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West Bengal, which has been doing exceedingly well in terms of its welfare schemes, would need to lay more emphasis on industrial growth and focus on bringing in investments into the State, said Abhirup Sarkar, an eminent economist. The State has a lot of potential and can draw investments if it got some support in the form of incentives in the forthcoming Union Budget, he added.
The State runs more than 400 programmes which provide social assistance, protection, care services and jobs through an umbrella platform ‘Joy Bangla’. It recently got a loan of $125 million (₹1,000 crore) from the World Bank for its efforts to help poor and vulnerable groups access social protection services.
‘Low industrial growth’
“The West Bengal government is doing well as far as welfare schemes are concerned, but from the point of view of long term growth, there needs to be more emphasis on industrial growth. It has been rather low in the last three years,” Sarkar told BusinessLine.
The State has done well in agriculture but that may not be enough, and for long term sustenance, it should be able to draw investments. The Budget usually provides for some regional incentives but that largely depends on how well the States can lobby with the government. Now despite having potential, West Bengal might be in a slightly tough spot as it does not enjoy a very favourable equation with the Central government.
“Empirical evidence suggests that when there is a different government in Centre and State, then the State usually suffers. So that is a disadvantage for us,” he said.
Focus on revival
The Union Budget 2022 should focus on revival of growth with a clear emphasis on pushing consumption and creating a demand boost, coming mainly from the middle class population. This can be done partly by way of tax concessions and partly by providing support to middle-level businesses. “There has been a bias in the way we have grown in the past. Our growth has been skewed in favour of the rich and super rich. We need more support to be provided to middle and lower middle classes. Different studies show signs of reduction in size of middle class as they have gone down the ladder,” he said.
The Merchants’ Chamber of Commerce & Industry (MCCI) feels the Finance Minister’s Budget speech will likely spell policies and measures that target demand generation, job creation and will help the economy to prolong a sustained 8 per cent plus growth rate.
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Demand boost a must to sustain the nascent growth revival
The fiscal space can be used to reinvigorate consumer demand. Tax sops can also be considered for the salaried“Restrictions and work from home norms affect the manufacturing sector more than any other sector. The challenge is more acute for the medium and small-scale industries, many of which had to shut down over the last two years. To address this challenge, we need to bounce back. We need to develop resilience and long-term sustainability in our enterprises. Businesses have to be enabled to operate even under pandemic as complete lockdowns often mean loss of livelihoods for millions,” said Rishabh C Kothari, President, MCCI.
According to Pradeep Sureka, President, Indian Chamber of Commerce, the upcoming Budget should help fast track economic recovery. It expects the Union Budget 2022 to increase public spending specially on the capital expenditure front with the objective of boosting demand and creating jobs, and counteracting by suitable supply-side measures for addressing the inflationary pressures.
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