The Union Budget for the year 2022-23 comes at a time when the world is still maneuvering its way out of the CoVID-19 pandemic and is grappling with high inflation and supply chain disruptions.With similar domestic conditions, the Union Government launched major initiatives in the last FY including several Production Linked Incentive Schemes and strong steps towards privatisation and PSU divestment.India Inc.’s response during the period was quite promising with considerable capital investment commitments and tremendous fundraising by start-ups and through IPOs thereby taking off the India Silicon Valley story.Amidst this backdrop, this year’s budget, presented by the Hon’ble Union Minister for Finance, tries to address the impending challenges of restoring growth normalcy and meeting social objectives of the country while addressing fiscal concerns.While doing so, the budget also tries to bridge the India@75 and India@100 divide – from merely a vision to a reality by laying out a pathway.
Estimating a nominal GDP growth of 11.1%, the first priority area in the Budget is the transformative approach of PM Gati Shakti.Powered by seven engines – roadways, railways, airports, ports, mass transport, waterways, and logistics infrastructure, the alignment of PM Gati Shakti with the National Infrastructure Pipeline can have a multiplier effect on the economy, at large and on the cost of logistics and export competitiveness, in particular.
Under the second priority area of inclusive development, the budget highlights key initiatives in Livelihood, Health, Education, Housing, and Financial Inclusion.
Across these, a great focus is on horizontal as well as vertical expansion through a cumulative outlay of Rs.
10.9 Lakh Crores.Through horizontal expansion, women, underprivileged population, micro and medium, and small-scale farmers and entrepreneurs would be covered.Through vertical expansion, these sectors would be made efficient by leveraging information, communication, and technology.
(The views expressed in the article have been curated solely for BW People publication, by Adil Zaidi, Partner and Leader – Economic Development Advisory, EY India)
To attract investments for the envisioned Amrit Kaal, which is the third priority area of the budget, digital and environment friendly path has been prioritised.Acknowledging the importance of sunrise sectors in assisting sustainable development at scale, the budget has a special focus on R&D, Artificial Intelligence, Geospatial Systems and Drones, Semiconductor and its eco-system, Space Economy, Genomics and Pharmaceuticals, Green Energy, and Clean Mobility Systems.Emphasis has been laid on easier collaboration between academia, market, and the government.
Similarly, 5G spectrum auction, digital currency, and infrastructure status for data centres have been highlighted to provide momentum to the economy in the digital and sunrise sectors.A blueprint has also been laid out in terms of taking Ease of Doing Business to another level.
Green clearances, accelerated corporate exits, surety bonds as substitute for bank guarantee, and other such initiatives will affect the economy positively.
Clarity on crypto-currencies in terms of income and transaction tax has also been widely addressed.
The Budget sews together the above-mentioned priority areas by charting out a roadmap for the financing of these investments.Public investment has been made the lead to pump prime the private investment and demand in 2022-2023.Green Bonds, incentive for states to expand their capital expenditures, Rs.1 lakh crore for capital expenditure of states as 50-year interest-free loans, and blended finance communicated by the Hon’ble Finance Minister, highlights the clear emphasis on expanding capital expenditure.The other emphasis is clearly on fiscal consolidation as indicated by a reduction in Centre’s fiscal deficit target from 6.9% of GDP in 2021-22 to 6.4% of GDP in 2022-23 and further to 4.5% of GDP by 2025-26.Further, the ratio of revenue deficit to fiscal deficit, standing at 59.6% in 2022-23 – lowest since FY17, also implies the improved quality of fiscal deficit.
Aspirational India deserves an aspirational approach to achieve the milestone of being a USD 5 trillion- economy while being Atmanirbhar.
However, effective resource allocation and mobilisation in addition to monitoring, not only in terms of output but also the impact it brings, would be the key to success.While the budget considers the future, it tries to seize the moment, thereby, bringing together both – the long run & the short run.And, thus, making it all the more interesting to witness its near-term and long-term impact!.
