Budget lays out a vision for India@100
It successfully balances the requirements for growth while taking ample care of equity
The most important feature of this Union Budget is that it has a unifying theme. It is neither a collection of outlays on populist welfare schemes nor a statement of assorted changes in the direct and indirect tax regime. The unifying theme is to lay the solid foundation for achieving our vision of a digitally empowered India with world-class infrastructure and globally comparable education and health sectors in 2047, when we celebrate the centenary of our Independence. It is a Budget that focuses on the long-term while at the same time addressing the immediate challenges thrown up by the worst shock in a century, caused by Covid-19. It has risen above being a partisan Budget. Instead, it has kept its gaze fixed, laser-like, on the country’s principal goals and objectives.
The four priorities, which have driven the Budget’s agenda, are essential components of this unifying theme. The Gati Shakti master plan, its priority, seeks to provide a seamlessly integrated world-class physical infrastructure to meet the logistics need of a rapidly growing economy. The rapid expansion and modernisation of the seven constituent sectors of this master plan — roads, railways, airports, ports, mass urban transport, waterways and other logistics dimensions — will have a productivity-enhancing and employment-generating impact. In addition, it will make Indian business globally competitive and help boost exports and remove bottlenecks in supply chains, thereby helping to bring down inflationary pressures in the economy. It is important to remember that the recent rise in the inflation rate is not a result of excess demand, but reflects supplyside constraints. This is true not only of India, but globally as well.
Therefore, the Budget has announced a whopping increase of 35.4% in government capital expenditure for 2022-23 (FY23) over the previous Budget estimate. Even when compared to the higher revised estimate of ₹6.02 lakh crore (risen due to the write-off of Air India’s debt), it still represents a substantial increase of 25%. This comes on top of a sharp increase in public capital expenditure in 2021-22. This amply demonstrates this government’s commitment to not pander to short-term populism, but to build the strongest foundations for long-term, sustained, rapid and equitable growth of the economy.
Infrastructure development generates employment. It crowds in private investment which, in turn, again creates jobs. Additionally, a world-class infrastructure and logistics network lowers costs for corporates and helps them become globally competitive.
This allows them to ramp up exports, which again are employment-intensive. The finance minister stated that a key component of the government’s threefold vision for India@100 is: “Relying on virtuous cycle starting from private investment with public capital investment helping to crowd-in private investment.” The Budget seeks to accelerate this virtuous cycle, thereby, generating massive multiplier effects, which will boost both growth and employment.
In a similar vein of giving India@100 a globally comparable education system and enabling us to reap the demographic dividend, the Budget has increased the outlay for the education sector to more than ₹1 lakh crore, representing a 12% rise over the Budget estimate of FY22. Combined with the digital ecosystem for skilling and livelihood; setting up 750 science and math virtual labs; 75 skilling e-labs in FY23 and facilitating “Drone Shakti”, the Budget gives a strong fillip to the implementation of the national education policy that aims to renovate and rejuvenate the country’s education system. The health sector outlay, having been raised by more than 7% in FY22, is being further ramped up by 16% over last year’s Budget estimate to ensure better living conditions for the “aam aadmi” (common man).
Another aspect of developing a vibrant modern economy is to bolster the growth of the domestic manufacturing sector. To this end, the government had already announced its ambitious Production Linked Incentive (PLI) Scheme in 14 sectors with an outlay of about ₹2 lakh crore.
This Budget further enhances this focus in several ways. It provides an additional outlay of ₹19,500 crore for the production of solar power equipment to minimise imports; it earmarks 68% of the total defence capital budget for procurement only from domestic manufacturers; it reduces import duty on several imported components for export-oriented sectors such as diamonds, gems and jewellery and textiles; it also raises duties on imported goods such as umbrellas, which compete with our small enterprises; the Budget does away with anti-dumping surcharges on intermediate products whose global prices have risen to lower production costs domestically; over 25,000 compliances have been reduced and 1,486 laws repealed to further improve the ease of doing business; finally it rationalises the exemption and import duty structure on capital goods, thus making domestic production more competitive. All these measures will permit a globally competitive manufacturing sector to expand in India. That will also generate jobs, with approximately six million additional jobs coming from the 14 PLI schemes already announced.
There are also some direct measures for improving the lives of the common person. The Jal Jeevan Mission, which will enable tap water to reach an additional 38 million households, has been allocated an additional ₹60,000 core in FY23 over the ₹50,000 crore in FY22. Under the Ayushman Bharat Digital Mission, an open platform for the national digital health ecosystem will be rolled out in FY23. ₹7,800 crore has been allocated to the PM Jan Aarogya Yojana that provides subsidised health insurance to the less well-off.
This Budget successfully balances the requirements for accelerating growth while taking care of equity. At the same time, it addresses immediate post-pandemic challenges while laying the foundations for a New India that will meet the aspirations of its young population.