The Budget rightly focuses on multi-modal transportation, logistics infrastructure, urban development, renewable energy, drinking water and housing
Budget FY23 has been drawn at a time when Indian economy takes strides towards complete recovery and growth post the pandemic. The Budget aims to rebuild the economy and attain the long-term objective of sustainable growth. In a way, it seeks to lay the foundation and give a blueprint to steer the economy over the next 25 years.
The government continues with its thrust to infrastructure development through the PM Gati Shakti National Master plan. The transformative approach for economic growth and sustainable development is driven by seven engines, expected to pull forward the economy in unison. For a bigger multiplier impact, the Budget rightly focusses on multi-modal transportation, logistics infrastructure, urban development, renewable energy, drinking water and housing.
Development of highways, railway network including metrorail at scale, transit-oriented development, etc, are intended to address the present constraints of the supply-chain ecosystem. Significant increase in the allocation for capex spend, at Rs 7.5 lakh crore, if implemented with speed and purpose, will lead to inclusive development through widespread employment generation.
The government has emphasised the need for public investment to pump-prime private investment and has also highlighted the PPP route for funding the developmental infrastructure programme. The government would be required to take concrete steps in enabling these models to work well.
In order to incentivise the states to enhance their capex spends, an allocation of Rs 1 lakh crore has been made available through 50-year interest-free loans to be utilised primarily towards PM-Gati-Shakti-related and other productive capital investment.
For facilitating the Make-in-India initiative, 68% of the capital procurement budget in defence is being earmarked for the domestic industry. Budget FY23 also enhances the PLI scheme for domestic manufacturing of solar cells & modules and energy-storage devices. Further, the Budget proposals also focus on making the MSME sector resilient for long-term growth. Credit guarantee schemes have been rightly provided for to such entities towards this end.
To facilitate energy transition towards a carbon-neutral economy, the Budget provides incentives for solar manufacturing in addition to measures around reduced emissions, energy conservation and promoting afforestation. Providing infrastructure status to data centres as well as energy-storage and charging systems will boost credit availability for some of these new businesses.
With the expectation of an increase in credit offtake from the banking system to finance the growth plans of the industry, issuance of surety bonds by the insurance companies in lieu of bank guarantees has been announced. This will unlock capital availability of the banking system for credit growth.
The Budget has provided a stable tax structure while rationalising some of the anomalies is the surcharge for AOPs. Reduction of surcharge on long term capital gains is expected to motivate flow of long-term investments. Tax collections have been budgeted to rise by 10% on the back of the projected GDP growth.
The Budget announcements are subtle and understated with respect to the financing plans. While remaining silent on asset monetisation programmes, the Budget plans include market borrowing of nearly Rs 15 lakh crore and issuance of sovereign green bonds. These are expected to have an upward impact on interest rates. High oil prices and commodity inflation would only add to this pressure.
While the government deserves to be complimented on crafting a growth-oriented budget, the outcome would depend on efficient implementation of programmes, including facilitation of clearances, early award of construction contracts as well as improving the ease of doing business.
https://www.financialexpress.com/opinion/budget-2022-a-vision-for-the-economy-over-the-next-25-years/2423553/
