The coronavirus pandemic has pushed India into a severe economic slowdown. GDP growth has gone to an eleven-year low of 5% in 2020, compounded by the impact on the banking, import-export, and other core sectors of the economy.
This article aims to understand the slew of corrective measures that Finance Minister Nirmala Sitharaman needs to take to lead India to the road to sustainable economic recovery.
1. Tax reforms
Taxes are the most sensitive yet crucial part of the economic and financial system of a country.
Strategic reforms in personal and corporate taxes can be a stepping stone to the road to economic recovery.
The finance minister can revise the personal income tax rates to put more money in the common man’s pocket. Middle-income groups will benefit the most from tax reforms, as their fixed incomes have been severely hampered during the ongoing coronavirus pandemic.
A boost in their disposable incomes will strengthen their earnings and buying power.
A cut in corporate taxes can facilitate making India a ‘manufacturing hub’. GST reforms can stabilise the ailing businesses of entrepreneurs whose sales and profits were badly hit during the lockdown.
2. Technologically-driven reforms
The pandemic has highlighted the relevance of digital technology in driving daily operations, such as work, education, or even social communication.
Hence, the finance minister must introduce technologically-driven reforms to explore the potential of digital information technology. It will pull out the economy from the shackles of adversity.
3. Sectoral/structural reforms
In an endeavour to drive the ‘Atmanirbhar Bharat Abhiyan’, or a self-reliant India, the finance minister should encourage the budding entrepreneurs of startups and MSMEs.
The budget must introduce reforms for redeveloping healthcare, real estate, banking, power, agriculture, and automobile sectors. This will increase the demand and consumption of products/services of these sectors. Structural reform policies can, thus, play a significant role in reviving the ailing economy of India.
4. Investment in infrastructure
Government spending and investment in public infrastructure and other stimulus development projects can bring a fillip to the present sluggish economy.
Incurring capital expenditures on growth programs can open employment avenues for the vast population with more job securities.
The government needs to pump-prime the economy by infusing more funds into various infrastructure projects, et cetera to boost production and employment, thus ensuring a strong push towards economic growth and recovery.
In a nutshell
The finance minister of a country plays a vital role in laying the roadmap to recover from the economic recession faced due to the coronavirus pandemic.
Introducing the above mentioned, growth-enhancing reforms in the budget will pave the way to economic recovery, growth, and development.
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