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: The government on Tuesday proposed to significantly step up the public investment by raising capital expenditure by 35.4% to ₹7.5 lakh crore or 2.9% of the GDP in the next financial year.

Presenting the Union Budget in the Lok Sabha, finance minister Nirmala Sitharaman said the virtuous cycle of investment requires public investment to crowd-in private investment.

“At this stage, private investments seem to require that support to rise to their potential and to the needs of the economy. Public investment must continue to take the lead and pump-prime the private investment and demand in

2022-23,” she said.

She said the outlay for capital expenditure in the Union Budget is being stepped up sharply by 35.4% from ₹5.54 lakh crore in the current year to ₹7.50 lakh crore in 2022-23. “This has increased to more than 2.2 times the expenditure of 2019-20. This outlay in 2022-23 will be 2.9% of GDP,” Sitharaman added.

She further said this investment taken together with the provision made for creation of capital assets through grants-inaid to states, the “effective capital expenditure” of the central government is estimated at ₹10.68 lakh crore in 2022-23, which will be about 4.1% of GDP.

The government also proposes to issue sovereign Green Bonds for mobilizing resources for green infrastructure. It will be a part of the government’s overall market borrowing in 2022-23 estimated at ₹11.58 lakh crore.

The minister said the proceeds of Green Bonds will be deployed in public sector projects which will help in reducing the carbon intensity of the economy.

Keeping in line with changing times, Sitharaman read out the speech from a ‘Made in India’ tablet personal computer which she carried in a red cover with the National Emblem embossed on it, instead of a brief case or ‘Bahi Khata’.

With Covid pandemic guidelines in force, members were seated in the chambers of Lok Sabha and Rajya Sabha. Most of the members, including Prime Minister Narendra Modi, were seen wearing face masks. However, members had crowded the Lok Sabha chamber, while hardly a handful of others, including union ministers Dharmendra Pradhan and Piyush Goyal, were seen seated in the Rajya Sabha chamber.

Trinamool member Saugata Roy and DMK member Dayanidhi Maran were heard criticising the allocation made for setting up an international arbitration centre at GIFT city. “Is this Union Budget or Gujarat Budget? This is good only for Gujarat,” Roy and Maran were heard saying.

The duo also demanded greater allocation for states from the GST collections when the finance minister mentioned gross GST collection of ₹1.40 lakh crore for January 2022.

Opposition members demanded allocation of 5G spectrum to BSNL, when

This Budget will create new opportunities... providing strength to economy

NARENDRA MODI,

Prime Minister

We are marking Azadi ka Amrit Mahotsav... entered 25-yr-long leadup to India at 100

NIRMALA SITHARAMAN,

Finance minister

M0di G0vt’s Zer0 Sum Budget! Nothing for— Salaried class— Middle class—The poor and deprived— Farmers

RAHUL GANDHI,

Congress leader

Sitharaman mention that the government planned to auction 5G spectrum in the next financial year.

Congress members protested the announcements related to strategic sale of Air India and Neelanchal Ispat Nigam Limited and the planned IPO of Life Insurance Corporation.

“It is a sell-off of institutions,” Congress member T N Prathapan was heard saying.

India Inc, meanwhile, said the budget is growth-oriented and exudes a fine balancing act with an increase in capital expenditure while maintaining fiscal discipline.

Corporate leaders and industry bodies described the Budget as business-like and devoid of any populism, with an emphasis on improving the ease of doing business and reviving economic growth by catalysing demand and investments.

“I congratulate FM @nsitharaman Ji for a growth-oriented and forward-looking #Budget for the masses. It sets the stage for rapid progress post-pandemic,” Vedanta Resources Executive Chairman Anil Agarwal tweeted.

Mahindra Group Chairman Anand Mahindra tweeted: “Brevity has always been a virtue. @nsitharaman’s shortest budget address may prove to be the most impactful.

”Biocon Executive Chairperson Kiran Mazumdar-Shaw tweeted: “Fiscal prudence and business ease have been the theme. 35% increase in capital expenditure will drive infra and jobs - positive rhetoric with no negative surprises= balanced budget.”RPG Enterprises Chairman Harsh Goenka tweeted: “With today’s budget focussed on capex, digital and welfare - I can clearly imagine the future. Today’s wordle Budget edition”.

Hinduja Group Co-Chairman Gopichand Hinduja termed the Budget as a great attempt by the finance minister to lay the economic blueprint for India’s growth in the next 25 years.

However, he stated that the devil is always in the detail, and the success of the measures taken will depend on the government’s ability to focus on the implementation.

CII Director-General Chandrajit Banerjee said, “Indian industry welcomes the government’s unwavering commitment towards boosting investments, creating jobs, improving ease of doing business, maintaining tax

stability and certainty in policy regime through well-designed and prudent measures delineated in the budget.”Along with several positive and innovative measures, the most defining feature of Finance Minister Nirmala Sitharaman’s Budget for 2022-23 is a phenomenal increase in the government’s capital expenditure that would effectively go up to Rs 10.68 lakh crore for the financial year beginning April 1, Assocham said.

Essar Ports Managing Director Rajiv Agarwal said the Budget, guided by the PM’s Gati Shakti National Master Plan, will facilitate economic recovery, especially amid the persistent pandemic.

“It is highly encouraging that the Union Budget seeks to lay the foundation and give a blueprint of the economy over ‘Amrit Kal’ of next 25 years — from India at 75 to India at 100,” Pradeep Multani, president of PHD Chamber of Commerce and Industry, said.

Rating agency Moody’s, however, said the Budget lacks any tangible measures to increase revenue generation even though the capital expenditure plans have gone up significantly and the fiscal deficit estimate suggests that the government is relying too much on strong growth to help drive fiscal consolidation.

The budget underscores government’s previous emphasis on capex to sustain near-term recovery from pandemic, while simultaneously paving the way for longer-term restructuring of the economy, it stated in a note. But the various spending initiatives are not offset by any significant announcements related to further increase revenue generation; rather, the announced revenue-related measures are aimed at other objectives such as fostering startup innovation, ensuring more equitable treatment for cooperatives and state employees, and promoting tax compliance through simplification, Christian de Guzman, a senior vice-president, sovereign risk group, Moody’s Investors Service, said.

The Sensex soared 848 points while the Nifty reclaimed the 17,500-mark on Tuesday after Finance Minister Nirmala Sitharaman unveiled a bigger ₹39.45 lakh crore Budget, with higher spending on infrastructure to spur economic recovery and create jobs.