Pockets not loaded: Budget is production-centric, not consumer-centric

A cutout of the Hindu goddess of wealth and prosperity Lakshmi is seen at an entrance of an electronics and appliances shop in Jaipur, India, October 20, 2020. Picture taken October 20, 2020. Reuters/Anushree Fadnavis 

If you are scouring the Budget to spot big steps to boost direct consumer spending, then there are none. There is neither any cut in the income tax slab to increase disposable income in the hands of taxpayers nor is there any measure to beef up consumer pockets in any other manner. The reasons are not hard to find. Last October, Finance Minister Nirmala Sitharaman rolled out Rs 73,000 crore to stimulate consumer spending. The idea was to fight the economic slowdown triggered by the pandemic. The government even announced payment of cash in lieu of LTC and Rs 10,000 festival advances to government employees as part of its efforts to boost spending by consumers during the festive season last year.

Budget 2021, in terms of direct measures, doesn’t take the story ahead. “It is not consumer centric. It is production centric,” reckons Harish Bijoor, who runs an eponymous brand consulting firm. The government, he underlines, is hoping that the private sector would spur the consumer demand and move the consumption story ahead. “There is sadly nothing directly for consumers,” says Bijoor.  

Indirectly, though, there are impetus across sectors. Take, for instance, the move to extend the benefit of additional Rs 1.5 lakh tax deduction on home loan interest on affordable housing till March 31, 2022. “This will act as an impetus to the residential property sector,” reckons Dhruv Agarwala, group CEO of Housing.com, Makaan.com and Proptiger.com. The move, he lets on, augurs well for the affordable housing segment, which will also benefit from the decision to offer a tax holiday for one more year. The support for rental housing too will go a long way in boosting the real estate market. “This will also help migrant workers to a great extent,” he says. Then there is additional allocation towards MGNREGA (Mahatama Gandhi National Rural Employment Guarantee Scheme). The allocation of Rs 73,000 crore, a massive hike of over Rs 63,000 crore against Rs 9,500 crore in 2020, will go a long way in boosting income, and consequent consumption, in rural India.

Harsha V Agarwal, director of FMCG major Emami, agrees. With key focus on building an Atmanirbhar Bharat, there are significant allocations for infrastructure building, especially for rural India. “The budget enhances allocation to agri-credit and also prioritises the agricultural and agri-allied sectors,” he says. All these measures, Agarwal adds, are expected in generating an increase in rural consumption which is necessary for reviving the Indian economy.