A work in progress that doesn’t hurt the citizen
Union finance minister Nirmala Sitharaman has performed a fine balancing act by focusing on measures to boost economic growth rather than present an election-focused please-all welfare budget. She has front-loaded public expenditure through asset-creating capital expenditure to prevent the economy from getting affected by a muted private investment. The budget allocation at the Central government level has been enhanced by `3.5 lakh crores and another `1 lakh crore has been offered to states as a 50-year interest-free loan for capital expenditure. Further, the state governments have been allowed to have a higher deficit of four per cent of the Gross State Domestic Product (GSDP), which will further boost public expenditure. The government’s focus on capital expenditure, though its results depend on faster implementation, is better than revenue expenditure. The government should also be commended for resisting temptation to hand out reckless freebies in the wake of the upcoming elections in key states.
Giving impetus to infrastructure development under the PM Gati Shakti will have a ripple effect on the economy by kick-starting the virtuous cycle. The PM Gati Shakti will focus on boosting growth in seven sectors, namely roads, railways, airports, ports, mass transport, waterways and logistics infrastructure.
The plan to integrate postal and railway networks for offering efficient logistics services for small farmers and small and medium enterprises and integrating post offices with banks through core banking services could help the postal department reinvent itself. A revival in India Post would help the government reduce its budgetary support to the public service, which is fast being replaced by private players.
The proposal to introduce a Digital Rupee by the Reserve Bank of India using the blockchain technology in 2022-23 hints at the government adopting new technology. The proposal to tax virtual assets like crypto currency among others at a flat 30 per cent could signal that the government may not ban crypto assets though it is highly uncomfortable with the presence of an unregulated investment channel.
While the corporate world may not be fully satisfied with the Budget, a reduction in surcharge would help it save some of its money. Production-linked incentives will make the government support incumbent companies increasing their production instead of giving them freebies through a further cut in corporate taxes. Legislation to replace the old Special Economic Zones Act could offer export-oriented units more ease of doing business.
The proposals on remote classrooms through PM eVidya and the National Mental Health Care could help in addressing two issues created by the Covid pandemic. A promise to fund five river linking plans may nudge states to begin work on creating a national water grid.
Though individuals have little cheer in this Budget, the finance minister does not take away anything more from them — and no negative should be considered a positive in the wake of exceptional circumstances that the country is facing. In a nutshell, the Union Budget 2022-23 is more a work-in-progress budget without any expressly negative components.
Though individuals have little cheer, the finance minister does not take away anything from them — and no negative should be considered a positive amid the exceptional circumstances the country is facing