 trillion across sectors, the need of the hour is to revive economic growth which has fallen down to a decade's low of figure sub 5% mark. For the first half of FY2020, the GDP has been calculated at 4.8%.

Budget 2020: Why It Should Be A Expenditure Focused Budget?

Also, in the recent advance estimates for GDP for FY 2019-20, the government has pegged it at 5%, which seems unachievable given the current slowdown. In all consensus, the slowdown is largely being attributed to a fall in consumption and government's consumption which is unlikely to sustain at the current 15-18% range, given the steep deviation from the targeted fiscal levels.

Also, a shortfall in taxation revenue for the exchequer and manufacturing growth which stood at a bare 3% are another reasons.

So, the challenge task before the finance minister needs to be both consumer centric as well as should succeed in instilling confidence in the private sector driving them to spur investment. It remains to be seen how private players are encourage to contribute 22% as required in Sitharaman's ambitious NIP scheme worth Rs. 102 lakh crore.

As per experts, it is suggested that for the growth to pick up, the budget should need to follow the fiscal expansionary model even if comes at the cost of rising deficit. Also, herein we cannot ignore on the falling GST collection and the failure of the same which put an undue pressure on the SME community on the compliance front.

So at the very best, the government can consider shelving its fiscal deficit menace and can rather focus on providing an impetus in the form of fiscal stimulus to revive the economic growth which has seen unemployment levels drop to 45 year low.

Story first published: Thursday, January 9, 2020, 13:47 [IST]
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