'Budget 2022 cites hike in capital outlay, but skips middle class'

KOLKATA: Stating that the Budget 2022 indicates increase in capital outlay and increase in government investment—expected to improve the infrastructure—economist Avirup Sarkar on Tuesday also opined that the Union Finance minister Nirmala Sitharaman should have taken measures to put additional money into the hands of the middle class.

Sarkar, a former professor of Indian Statistical Institute, believes that though infrastructure improvement is likely to happen— which in turn can increase private investment—it needs to be seen how far the market can be strengthened in this sector.

There are serious doubts, though.

"If there is no demand in the market, then even if there is an increase in productivity, private investment is not likely to pick up. So, the Finance minister should have taken measures which could directly put additional money into the hands of the middle class, who are the major spenders in the economy. In the absence of that, the virtual cycle of spending—as mentioned by the Union Finance minister in the Budget— is not likely to start," he said.

According to Sarkar, till now an estimated 4.6 crore people have been pushed into extreme poverty and per capita expenditure has declined from 62,056 crore in 2019-20 to Rs 59,043 crore in 2021-22.

"The Budget did not highlight any positive outcome for the farmers, middle class, daily earners and the unemployed. This needs to be looked after," added Sarkar. Moreover, the government on Tuesday proposed to replace the existing law governing Special Economic Zones (SEZs) with new legislation to enable states to become partners in 'Development of Enterprise and Service Hubs'.

According to Sarkar, it needs to be seen how far the new legislation in SEZ will help the states so that all large existing and new industrial enclaves optimally utilise the available infrastructure and enhance the competitiveness of exports.