Nirmala Sitharaman made a statement with her clothing choice for the 2021 budget. (Express photo by Praveen Khanna)

The budget comes at a time when India’s employment rate has plummeted. Historic unemployment and faltering growth have not only exacerbated income and wealth inequality, but have also led to an increase in the absolute number of poor in India – an unprecedented and embarrassing reversal in poverty reduction. In the years leading up to the technical recession caused by Covid, there was much disagreement over the government’s approach.

The economic study, filed just a day before Sitharaman announced the 2022-23 Union Budget, underscored the need for the government to provide a buffer against stresses such as global environmental uncertainty, the cycle of withdrawal of liquidity by the main central banks, etc.

The survey established that in the government’s efforts to build a post-Covid economy, demand measures alone will not provide the solution. This is mainly based on the fact that a wide variety of factors such as consumer behavior, technological developments, geopolitics, supply chains, climate change could interact in unpredictable ways, and India will have to develop a supply-side strategy to cope with the long-term unpredictability of the post-Covid world.

Last year, the government decided to set up an asset reconstruction company that will take over bad debts from banks, giving them the flexibility to fund economic recovery. Just days before the Union budget 2022-23, this proposal to create a “bad bank” was approved. State Bank of India chairman Dinesh Khara said the proposed “bad bank” had “now” received all necessary clearances, including from the Reserve Bank of India. It is ready to start operations with 15 cases worth Rs 50,335 crore to be transferred by March 31, he said.

Essential reading on the 2022-23 budget: