The upcoming budget must focus on creating employment and bridging widening inequality in the economy besides accelerating growth, the former RBI governor D Subbarao said on Thursday while observing that considering the need to improve education, health and infrastructure, there were not many concessions. for tax cuts.

Subbarao also believes that experience shows export promotion behind protectionist walls is rarely competitive, so there are cases to reduce tariffs.

“The acceleration of growth is the purpose of every budget because it must be from this one. But this budget must pay special attention to bridging inequality that widened in the economy,” he told PTI in an interview.

While noting that the Covid-19 pandemic has caused a major trouble towards a low-income segment operating in the informal economy, Subbarao said the upper income segment was not only able to protect their income but in reality it was able to foster their savings and wealth.

Citing the report of the latest world inequality that India is one of the most uneven countries in the world, he said, “The extensive inequality is not only morally wrong and corrosive politically, but will also refer to our long-term growth prospects.”

Minister of Finance Nirmala Sitharaman is scheduled to present the 2022-23 Union budget in parliament on February 1.

“We need intensive job growth. If there is a theme for this budget, it must be a job,” he said.

The former RBI governor shows that the work has been lost due to a slowdown in growth and also because of the shift in activities from the informal sector of labor intensively to the intensive formal sector.
“Growth is needed to produce work, but not enough,” he said, added that there was a need for stronger emphasis on increasing the ease of doing business through governance reform so that investment was a promising choice for domestic and foreign investors.

Subbarao shows that raising export levels is good not only for the reason for paying reasons but also from a work perspective because of the production of labor intensive export.

“Experience shows that export production behind protectionist walls is rarely competitive. Therefore there is a case to roll out tariffs,” he said.

Asked whether there was a scope for a tax reduction in the upcoming budget because it would provide assistance to the poor, said Subbarao in accordance with media reports, this year’s tax collection would be better than budgeted targets, he would mostly occur offsets with the results of privatization Lower and higher expenses for food and fertilizer subsidies.

“So, the net positive impact on the fiscal deficit tends to be marginal,” he said. Also, subbarao noted that the tax show that this year’s country saw would disappear next year because the informal sector revived.

“In addition, given the sustainable need to increase expenses for education, health and infrastructure, I do not believe there are many concessions for tax deductions,” he said.

Asked whether the government had to continue with stimulus steps to stimulate growth, said Sub-Carriage in the last budget, the Minister of Finance is committed to the fiscal consolidation path to reduce the fiscal deficit to 4.5 percent of GDP from 2025/26.

“I believe this is important to operate in that space. Every deviation from the fiscal consolidation path will damage the credibility, the sentiment of dented investors and hurt our growth prospects.” He said.

Asks how big inflation worries, subbarao said inflation remained in reach of the RBI target band over the past two years.

In the future, he said there would be pressure on inflation due to unfavorable basic effects, the increase in commodity prices and the increase in output prices by the company.

“Controlling inflation can walk far to improve the difficulties of the poor,” Subbarao said.

At the risk of stagphlation, he said he thought it was too worrying.

“Yes, inflation has been persistent for the past two years but note that it is still in the target of the RBI band. RBI must be able to bring it to the midpoint of the target band by normalizing the policy,” said Subbara.

Stagflation is defined as a situation with persistent high inflation combined with low growth.

Retail inflation in India rose to 5.59 percent in December 2021, while wholesale price-based inflation fell to 13.56 percent last month.

In economic growth, he said if Omicron remained light, mobility restrictions tended to be targeted and decentralized.

“Therefore in the basic case scenario, we must achieve a growth of 9.2 percent for the full year. If actually the assumption of Omicron does not apply, there will be a risk of decrease in the estimated growth of 9.2 percent,” said Subbarao.