A booster shot for speedy recovery
The Union Budget strikes a fine balance between providing a safety net to those reeling under the impact of the pandemic, and ensuring macroeconomic stability
India has rolled out two budgets, and a slew of mini-budgets, amid an unpredictable pandemic situation that saw countries, including ours, go into lockdown. Naturally, a unique emergency situation of this magnitude warranted a one-of-a-kind fiscal response. While rich countries offered large stimulus packages, India took a staggered and calibrated route. With that, India also pushed for large reforms, which many critics snubbed as excessive and out of focus in a flailing economy.
Two years into the pandemic, the rich nations are running up debts that have slowed their growth prospects, and opened the floodgates of inflation. India, on the other hand, is poised to become the fastest growing economy in the world with a 9.2% Gross Domestic Product (GDP) growth estimate this year. Clearly, more than the size of the stimulus, it is the fiscal approach, and the tenacity of those at the steering wheel, that have proven to be gamechanging in a tough situation such as this.
India’s proactive policymaking and supply-side reforms in the last two years have provided it with a solid footing this year, as well as its onward journey to the “Amrit Kaal” (the 25-year period to 100 years of Independence in 2047). The framework under the Prime Minister (PM)’s vision of an Aatmanirbhar Bharat is being used to build resilience to global disruptions by encouraging innovation — a model for the world to emulate. It is in this backdrop that Budget 2022-23 has been laid out as a blueprint for inclusive, sustainable and progressive growth. Standing on the bedrock of these principles are the key pillars of future growth that I shall attempt to list here.
First, capital expenditure. Consistency is key to sustaining the upward momentum in India’s medium-term growth trajectory. Evidently, big infrastructure spending that was a mainstay in last year’s Budget, has yet again, seen a significant 35.4% increase this year to more than ₹7.5 lakh crore, a hitherto unprecedented figure. In the spirit of continuity, the Budget gives a boost to implementation of the $1.5-trillion National Infrastructure Pipeline, and big-ticket Gati Shakti projects that are essential for an equitably spread, synchronised growth among various parts of the country. This will also have positive spill-over effects associated with other sectors such as education, defence and trade. Further, high public outlays have been targeted at an eventual “crowding-in” of private investments. This will kickstart the virtuous cycle of capacity-building, rise in income and thus, consumption as well.
Second, digitisation. The Budget does the important work of recalibrating India’s economic policy with changes in the global economy. The government’s decision to carve out space for digital currency in the economy only lends testimony to its leader PM Narendra Modi’s ethos of progressive thinking and agility in action. With this, India becomes one of the first large countries to have its digital currency. This will also lead to introduction of better safeguards for investor interests, protection against online frauds, and prevention of money laundering — key challenges facing this sector. The introduction of Drone Shakti and “Kisan Drones” is a sequel to this government’s affirmative outlook towards the technology, and the potential gains it holds for the economy.
Third, buoyant tax revenues. Goods and Services Tax (GST) revenue collections have surpassed records almost every month this year, surging to the highest-ever ₹1.4 lakh crore in January. This is a result of the government’s thrust on ease of doing business, removal of more than 1,486 archaic Union laws, and transparency in tax filing and collection processes. Following this trend of increased receipts, the fiscal deficit will come under control slowly but surely.
Fourth, empowering individuals. The distinct characteristic of this Budget is prudent calibration, in the sense that it has redefined social protection. The allocation to critical schemes, such as PM Awas Yojana and PM Kisan Samman Nidhi, has seen a rise. The popular “Har Ghar Nal se Jal” scheme has been given a ₹60,000crore boost to cover 35 million households. There is a fresh impetus to connectivity with over 25,000 km of national highways to be built. Over six million new jobs have been envisaged through the Production Linked Incentives-scheme route. Contrary to the narrative being woven by the Opposition, a reduction in the allocation to the Mahatma Gandhi National Rural Employment Guarantee Scheme, which is a demand-driven scheme, indicates a likely spurt in the creation of high-income jobs. As is evident, this is an all-encompassing Budget for “Bharat” in the way that it touches every segment and every sector, especially those impacted by the pandemic. For farmers, more than ₹2.37 lakh crore of minimum support price (MSP) sum will be paid directly. Existing schemes for women-led development will be revamped. For micro, small and medium enterprises (MSMEs), apart from the extension of the Emergency Credit Guarantee Line, a programme to accelerate their performance will be introduced. For start-ups, tax rebates have been extended.
With this Budget, the government has struck a fine balance between providing a safety net to those reeling under the impact of the pandemic, and ensuring macro-economic stability in the near-term. This is a precursor to the ensuing journey from 75 to 100 years, which, under the PM’s leadership, will see India transition from an emerging power to a global superpower. As is clear from the Budget’s essence, this transition will ride on the wheels of infrastructure, digitisation, investment and business-friendliness, and on the capability and spirit of 1.3 billion people.