This year’s Union Budget is being prepared against a backdrop of extraordinary uncertainty. The IMF’s World Economic Outlook Update talks of a disrupted recovery. It says, “Supply chain disruptions, energy price volatility, and localised wage pressures mean uncertainty around inflation and policy paths is high.”
Earlier, the World Bank’s Global Economic Prospects, its flagship publication, said, “The global recovery is set to decelerate markedly amid continued COVID-19 flare-ups, diminished policy support, and lingering supply bottlenecks.”
The priorities last year were clear — spend as much as possible to offset the impact of the pandemic. Pent-up demand aided the recovery and the rebound in the corporate sector helped strong growth in tax revenues. This year, things are very different.