Against the prevailing economic backdrop, it was imperative for Finance Minister Nirmala Sitharaman to make a vigorous push for economic growth in the coming fiscal. But, there was also the compulsion to signal fiscal consolidation, given the high level of public debt and borrowings.
Under the circumstances, the FM has done a judicious job of addressing the growth prerogatives and laying the foundation of a sustainable high-growth trajectory for India.
This Budget can be said to have three main legs:
First, it is a blueprint for future growth, driven through the means of investment towards modern infrastructure and guided by the multi-modal approach that is envisaged under the PM Gati Shakti programme.
Second, it’s an aspirational Budget that is inclusive, and benefits all segments of the population including youth, women and farmers.
The third leg deals with sunrise opportunities, energy transition and climate action, all relevant parts of India’s growth journey.
Thus, this Union Budget is a landmark one that seeks to give a massive impetus to productivity growth, creating jobs and enhancing the general well-being of the people as we journey into the next 25 years of a self-reliant India.
The Budget also seeks to take states’ assistance towards achieving the broader objectives of productivity growth. The capital expenditure budgeted under the central government has been enhanced to 2.9 per cent of GDP against an achieved 2.4 per cent of GDP in FY22.
On the other hand, for FY23, Rs 1 trillion has been allocated to the states to push forward investments in the economy. These are to be provided as a 55-year interest-free loan to the States, over and above their regular borrowing programme.
This allocation will be used by the states for the Gati Shakti programme and other productive capital investments. With implementation and reduction in cost overruns as the motive, the central government intends to work closely with states to reduce time required for land and construction related approvals.
Due attention has been paid to nurture the domestic manufacturing sector, including the MSME sector, which still needs hand-holding. The ECLGS scheme has been extended for one more year, while the guarantee cover has been enhanced by Rs 50,000 crore, earmarked for the hospitality sector.
The MSME sector also received more protection as the Budget rationalised the customs rates.
This Budget also seeks to promote digitalisation and the fintech ecosystem. To boost the agricultural value chain, a scheme in PPP mode is envisioned for delivery of digital and hi- tech services to farmers.
The digital ecosystem is also proposed to be used effectively for skilling, reskilling and upskilling efforts and towards providing universal education. A proposal has been placed to set up 75 Digital Banking Units in 75 districts by the SCBs.
Towards the government’s efforts at digitisation, 5G spectrum auctions are likely to be conducted in 2022. Some thoughts have also been put forward to enable affordable broadband and mobile service proliferation in rural and remote areas.
Overall, this Budget can be classified as a bold effort towards augmenting the productivity of the economy by unleashing the multiplier effects of the capital expenditure. True, the fiscal numbers for FY23 have surprised on the higher side. However, the expectation could be that as the economy moves ahead on a strong growth trajectory, it should provide a boost to revenues, thereby enabling a correction to the fiscal gap.
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