CAPITAL PATH TO RECOVERY ROAD

FM prioritises growth over fiscal consolidation, scales up spending on expressways, transit, housing to propel post-Covid bounceback Green energy gets a major push; new digital currency and tax on crypto gains proposed; personal income tax slabs left unc

NEW DELHI: Finance minister Nirmala Sitharaman announced a Union Budget built primarily around a huge increase in capital expenditure to revive growth, measures to encourage domestic manufacturing and exports, including a new SEZ policy, and a transition to a less carbon-intensive economy, but took on a higher-than-expected fiscal deficit target, despite lower food and petroleum subsidies.

She also made no changes in direct taxes, although she announced the taxation of virtual digital assets including cryptocurrencies. Sitharaman also said the Reserve bank of

India will launch a digital currency in 2022-23.

The Budget was welcomed by some analysts and businessmen who appreciated the emphasis on capital expenditure – an increase of 35.4% to ₹7.5 lakh crore –although others criticised the absence of any direct demand-or consumption boo sting measure.

“The substantive enhancement of public expenditure will create a multiplier impact on growth and competitiveness,” said Sanjiv Puri, chairman, ITC Ltd.

“The budget has prioritised long-term growth over short-term sops-induced growth, despite upcoming state elections. Though there are no direct measures to boost immediate consumption, medium to long term growth for key consumer categories should be robust,” Amit Adarkar, CEO of research firm

Ipsos India told Mint.

Despite being announced ahead of polls in five states, including India’s most populous and politically important one, Uttar Pradesh, the Budget did not have any populist measures. Analysts also said that the Budget indicates that the government believes the worst of the pandemic is over, as evident in no mention of an extension of the food grain distribution programme launched at the Covid-19 peak – although it did announce an extension of a credit scheme targeting small enterprises, with an additional tranche exclusively for companies in hospitality and allied businesses that have been hit really hard over the past two years.

Prime Minister Narendra Modi said that the Budget “is full of new possibilities for more infrastructure, more investment, more growth, and more jobs”, adding that it also focuses on “welfare of the poor”. However, Congress leader Rahul Gandhi criticised the Budget and termed it a “zero-sum” one. He added it that has nothing for the salaried, middle class and the poor.

Finance minister Sitharaman said it wasn’t true that the budget has nothing for the middle class. “What is our understanding of middle class? Whether a farmer’s family doesn’t have members belonging to middle class? People having MSMEs, aren’t they middle class? Those who are beneficiaries of affordable houses, aren’t they middle class?... My