FM has to prioritise nation's growth and the promised $5 trillion economy and involve and inspire the Indian private sector to create quality jobs

People have a major expectation. Two years back on September 20, 2019, less than 40 hours before prime minister Narendra Modi's Houston event, the government announced a massive corporate tax rate cut, lowering the base rate to 22 per cent from 30 per cent, and to 15 per cent from 25 per cent for new manufacturing companies. Till such time individual and tax rates were in sync.

Now people want that synchronisation is re-established. The individual income tax rates remain very high at 42 per cent and 30 plus 3 per cent. It robs an income tax payee of a lot of his or her income. The aspiration is that it be lowered to 20 to 22 per cent, possibly to around 17 per cent to help generate demand. The aspiration is because of the difficult three years of Covid-19 uncertainty, job losses, income contraction and severe inflation at 14.6 per cent.

The Finance Minister has her problems of constricted finances, not the desired growth or rather uneven growth instead of a high trajectory that could have generated jobs, increased demand, boosted production and paved the way for demand.

The FM should also think of incentivising savings by asking RBI to raise interest rates. If she does, it would bring back the sustained growth pattern and strengthen Indian families come out of the crisis.

If this happens, the government would not have to resort to free food, edible oil and other doles to 80 crore people or 61.54 per cent of the population. It is a benevolent approach but could have been avoided if the families had the financial strength to face the crisis.

The FM now should through various policy formulations try to empower the families. It may help the country reduce these expenses in the next four to five years helping the country to invest in many projects and create demand.

The budget would invest in many metro, infra projects, healthcare, railways and ports. It also may take up the issue of regulating crypto currencies. Last year, the new National Bank for Financing Infrastructure and Development (NaBFID), with a capital base of ? 20,000 crore and a lending target of ? 5 lakh crore over a three-year horizon was set up. In five years, it targets Rs 111 lakh crore investment.

NaBFID chairman KV Kamath says that it would require Rs 80 lakh crore in 2022-23 to kickstart big ticket projects like high-speed railways, airports, ports, highways, river interlinking for the national infra pipeline. Infra is critical and risky both. Highway investments may go up by 35 per cent. The ASEAN had gone bust with high infra investment. It aims to make it up by further asset sales of the PSUs.

It has to lay special emphasis on agriculture. Procurements are on the rise but still unable to satisfy farmers. The budget proposes to increase loan limit to Rs 18 lakh. Various infra funding, healthcare, agriculture, small businesses would depend heavily on banks, which are certainly not so comfortable. As per RBI, banks have Rs 8.35 lakh crore NPA. Even there are plans to allow youth to have loans from banks for entrepreneurship. Looks good. But MUDRA loans' record is not that bright. Bad debts for Mudra loans have spiked for PSBs, and, at the end of 2018-19 (FY19), stand at 9.3 per cent of advances. There has been 71 per cent jump in the number of MUDRA loan accounts that have turned non-performing assets (NPA) in Gujarat in 2021.

The Budget has also to refocus on jobs and changing lifestyles to defuse a social time bomb. Two recent incidents indicate the magnitude of the impending crisis. One is the death by freezing of a Gujarati family of four while trying to illegally enter the United States in order to escape their adverse economic realities in India. The other is the recent round of protests over railway jobs in Bihar and UP where millions applied for roughly 40,000 vacancies. It is a grim reminder that the  sheer size of unemployment.

The unemployment rate rose a four-month high to 7.9 per cent in December 2021. It stood at 7 per cent in November last year and 9.1 per cent in December 2020. But jobs were shrinking even before that in 2019 and earlier. World Bank says that India has the highest total unemployment rate at 21.01percent for the 15-24-year-old population.

The jobs have to be the priority in a country where the number multiplies every day. The covid19 lockdown is the immediate cause. Blaming any government for this criticality is not wise. As a nation somewhere the political parties are found to be clueless. The NITI Aayog supposedly tasked to suggest like its predecessor Planning Commission is not apt in hitting the nail on the head.

The Gujarati family was apparently well off with a teacher's job and sundry other chores. It could pay $2.5 lakh for their dream travel through agents for illegal entry to the US. What sparked them like many Gujaratis and Punjabis rushing to El Dorado may be aspirational "lifestyle". In 2007, Babubhai Katara, MP, was caught trying to smuggle a Punjabi woman and her son for Rs 30 lakh to the US. His party suspended him.

What triggered Bihar and UP problem is lack of jobs. Once private sector jobs were considered well-paid. The seventh pay commission changed that. Now for years the corporate, including the IT, are not creating the required number of jobs.  And jobs fetch lower wages and remain insecure.

Bihar has about 13 per cent unemployment. UP had 5.41 per cent unemployment in May- August 2021 against 3.75 per cent in March 2017. The job strategy has to change. An interesting aspect is that because of the Narendra Modi government's less interference in PSU operations, even in the difficult Covid times, 171 PSUs continued to have good profits despite better salary structure. This indicates that proper salaries can be paid even during crisis periods and profits can be achieved. But that also calls for reviewing the PSU disinvestment policy.  The world has seen the failure of the global private sector for unethical practices since the 2007-08 Lehman meltdowns.

The FM may open a new leaf. India has thrived with a mixed economy. The PSUs have the capacity to start a competitive economy that the private sector abhors. No national economy can thrive without competition within. Monopolised private or public sector would cause inbreeding leading to poor performance. She has to be innovative enough to help create rural farm and non-farm jobs that make the rural economy viable and lifestyle attractive to stem rural migration.

The private sector also has a tendency to employ less and pay less. If jobs are to be a priority this policy has to be given up. The PSUs can deliver if encouraged. The FM has to think in terms of the nation's growth and a promised $5 trillion economy. In the new scenario, she has to involve and inspire the Indian private sector to create quality jobs and make them capable of competing with their international rivals.

(The writer is a senior journalist. The views expressed are personal.)