Global economy is on stake due to rivalries between the big economic powers like United States and China. And the US-Iran conflict has further worsened geopolitical and economic crisis for the whole world, not only for Asia. Unfortunately, if this US-Iran conflict escalates, it will create a huge impact on Indian economy. Owing to this, oil prices will go up and India’s trade with west Asian countries will jeopardize. Against this backdrop, the Budget 2020 assumes significance for the Narendra Modi government. There are various challenges before the government to tackle with. But the most important tasks, where the government needs to focus on, are generating employment in small towns, making India self-dependent in energy and concentrating on Research & Development (R&D).
Energy is the only and the biggest medium of development for a country. India cannot depend on oil being imported largely from west Asia, which is going through bloody conflicts. Even if India moves towards other countries, it is not an ultimate solution. Because, at the end of the day, economy will depend on energy market of other countries. They will decide not only India’s development, but also inflation of the country, which is the most important factor for the common man. Therefore, this budget should lay emphasis on increasing contribution of solar energy in India’s energy needs. However, it cannot be gainsaid that this government has focused a lot on green and solar energy. India has already installed 20 GW of solar power and it has now set a new target of achieving 100 GW of solar power by 2022. It is here worth mentioning that India’s self-dependent in energy cannot be completed without electrification of all types of vehicles. It will have an enormous impact on cutting oil import bill.
Rural development and generation of employment in small towns is the one subject where government has to really work hard. Owing to dearth of job opportunities, people are rapidly migrating from rural to urban areas. Gradually, villages are turning vacant. And this is happening because there is a very little profit in agriculture. Having said that, agriculture cannot be made profitable by giving minimum support prices or waiving loans. It is the agro-processing that can bring smile on a farmer’s face. Food production industries should be set up in small towns, which will not only give the appropriate price of crops, but also generate jobs in rural areas. It will put a stop on migration also. There is also a fact that those companies that would invest in rural areas will have benefit of low wages. There is also a truth that due to flood-like situations farmers often face huge problems, which is also a reason why agriculture is becoming problematic. One of the most important things is that due to the division of families, the area of farming is shrinking day by day and this is the reason why the production cost is increasing. If the population increases further and the families of those people who own small land are divided, the majority of the farmers would have very less land to cultivate on. Therefore, it is evident that industrialisation in rural areas is the only solution and MSMEs can contribute a lot in this regard. Hence, in this budget, some special treatment should also be given to those small industries that are willing to invest in rural areas. Due to this rural problem, big cities are also having huge burden of population, which creates hindrance in urban planning.
Research and development is also one of the most important areas, which should be focused in this budget. According to the Economic Survey, India's spending on R&D in terms of percentage of GDP has been stagnant at 0.6 to 0.7 per cent in the last two decades -- much lower than that of the US (2.8%), China (2.1%), Israel (4.3%) and Korea (4.2%). Due to lack of R&D India is lagging behind powers like the US and Chine. India, a country of 1.35 billion and people import most of their resources from outside. On this, it has to spend billions of dollars and this is the big reason of India’s trade deficit with country like China. When the whole world is focusing on indigenous manufacturing with the help of research and development, India cannot depend on other countries’ technology. The best example we have is defence sector. In defence, no country exports its most updated version of technology. So, procuring the old version is only wastage of money. Here it is vital to mention that when India is willing to have its fifth generation fighter jet till 2029, China is already working on sixth generation fighter jet. Not only this, India has not its global brand in the area of mobile manufacturing. And it is only because of lack of research and development. According to ET report, If over 600,000 applications were filed for patents in the US and more than twice that number in China in 2017, in India, there were only 46,600 — and patent grants came to just over 12,000. It clearly points out that India needs to take emergency steps to stand with countries like the US and China in the world of innovation. It should not be forgotten that those who will have good technology will lead the world economy. And those ahead in economy will lead the world. Therefore, one hopes that this budget will focus more on R&D, rural development and energy. It can help fulfil India’s 5-trillion-dollar dream.
By Ravi Mishra
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