TIME FOR BIG SPENDING
WHEN FINANCE MINISTER NIRMALA SITHARAMAN presents Budget 2021 on February 1, the circumstances that she will do so in will be, without doubt, exceptional. The Covid-19 lockdown last year was an economic earthquake of sorts, comparable to the global financial crisis sparked off by the collapse of Lehman Brothers in September 2008. D.K. Joshi, chief economist at Crisil, says, “No other budget compares as closely to the upcoming one as the one that followed the Lehman Brothers crisis.” Thanks to the fiscal stimuli rolled out in 2008-09, India emerged rather unscathed from that crisis, though the splurge seeded other problems, including a spate of corporate bankruptcies and mounting bad loans in the following years.
Sitharaman’s 2021 budget comes against the background of a recession, with growth in two consecutive quarters in the red (-23.9 per cent in the first quarter of fiscal 2020 and -7.5 per cent in the second). The economy is set to post negative growth for fiscal 2020 as a whole, at an estimated -7.7 per cent. There have only been four instances when budgets have been presented in times of negative growth—1958-59, 1966-67, 1973-74 and 1980-81.
In May last year, to address the cratering economy, the Centre announced the Atmanirbhar Bharat Abhiyan, a Rs 20 lakh crore stimulus that amounted to 10 per
