Budget 2021 | Govt should focus on higher spending on R&D, says Deloitte India Economist

By Rumki Majumdar,

The emphasis of the economic survey has rightly been on healthcare and one that we too have repeatedly highlighted. This pandemic may not be the last one that the world experiences and India needs to build resilience and be better prepared for future uncertainties.

The other two areas of emphasis include innovation with higher spending on R&D and poverty and inequality. While India aims to be the next manufacturing hub, our country must aspire to move up the value chain simultaneously by spending on innovation and R&D.

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We also believe growth and redistribution of income is the only solution for India to deal with the challenge of poverty and inequality, which has turned more acute during this pandemic.

While the government will aim to address many of the challenges through spending on social and physical infrastructure, funding these expenses on time will be important. India needs investments from foreign sources and the private sector and both will be determined by the sovereign credit ratings, which according to the survey, doesn’t reflect India’s fundamentals.

Most likely, an overhaul of the methodology, as well as its transparency, will likely help improve India’s rating and in tapping into alternate sources of funds.

(The author is an economist at Deloitte India)