Budget consistent with fiscal strategy; aimed at boosting demand

The fiscal multiplied impact of higher government consumption spending is coupled with signal to household sector to spend more

The budget announcements for financial year 2020-21 (FY21) is consistent with the fiscal strategy, which is geared towards boosting demand. And it contrasts the extremely conservative approach adopted in FY19 when spending was retracted to meet fiscal deficit target in the face of large tax revenue shortfall.

Tax shortfall continued even in FY20 at Rs 3 trillion and its growth is expected to be modest at 12 per cent in FY21BE. But it has not prevented the government to continue spending. The 13 per cent spending growth budgeted for FY21 at Rs 30 trillion is over high growth of 17 per