India’s budgetary gambles

Facing constraints: The Reserve Bank of India building in Mumbai. It says the non-performing assets of troubled public sector banks could exceed 15% of their total assets by the end of next month. ─ Bloomberg

RAVAGED by Covid-19 more than any other major Asian economy, India’s economy is on the comeback trail. But the 2021-2022 financial year budget unveiled by finance minister Nirmala Sitharaman on Feb 1 takes some unusually bold gambles to put the economy back on a path of sustained growth.

If they work, India could regain its place as one of the world’s fastest-growing economies and enjoy a “roaring 20s”, as some policymakers hopefully predict. If they fail, the economy could relapse into its sub-5% pre-Covid-19 growth rate, weighed down by a job crisis, a blowout of the fiscal deficit and a mountain of bad loans in its financial institutions.