India is now poised to grow into its golden period or as Finance Minister (FM) Nirmala Sitharaman stated - “Amrit Kal”. The budget has made announcements keeping in mind various growth sectors for the next 10 to 20 years. As per the FM, the focus has been to provide growth intensive capital to youth employment, farmers and public and private investments. The plan sees a budget deficit of 6.4% of gross domestic product which is more than expected per pre-Budget surveys. The focus is clearly pro-growth rather than pro-fiscal adjustment which is a difficult balancing act for an emerging economy like India aiming to hit $5 trillion by 2025. As announced the economy is seen growing at 9.2 %in the current fiscal.
The budget has been based on 4 key areas
1. Prime Minister’s pet project Gatishakti and various others
A laudable and humongous infrastructure project to connect and enhance existing “engines of growth” - rail, roadways, highways, and various modes of transport to bring interconnectivity closer and faster than ever before. The national highways network will be expanded by 25,000 kilometres in 2022-23, with an outlay of INR 20,000 crores via financing. Also, a new Unified Logistics Interface Platform will be brought in to facilitate data exchange between operators across different modes of transport. Various other highlights under this plan are -
- Railways and IndiaPost to work together on logistic.
- Establish Vande Bharat trains in 3 years.
- 100 cargo terminals to be built in 3 years.
2. Inclusive Development of Farmers, Women and the Common Man
- Fertilizer subsidy seen at Rs 1.05 trillion next fiscal, oil subsidy at Rs 58 billion, food subsidy Rs 2.07 trillion.
- Government to get all Post office on core banking systems in 2022.
- Plans to digital University to provide access to school.
- Drinking water projects allocated Rs 60000 crore.
- Housing projects allocated Rs 48000 crore.
- Rs 6,000-crore programme to rate MSMEs will be rolled out over the next five years.
- A Digital Ecosystem for Skilling and Livelihood, the DESH-Stack e-portal, will be launched to empower citizens to skill, reskill or upskill through online training.
- A Digital University will be established to provide access to students.
3. Energy Transition & Climate Action
- Plans find for farm startups under Nabard.
- Plans expansion of water supply projects.
- Plans to cut dependence on oil seed imports.
- Battery Swapping for EVs Amid Urban Space Challenges.
4. Financing of Investments
- A large outlay in a Budget where it has doubled on the promised investment for various new infrastructure projects.
- Government plans Rs 1 trillion assistances to States borrowing plans.
- Proposed Rs 7.5 trillion on capital allocation.
- Proposes Rs 10.6 trillion on effective capital expenditure.
- Plans to issue sovereign green bonds for infrastructure spending.
- Spectrum auction next fiscal to ensure launch of 5G network.
- Dividend from RBI, financial institutions expected to be Rs 739 billion.
Other Industry Announcements are as follows
- 1. Extending the ECGS till March 2023, with an expanded guarantee cover to ₹5 lakh crore.
- 2. Simplification of customs rate for sectors including chemicals.
- 3. Import duty of 7.5% to be charged on capital goods.
- 4. Customs duty on cut & polished diamonds, gems to be reduced to 5%.
- 5. Revokes anti-dumping duty for some steel products.
- 6. Government to cap surcharge on long term capital gains at 15%.
- 7. Government extends tax incentive for startups up to March 2023.
- 8. Tax gift of virtual digital asset and to tax income from Virtual digital assets transfer at 30%.
- 9. Government proposes allowing upto two years from the deadline filing for fulfilling Income Tax requirements to increase voluntary disclosures.
- 10. Proposes cut in Minimum Alternate Tax for Cooperative society, MAT reduce to 15%.
- 11. States will be encouraged to adopt Unique Land Parcel Identification Number to facilitate IT-based management of land records.
- 1. Central Bank Digital Currency (CBDC) in FY23 to be backed by blockchain technology.
- 2. Set up an international arbitration center in GIFT City.
- 3. Startups will be promoted for Drone Shakti, she added.
- 4. Government SEZs act to be replaced with new law, new law to boost exports competitiveness.
- 5. To open up Defense R&D for startup, academia, industry.
- 6. 65% of defense capex to be kept for local companies.
- 7. To promote startups for Drone making.
As the breakup shows, there has been an attempt to create trust-based governance to build an “atmanirbhar bharat” through various industrial and grass-root level initiatives with infrastructure being the backbone of these announcements. It is a mix of short-term boost & long-term structural emphasis for the future.