Can Nirmala Sitharaman find enough growth pills for the ailing economy?

On February 1, Finance Minister Nirmala Sitharaman will present the Union Budget 2020-21. As usual, there are intense speculations and expectations over the nature of the budget. Some expect it to be more of the same, wherein the government would announce “grandiose schemes” without actually spelling out where it would find the money to fund them. Others think it would be “please-all, populist” budget with a cut in personal income tax rates and sops to farmers. And yet others expect “big-ticket reforms” that may help the economy in the long run. But one thing they all agree is that the finance minister has a tough task at hand.

The economy hasn't fallen into a recession but the indicators paint a gloomy picture. GDP growth is the lowest in 11 years. Investments by companies have hit a 17-year low. Private consumption, or money spent by individuals to buy goods and services, is lowest in seven years. Manufacturing growth has slumped to the worst in 15 years. Agriculture, which sustains 44 per cent of India’s workforce, has registered the slowest growth in four years. Finally, unemployment levels are the highest in 45 years.

How did we get here? In 2014, when Prime Minister Narendra Modi took over the reins of the government, there was an air of expectancy among the rich and the middle class. Even a large number of rural population voted for a government that promised “achche din”. The carefully crafted image of Narendra Modi as a leader who means business was bought by a huge section of the populace. The tales of scams, policy paralysis and economic mess left behind by UPA-2 had made the electorate wary, and they expected the new leader to bring in rapid development and economic growth.