The Union Budget 2021 is being presented at a time when the economy is battling with slowing growth and higher inflation. Finance Minister Nirmala Sitharam will walk a tightrope between providing spending power and maintaining fiscal deficit.
Several reports have suggested that consumer price inflation (CPI), or retail inflation, is expected to remain elevated in the current calendar year. According to the latest survey by IANS-CVoter, a majority of Indians are finding it difficult to manage their expenses. Around 65.8 per cent respondents in the survey said that current expenses have become difficult to manage, while 30 per cent people said that although expenses have gone up, they are in manageable limits. Follow live updates of all budget announcements here.
Close to 2.1 per cent of the respondents said that their expenses have gone down in the past one year and another 2.1 per cent could not respond on the matter. Around 4,000 respondents were quizzed for this survey.
Budget 2021 may see the government announce fiscal measures to lift the economy from the worst economic slowdown since Independence. India's GDP saw massive contraction of 23.9 per cent in the first quarter of the current fiscal in wake of economic disruption caused by coronavirus-led nationwide lockdown.
Overall, the economy is expected to contract by 7.7 per cent in the current financial year, as compared to the growth rate of 4.2 per cent in 2019-20, as per the first advanced estimates of the national income released by National Statistical Office (NSO).
The survey results also showed that with a massive impact of the pandemic on businesses and people's earnings, purchasing power of most Indians weakened in the past one year.
In the Monetary Policy Committee (MPC) meeting in December, the RBI Governor Shaktikanta Das projected CPI inflation at 6.8 per cent for December quarter and 5.8 per cent for March quarter of the current fiscal (FY21). For H1 FY22, he said inflation is predicted to hover in the range of 4.6 per cent to 5.2 per cent with risks continuing to be broadly balanced. Amid concern over elevated inflation, the MPC kept the benchmark interest rates unchanged at 4 per cent maintaining an accommodative stance.