Encouraging wealth creation should be key objective of Union Budget '22

What is in store for us in the Union Budget 2022-23? This question is haunting many as the D-Day nears. Now, there is just one day left before we know the answer to this tricky question. But the wish list is long and exhaustive. As in the past, Finance Minister Nirmala Sitharaman, who is going to present her fourth consecutive Union Budget on February 1, 2022, would have received hundreds of representations during her pre-budget consultation process that began on December 15, 2021.

During this exercise, she met eight key stakeholder groups from agriculture to climate change with India Inc and economists in between. She sought their suggestions. This apart, Prime Minister Narendra Modi also held a pre-budget interaction with 20 chief executive officers (CEOs) of top companies from diverse sectors. He has talked to representatives of startups, venture capital firms and private equity funds too as his government seeks to boost the investment climate in the country.

This apart, scores of other industry bodies, organisations and individuals submitted their representation to the Finance Minister or her ministry through various means and modes. From doctors to advocates, everyone has a budget wish list these days! The only exception is the poor and of course the beggars.

However, it's too much to expect the Finance Minister to appease all and address all the wish lists. Human desire has no limits, but resources are limited. Same equation applies when the Finance Minister stands up to present her new statement of accounts and projections for the new financial year that starts on April 1, 2022. Gita Gopinath, who was recently elevated as the First Deputy Managing Director of the International Monetary Fund (IMF), is an apt of example of a beauty with brains. Gopinath also came out with her own suggestions on what the Modi government should do in the latest iteration of its budgetary exercise. She batted for more investments in infrastructure and, more and more disinvestments. She also wanted the government to tackle the unequal economic recovery.

I was going through her suggestions on the internet. One thing that caught my attention was a reader's comment. Someone, who owns a 2018 Tata 1109 truck with a gross vehicle weight of 12,990 kg, wanted to know how much load could be increased on the truck. He was obviously looking for ways to go for overloading, a common practice in India to make some extra bucks at the cost of road safety. That's a different issue though.

However, such an irrelevant appeal under a news item that deals with India's upcoming budget tells us in unequivocal terms what fate the wish lists rolled out by the various sections of our society seeking favours in the Budget meet. Of course, everyone has his or her own priorities. So is the Modi government when it comes to the Budget. The government's priorities obviously come first.

This aside, ruling Bharatiya Janata Party (BJP) is fighting key elections in five States including all-important Uttar Pradesh. Dubbed as semifinals for 2024 General Elections in which BJP and Modi will gun for a third consecutive term at the Centre, the upcoming polls may get adequate attention in the Budget. Will there be some populist schemes? It can't be ruled out.

Nevertheless, the central focus of the Sitharaman's latest Budget should be wealth and asset creation with focus on employment generation and infrastructure. That can happen only if private investments pour in. Bridging the economic disparities are also important.

Further, India is gaining traction rapidly in the startup space. Our country now ranks third globally when it comes to the number of unicorns - the startups with over $1 billion valuation. But we as a nation still lag when it comes to entrepreneurship which plays a key role in generating wealth in any country. It's time to up the ante on this front as well. The Modi government should find new ways to encourage new startups and new ideas. Besides, the country needs a higher economic growth to repair the damage caused by the Covid-19 pandemic in the last two years. In its recent World Economic Outlook, IMF has cut India's growth forecast for the current fiscal year to 9 per cent, citing concerns over Omicron, the new coronavirus variant that triggered Covid-19 third wave in the country. It earlier forecast a GDP growth of 9.5 per cent for FY22. For next fiscal (2022-23), it projected a growth of 7.1 per cent, 0.5 percentage points higher than its earlier reading.

Inflationary pressures are also on a higher side now with retail inflation hitting a five-month high of 5.59 per cent in December. The December reading is close to breaching the tolerable limits set by the Reserve Bank of India. The country's poor can't afford higher inflation. Moreover, the Budget should also offer tax incentives besides sops for encouraging the affordable housing sector across the country. It's to be seen how the Finance Minister will tread political compulsions necessitated by the upcoming elections while spurring economic recovery without fueling inflationary pressures and taking care of the poor amid the Covid pandemic whose end, it appears, is not in sight. It will be a tight rope walk for her indeed!