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Fiscal Restraint Trumps Fiscal Stimulus
The 2020 Union Budget has failed to provide any fiscal stimulus based upon the assumption that there is no fiscal space for providing growth stimulus. In doing so, it missed out on the opportunity of leveraging an additional fiscal space of around 10% of the gross domestic product that could have been tapped through revenue and expenditure rationalisation measures.
The 2020–21 Union Budget was expected to provide a strong fiscal stimulus to revive faltering economic growth. Those expectations have been belied. The revenue projections, though still overly optimistic, are more realistic than the revenue projections of the past two years. But, in aligning expenditure plans to these revenue projections, without any effort to mobilise additional revenues, this budget has failed to provide the required fiscal stimulus. In the sections that follow, we discuss in sequence the fiscal stance of the budget, its revenue measures, expenditure allocations and missed opportunities that the budget could have addressed to revive growth.
Growth Revival and Fiscal Dominance
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