This is quite an expansionary Budget that rightly hits the pause button on fiscal consolidation to create space for supporting the economy and to work towards erasing the pandemic scars.
It lays out a rather relaxed fiscal consolidation path for the medium run, which can be realised if growth remains healthy, and there are a number of steps to push up the medium-term growth potential.
The onus was on the government to do the heavy lifting for reviving the investment cycle as a broad-based recovery in private capex is not yet in sight. Quite in line, it has raised the capex allocation for fiscal 2022 by 26 per cent year-on-year, with sharp focus on infrastructure. To be sure, public investment not only crowds-in private investment, but also has a higher multiplier effect compared with revenue spending.
Ashu Suyash, MD & CEO, CRISIL
The key remains enhancing institutional capacity to carry forward the aggressive investment plans and making a success of the proposed development financial institution. Setting up a bad bank is a good idea and it should be followed up by reforming public sector banks for full benefit.
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