He said that the government is in favour of taking forward reforms by deregulating and removing regressive laws to boost ease of doing business rather than tinkering sector specific schemes.
The recent agriculture reform however drew criticism from several quarters.
“We will look at how to soften the blow. But any economist worth his salt would support the new farm laws,” Sanyal said. The government has also unveiled three labour codes on industrial relations, social security and occupational health safety & working conditions last year.
Elaborating the philosophical framework behind the Budget announcements, the economist said that the focus is on asset creation by increasing capital expenditure on infrastructural development instead of going for a fiscal stimulus and spending money to artificially inflate the economy.
“India will follow an investment led growth model which will be supported by huge foreign direct investment inflows,” he said at a webinar organized by Bharat Chamber of Commerce. There was no point for a big stimulus since it’s a supply side bottleneck during the pandemic and not a demand side problem, Sanyal said.
Ramesh Kumar Saraogi, president of the Kolkata-based chamber of commerce, expressed apprehensions on whether the Budget could have done more to bolster the economy through income support rather than enhanced outlays on infrastructure and capital investment.
Sitaram Sharma, immediate past president, raised concerns over growing income inequality.
Sanyal argued that the only way to address poverty is through growth and wealth creation, as in East Asia, where poverty has gone down drastically. “If wealth is not generated, the government ends up redistributing poverty. Though, we have ensured that the basic necessities of the poorer sections are taken care of, it’s important that the rhetoric of income inequality does not deter the growth of the economy,” the economist said.
He emphasized on the private sector role for alleviating poverty and building a strong nation while the government would function as a strong but minimalist state.
“We are clear that deregulation is needed. We have already got rid of unnecessary regulations in the geo-spatial and cartography sectors and also telecom regulations affecting the BPO and IT sectors,” he said.
The pandemic has however brought trouble for the Insolvency and Bankruptcy Code (IBC) — one of the major reforms from the government’s previous term, since it has to be suspended temporarily in sync with regulatory forbearance for banks.
The Goods and Service Tax – a vital tax reform — is getting stabilized setting aside the pandemic blow with collections exceeding Rs 1 lakh crore for the fifth straight month to February.