Budget 2022: Budgetary Income Support Must Continue To Boost Household Consumption Demand, Says Crisil Research

According to Crisil Research, budgetary income support must seek to strengthen household consumption demand.

The latest projections from the National Statistical Office for India’s gross domestic product (GDP) for the current fiscal year suggest that household consumption demand is 3% behind fiscal 2020 norms.

According to Crisil Research, the government’s objective of boosting development potential through a blend of capex and reforms has been highlighted in recent budgets.

“Moreover, though nominal GDP growth is estimated to decline from 17.6 percent in fiscal 2022 to 12-13 percent in fiscal 2023, it remains strong. A broad-based recovery and improved compliance should also benefit tax collections.”

“This, together with a gradual path of deficit reduction, can provide room to accommodate spending on supporting rural and urban employment generation—near-term consumption-supporting measures as outlined below—and to fund capex over the next four fiscals.”

It was stated that policy support focusing on incomes must persist for a longer period of time until development becomes more broad-based and demand numbers increase consistently.

“The MGNREGS remains the only lifeline for the vast section of landless, informal sector, and migrant workers who have borne the brunt of repeated pandemic waves and a lack of employment opportunities in urban areas. A higher allocation for the MGNREGS must be prioritised this fiscal.”

“There is also merit in introducing similar employment generation schemes in urban areas, given how swathes of workers, such as in urban construction and contact-based services, remain unemployed or underemployed, even if lockdowns have become less restrictive. The case for a national urban employment guarantee scheme has repeatedly been put forth by experts and the Parliamentary Standing Committee on Labour in its August 2021 report. The time is ripe for its realisation.”