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The budget must prioritize steps to support short-term incomes and delay fiscal adjustment

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In Science and Space: With household consumption, which accounts for up to 55% of GDP, contracting by 10.1% in FY2021, the report calls for drastic measures in the upcoming budget to reverse the damage from lax fiscal policy and focus on short-term income and job creation. demanding action measures. CRISIL’s report on Tuesday, citing the National Bureau of Statistics’ latest estimates for this year’s GDP, said household consumption this year fell 3 percentage points from 2020 levels, the worst of the expenditure-side components of GDP. said to show the performance of Pandemic.

Joshi called on the government to announce in the budget some key steps to stem the recession by taking measures to create jobs and support incomes. The government could create an additional fiscal space of INR 3.5 billion over the 2022-26 financial year by delaying the 3% budget deficit milestone, the report said.
Even if nominal GDP growth slows from 17.6% in fiscal 2021-22 to 12-13% in fiscal 2022-23, it could still support the broader government balance sheet as tax revenues rise, he said added.

Noting that the consumption cycle desperately needed a budget hike, the report noted that consumer spending had already slowed before the pandemic. Growth in per capita consumption fell from 6.8% in 2017 to 4.4% in 2020 and dropped sharply by 10.1% in 2020-21. Moreover, the recovery has been slower than other demand components of Gross Domestic Product (GDP). CRISIL chief economist D.K. Joshi said in a report that it will not even reach the level of 2019 by the end of this year.

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This, coupled with a gradual path to deficit reduction, may provide room for increased spending to support rural and urban job creation, which will support consumption in the short term and increase capacity growth over the next four years. It will fund investments (investments), the report said. . Specifically, the report says the budget should announce asset-creating job-creation measures until growth is widespread and demand conditions show sustained improvement.

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