Countdown for the Union Budget 2022 the mega budget has already started and is seen globally the threat of surging inflation has pushed the US Federal Bank to begin increasing interest rate as early as March, similarly the trend is following in economies like India. In India, CPI inflation for December has climbed to a 5-month high of 5.59% in India.
So, besides focusing on growth, the other must look out before the government is to tame inflation. This is more so when amid the ongoing Covid threat, households are confronting income deficit.
Commodities that have inched higher in price even as incomes have gone down below pre-pandemic levels
Now as income levels have gone down below the pre-pandemic levels because of job loss or salary restructuring, there are certain daily essentials which have surged in price since the Covid outbreak by 20-40%. Further as per the statistics department, since the Narendra Modi government has taken over in the first five and a half years there was rise in retail prices by 8 percent, while in the last 2 years the increase has been to the tune of 10%.
Further as the WPI continues to be in double digits there is a higher threat that the retail prices will also move higher and so this should be the prime focus area that the ministry should put its focus on.
Concerns like unemployment and lower average per capita income continue to be another threats.
The one aspect that could help in dealing with lower average per capital income can be higher allocation to the MGNREGA scheme. So, as the threat lingers even now decision to continue with higher allocation towards the scheme can be wise. Further to boost consumption and face current uncertainties, allocations to additional schemes can be front-loaded for at least up to the H1Fy23.
Also the credit guarantee scheme rolled out in the wake of the pandemic also came to be a saviour for the MSME-seen to be the backbone as else the companies would have been financially ruined.