New Delhi, Jan 27 (PTI) Former Reserve Bank governor D Subbarao on Thursday said the government should focus on job creation and bridging the widening inequality in the economy in the upcoming budget.
He also said that given the need to increase spending on education, health and infrastructure, there is not much scope for tax cuts.
Subbarao also said that experience shows that the policy of promoting exports with protectionist walls is rarely competitive, hence there is a need to reduce import duties.
In an interview to PTI, he said, “Growth is the objective of every budget and this budget should also have that objective. But, in this budget, special attention should be paid to bridging the wide disparity in the economy.
Subbarao said that the Covid-19 pandemic has created a huge crisis for the low-income group working in the informal economy, while on the other hand the high-income group is not only able to increase their income, but in fact their savings and wealth. has grown.
“Such widening inequality is not only morally wrong and politically damaging, but it will also affect our long-term growth prospects,” he said, citing the recent World Inequality Report.
Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget 2022-23 in Parliament on February 1.
He said that accelerating growth is the objective of every budget and this budget should also have this objective, but this time the focus should be on bridging the wide disparity in the economy.
“We need employment-based growth. If there is a ‘theme’ for this budget, it should be employment.
The former governor said jobs have been reduced due to the recession. Apart from this, due to the shifting of economic activities from the labor intensive informal sector to the capital intensive formal sector, there was also an employment crisis.
He said that growth is necessary to generate employment, but it is not enough. Increasing exports will not only provide foreign exchange, but will also increase employment opportunities.
Apart from this, Subbarao said that the jump in the tax collection of the country this year will end next year, as the informal sector will start coming back on track.
He said the scope for tax cuts is slim given the continuing need to increase spending on education, health and infrastructure.