Not an Unwise Sleight of Hand

Context: Budget 2021-22 could have done more for boosting public investment in agriculture and increasing government spending

Positive Provisions in Budget 2021-22: 

• In the direction of Doubling Farmers Income: 
  • Increased investments:  23% over the revised estimates (RE) for FY2021.
  • Increase in allocation for developmental missions of the agriculture ministry: 28% hike from FY2021’s RE and 14% increase over the FY2019.
  • Enhanced the agricultural credit target: to Rs 16.5 lakh crore.
• Increased transparency in subsidies: A Rs 3 lakh crore increase in food subsidy in FY2021 (RE) to settle dues (Rs 3.33 Lakh crores debt) of Food Corporation of India (FCI).
• Pro-poor steps: - Food subsidies of $60 billion.
• Infrastructure investments: 2.5% of Gross Domestic Product (GDP) for Infrastructure push will help revive employment growth. -  may help in employment generation
• Less protectionist than the previous year: e.g. Last year, the customs duty had risen by 33-50% on about 40 items while the raise is significantly less in the current Budget.

Some Concerns related to Budget 2021-22:

• Ignored employment generation:
  • Reduced allocation to Mahatma Gandhi Employment Guarantee Act (MGNREGA): Displaying dismissal of it as a tool for Employment creation. (Small increment of Rs 1,300 crores)
  • Investments in infrastructure are unlikely to increase jobs - only five million new construction jobs were created between then and 2017-18.
• Actually Reduced allocation to agriculture/rural sector: under following heads - 
  • 28% drop in revised estimates over the budgetary estimates (BE) in case of public investment.
  • Reduced outlay on interest subsidy, by Rs 364 crore in FY-2022.
  • Low allocations for Pradhan Mantri Gram Sadak Yojana; lower by Rs 414 crore,
• Rising trade protectionism: Raises duties on a number of products including electronic components, agricultural goods, leather and auto parts.
  • Average applied tariff rates rose from 13.5% to 17.6% in 2014-2019 - World Trade Organisation (WTO)
  • While the Economic Survey 2016-2017 made a spirited case for making India a hub of leather footwear, increased tariffs will harm India’s exports (against Bangladesh and Vietnam).