Big on expectations, low on ideas: Union Budget 2022-23. Feather

Finance Minister Nirmala Sitharaman’s fourth consecutive budget, while generic in its approach, isn’t bubbling with new ideas at all. The economy is still looking for sustainable momentum that can help it recover from the record contraction of the last financial year, Ms Sitharaman missed the opportunity to address Flagging consumer spending in the wake of a fall in real income and savings through a combination of tax breaks for the middle class and cash handouts for the poor. And even the minister acknowledged the role public capital expenditure can play in crowdfunding private investment when “private investment needs that support” and demand to ‘pump-prime’ the economy. Helps, the budget outlay of ₹7.50 lakh crore for capital account is an increase of just 24.4% from the revised estimate of ₹6.03 lakh crore for the current fiscal. To be sure, Ms Sitharaman’s speech highlights PM Gatishakti, a “transformative approach to economic growth and sustainable development”, which can be implemented through roads, railways, airports, seaports, mass transport, waterways and ‘seven to be driven by engines. logistics infrastructure. While the massive expansion of public infrastructure envisaged by the program could potentially be transformative if implemented as envisioned, the budget is largely short on details where it covers only a few figures for roads and railway components. Specifications and relates to pencils. , List of ‘Master Plan for Expressway’ in the budget Which will be prepared in 2022-23 under this plan and is a project to connect 25,000 km of roads to the national highway network. Talk of enabling seamless multimodal movement of goods and people and providing multimodal connectivity between mass urban transit systems and railway stations, however, has been a refrain from all previous speeches.

outlay on many other key sectors including health careIncome providing, rural development and critical employment and the National Rural Employment Guarantee Scheme have all shrunk as a percentage of overall expenditure in the Budget Estimates for FY2023 from the Revised Estimates of the current year, albeit only marginally in some cases. . These sectors have been largely forced to bear the brunt of the government’s eagerness to stick to the fiscal consolidation road map – the budget projected to limit the fiscal deficit to 6.4% of GDP in 2022-23 which is up from the revised estimate of 6.9. % – Indicates its priorities. Instead government spending on health care should have been substantially increased, drawing lessons from the first two waves of the ongoing pandemic and highlighting the need for massive expansion of public health infrastructure. The source of some consolation, however, is the announcement of a ‘national tele mental health programme’ to address mental health problems, exacerbated by the claustrophobic lockdown and the plethora of concerns arising out of the pandemic.

In line with the ruling party’s nationalist anchor and the government’s thrust to enhance self-reliance or self-reliance, the finance minister has proposed a series of tariffs and policy measures that could help boost domestic manufacturing in the long run. A key policy element is a commitment to reducing import dependence in procurement for the country’s defense forces. To this end, the minister has proposed to earmark 68% of the Armed Forces’ capital procurement budget for domestic industry in 2022-23, which is not a marginal increase from the current fiscal’s target of 58%. Tariff rationalization, which covers a broad range of commodities ranging from electronics, gems and jewellery, chemicals, inputs used by MSME units and project and capital goods, however, the short-term impact may vary. Notably, the move to gradually phase out concessional rates in capital goods and project imports and introduce a moderate tariff of 7.5% has resulted in losses despite some proposed relaxations for short-term infrastructure projects and setting up of new manufacturing capacity, advanced machinery. Maybe. The minister has attempted to address the raging debate on how to deal with virtual currencies by adopting a two-track approach. On the one hand, Ms Sitharaman has proposed introducing a central bank digital currency in the coming financial year, which according to her will give a major boost to the digital economy and “lead to a more efficient and affordable currency management system”. The digital rupee issued by RBI will leverage blockchain and other related technologies. In parallel, it intends to tax the proceeds from the transfer of any virtual digital asset at the rate of 30%, with deduction only allowed for the cost of acquisition. It remains to be seen whether the government’s efforts to bring rapidly growing trade and investment in a plethora of virtual digital assets, including cryptocurrencies, under the tax net will have a beneficial effect apart from adding revenue streams to the exchequer. The minister’s latest budget also does not mention the asset monetization plan mentioned in the previous budget and shows a sharp decline in capital gains from disinvestment. With a budget of only ₹65,000 crore from asset sales for the financial year 2023, against ₹78,000 crore as per the Revised Estimates for the current fiscal, the minister has had to increase the gross borrowings to ₹14.95 lakh-crore, a growth of 24%. is growth. Budget estimate for the current fiscal, but a sharp 43% jump over the revised estimate of ₹10.46 lakh crore. The resource crunch revealed in the proposed higher debt issuance is ultimately bound to become more acute in the days to come, given the lack of growth-stimulating proposals in the Budget.