While agriculture and infrastructure should be the focus, Gopinath said reforms to accelerate economic recovery should also score high on the government's agenda for budget 2021.
Finance Minister Nirmala Sitharaman will present the Union Budget 2021 on February 1. Ahead of the presentation, International Monetary Fund (IMF) Chief Gita Gopinath has listed out key areas that should be on the Indian government’s agenda this Budget session.
While agriculture and infrastructure should be the focus, Gopinath said reforms to accelerate economic recovery should also score high on the government’s agenda for budget 2021. The budget should also keep an eye on the future at the same time, she added. The economy suffered immensely due to the Coronavirus pandemic last year. Also Read - Budget 2021: FM Sitharaman Tables Economic Survey, GDP to Expand by 11% in FY22
Talking to Economic Times, Gopinath said, “If you look at the social sector, there is a good argument to extend some of the pandemic support measures that will provide lifelines to poor households.” It is worthwhile to note that former RBI Governor Raghuram Rajan had shared a similar point earlier.
Asserting that the Centre has provided expenditure in the health sector as well as to MSMEs, Gopinath said that the next step would be to see if that’s working well.
“On the health front, expenditures have been put in now to make sure that the vaccinations roll out at a faster pace. For MSMEs, lifeline were provided mostly in the form of liquidity. It’s important to see how well they’re working” said the IMF Chief.
Warning that banks may see a spike in non-performing assets (NPA), Gopinath said the government could provide capital support in this sector. “The banking system is going to see more NPAs. There could be a reason for capital support from the government. The government has to scale up infrastructure spending. And alongside, there has to be a credible path for divestments,” she told the leading portal.