Business Standard Microeconomic and Macroeconomic Challenges before the FM in Budget 2018-19
The Budget 2018 is not expected to be a popularist budget. A fine balancing act is required by the FM to address various issues plaguing the economy along with observing fiscal prudence. The Budget 2018 is not expected to be a popularist budget. A fine balancing
act is required by the FM to address various issues plaguing the economy along with observing fiscal prudence. Bold and innovative initiatives are required on both micro and macroeconomic levels by the FM. For the required positive impact, in the upcoming Budget 2018 the government needs to address issues at both microeconomics and macroeconomic as both are interlinked too. Microeconomics is concerned with economic issues that are dealt at an individual, group or business level. Whereas macroeconomic deals with economic policy formulation, economic indicators and other such overall aspects of the economy. Although factors such as rising oil prices, demand for Indian exports abroad, international economic indicators are beyond the FM’s control but these aspects will also have to be factored while dealing with challenges closer at home. Some of the most important macroeconomic and microeconomics challenges before the FM in Budget 2018 are mentioned below. Revive Growth – The first and foremost challenge before the government is to achieve the high GDP growth numbers. After the dual jolt of demonetization and GST the growth figures hit a low of 5.7%. It has steadily improved since then and the economy recorded a 6.3% growth in the quarter ending September. Also there is some good news on the said front, according to recent Sanctum Wealth Management report India will be the fastest growing large economy in 2018 surpassing China and achieving a 7.5 per cent growth rate. But for the said to materialize Budget 2018 will have to play a very vital role. Boosting investors’ confidence, practicing fiscal prudence and providing the required impetus for quick growth will be important. Improve Consumer Confidence, Sentiment and Spending – Consumer confidence and health of the economy are both interdependent on each other. After the cash crunch of demonetization the government will have to encourage greater spending especially by the middleclass. This will in turn improve demand and add to growth in the manufacturing sector. Cut in personal tax rates which is widely expected is one of the ways to put money in the pockets of the consumers. Keeping inflation under check is another important factor that helps improve consumer’s sentiment and enhance spending........read more