FM Nirmala Sitharaman promises support for business sectors battered by pandemic

Finance minister Nirmala Sitharaman on Friday pledged to invest more to strengthen India’s health infrastructure and support industries in the Union budget for the year starting April 1.

Addressing business leaders at the Confederation of Indian Industry’s (CII) virtual Partnership Summit, Sitharaman described her third budget in February to be presented in the long shadow of the pandemic as a ‘never before’ event and promised to give abundant attention to all suggestions.

Sitharaman’s emphasis on higher healthcare spending and supporting the industries such as hospitality and aviation indicate the general direction of the next budget. “Investment in health is going to be absolutely critical, not just to make lives safer but also to make health and health-related expenditure more predictable for people and not to do it out of pocket,” she said.

She also said that while the rural economy showed resilience during the pandemic, urban India offered a lesson about where it could not take the shock. Cities witnessed a massive reverse migration following the stringent lockdown imposed in March, leading to a humanitarian crisis.

“Support has to be extended to sectors that got disrupted badly and support to which are now going to be centres of newer demand and newer engines of growth. We need to fuel that engine and run that engine as fast as possible,” the minister said.

The Centre has so far announced three stimulus packages amounting to Rs24.3 lakh crore. While the manufacturing sector has recovered in the September quarter from the 39.3% contraction seen in the June quarter, trade, hotels, transport, communication and services related to broadcasting are still in the negative territory as per the Q2 GDP data released last month. India’s economy slowed its pace of contraction to 7.5% in Q2. For the Centre , a major challenge is to create an adequate number of jobs amid work increasingly becoming technology-driven and automated.

Sitharaman said the way in which jobs are created will go through a massive change, with ‘working from home’ becoming a culture. Continued and justifiable anxiety that women’s participation in the workforce is not adequate needed to be looked at, she said. “We will be a country where 60% of population is going to be under 30 years of age, which is a blessing, and we have to provide them with the right kind of skills. Vocational training has to be given with a new perspective,” she said.

Economic affairs secretary Tarun Bajaj on Friday said he is hopeful of the Indian economy getting back on track soon given the signs of sustained improvement, and that in the next fiscal year, the size of the economy may cross the FY20 level by a slight margin.

Bajaj said that he expects an improvement in economic activity and hopes the Indian economy to post a small, positive growth in December. “From May when covid had hit us to December seems like a long journey. In May, we didn’t know where we were heading. The revenues were absolutely down. We didn’t know how the virus will hit the country with a population of 1.3 billion people. For the third and fourth quarters, I would not like to quote anybody else but my own central bank. They have recently come out with the projection of slight positive growth both in the third and fourth quarters,” he said.