Big push to reignite sluggish economy

Big push to reignite sluggish economy
With the allocation of whopping Rs 3,96,135 crore for infrastructure development in the Union Budget of 2017-18, the  central government wants to reignite the sluggish economy followed by recent demonetisation. The growing needs of both social and economic infrastructure are well accepted in the recent economic survey 2017-18 which succinctly puts as “other Indias” where investment is insufficient to place India on the high growth trajectory.

This stark diagnosis on economic infrastructure has resulted in increase in the total outlay of Rs  2.21 lakh crore in 2016-17 to Rs 3.96 lakh crore in 2017-18, a 55%  hike in the allocation. The digital infrastructure outlay of Rs 10,000 crore for BharatNet with high speed fibre to reach 1,50,000 villages in 2017 will reduce the digital inequity or gap between rural and urban India, throwing more educational and skill development for rural students. However, more thrust on rural infrastructure has been given over urban infrastructure. The highway development received Rs 64,900 crore, which will create more employment along with cement, steel and other allied industries. This Budget is highly focused on overall development of rural India, particularly on infrastructure development such as roads, electricity, housing, sanitation, drinking water, irrigation etc., with an aim to alleviate poverty and reduce income inequality. A comprehensive infrastructure investment plan on nuclear power generation for the next 15-20 years will ensure energy demands of the country.

The energy sector received
Rs 1,26,000 crore, which will be used for enhancing renewable energy production, constructing strategic crude oil reserves and to provide electricity to all the rural households by 2018. However, when compared to economic infrastructure, the social infrastructures like education, health, and environment are given less scope in the Budget. Further, the investment on urban infrastructure received a raw deal in the Budget. The flagship programme of “Smart Cities” have not received much investment in the Budget. A new Metro Rail policy and construction of airports in Tier II cities will help shifting of population from Tier I cites to some extent.

This year, the Budget with more thrust on rural infrastructure has tried in principle to reduce the infrastructure inequality between urban and rural areas and creating more employment opportunities in rural areas through reallocation of income. Over all, undeniably, the Budget has tried to balance and address both the short and medium term needs of the economy which will achieve twin goals of creating demand and augmenting capital formation.

(Dr Krishna Raj is Associate Professor and Head, Centre for Economic Studies and Policy, Institute for Social and Economic Change, Bengaluru)
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