While there are mentions of Light Touch Regulation for AI, Green Energy, Clean Mobility, growth was expected to accelerate in these sunrise areas.
We still don’t know when the worst is over. Nor do we know in which direction the wheel of fortune will turn with the corona virus and what will be the effect of the next mutation. Oil prices are high, and war drums are heard in Ukraine and the Middle East.
But with all these risks, the FM presents a budget for a country that is otherwise a bright spot in the dark horizon. At 9.2%, India is the fastest growing, large economy with over $630 billion of foreign reserves equivalent to 13 months of imports, inflation under control and stock market and corporate results shining positive, and vaccination A success with 93% of the eligible population. achieving a single dose and 70% complete vaccination.
But FMs should be aware that there is a dark underbelly to bright spots. That underbelly is the unemployment rate. There is officially an unemployment rate of 7.2% but the reality is much worse. This is perhaps the biggest challenge that the finance minister should address through his budget.
Clearly the FM has risen to the challenge. By allocating ₹7.5 lakh crore in FY23, which is 35% higher than the previous year, it has clearly set the right tone. Infrastructure has a triple effect. First employment, then the revival of the core sector and finally the productivity of the economy. We couldn’t have asked for more.
In addition, it has increased the financial assistance to states for financial assistance from ₹10,000 crore in FY22 to ₹1,00,000 crore in FY23. Clearly the states are getting the right signal that they partner with the Center to build a modern India. A major part of this focus is on PM Gatishakti, an initiative to focus on logistics through development of roads, railways, airports etc. to ensure efficient movement of goods and this is aided by 100 multi-modal cargo terminals . Clearly, if Make in India is to succeed, the Gatishakti initiative will play a vital role in making the cost of production competitive.
Digital India is another theme that runs throughout the budget. From recognition of virtual assets as a taxable asset class to digital currency, e-passport, digital universities, Council for AVGC (Gaming, Animation Sector), emphasis on digital banking, land record digitization, facilitation of payment platforms, 5G spectrum Auctions, optical building fiber networks are efforts that will build the country’s digital capability, improve efficiency and further boost employment in the service sector.
The Amrit Kal initiative, a plan to complete 100 years after India’s independence, presses the right button. The emphasis on urban planning and development, when 50% of India’s population will live in urban areas, is clearly the right priority and will improve quality of life and ease of doing business.
So what did the budget miss? Healthcare was expected to get the bulk of the allocation. The pandemic has exposed the hospital’s capacity constraints. A public-private initiative with PLI type incentives can be expected for this sector. The major initiatives in the last budget along with privatization, asset monetization have been completed. One would have expected reforms to ensure that they get back on track.
While there are mentions of Light Touch Regulation for AI, Green Energy, Clean Mobility, growth was expected to accelerate in these sunrise areas.
Lastly, this budget is foundational in its approach. It has its eyes set on 8.5% growth for FY13 and presses the right button to get the country there. India will headline for 8.5% investment, on top of 9.2% in FY13. But we have a lot to do before we get there. The devil is in implementation and with state elections a distraction and the ongoing pandemic, Team India has its hands full of challenges. The budget has rolled the dice in favor of Team India. Now the time has come for him to fulfill his promises.
(Ashok Hinduja President, Hinduja Group of Companies (India)