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Next Union budget may retain focus on infrastructure story, states Nirmala Sitharaman

The forthcoming budget may have a continued focus on infrastructure development, finance minister Nirmala Sitharaman has indicated on Saturday, and stressed the importance of a consistent tax regime.

The finance minister, speaking at the Hindustan Times Leadership Summit 2021, said that infrastructure development is one of the key focus areas of the government and the “emphasis on infrastructure spending in some form or the other” will continue.

Sitharaman said that the robust recovery of the pandemic-hit Indian economy is because of the government’s policy focus on providing support to micro, small and medium enterprises, increasing infrastructure investments, ease of compliance, and consistency in both direct and indirect taxes.

“If decision-making is complicated, time-consuming and burdensome, it cannot help. So ease of doing business and compliance burden are being reduced,” she said, pointing out that the government is continuously taking policy decisions for ease of doing business.

On consistency in taxation, the finance minister said the government reduced corporate tax in 2019 to boost investor sentiment and the policy decision helped in faster recovery of the economy after the two waves of Covid-19 pandemic hit the economy – the first in March 2020 and the second in April-May this year.

The Covid-19 outbreak last year and the 68-day hard lockdown since March 25, 2020 had a devastating impact on the economy. India’s gross domestic product saw 24.4% contraction in the first fiscal quarter ended June 2020. The economy plunged into a technical recession (negative growth for two consecutive quarters) as it shrunk 7.4% subsequently in the second quarter of 2020-21.

The economy then saw a V-shaped recovery on the back of ₹20.97 trillion stimulus package and several policy reforms announced since March 2020. A positive 0.5% growth was reported in the third quarter, followed by 1.6% expansion in the fourth quarter ended March 31, 2021.

The Indian economy started the current fiscal year with a record 20.1% expansion in the first quarter, signalling a strong revival in business activities. The latest official data released on November 30 reported 8.4% growth in the second quarter ended September on the back of increased government spending, exports and agriculture.

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