Finance minister bets on public capital spending to revive private investment and boost job creation
Union Finance Minister Nirmala Sitharaman presenting her fourth budget And the second on Tuesday stuck on a broader script since last year in the pandemic-hit economy, betting on public capital spending to revive private investment and job creation through a good growth cycle, with an eye on Keeping the country’s macro-fiscal health.
Presented in the 75th year of independence, this budget sets the stage for a Amrit Kaal (Time of Amrit) over the next 25 years, culminating in a vision for India in 2047, as enunciated by Prime Minister Narendra Modi in his Independence Day address last year, she said.
Begin your 90 minute speech With an expression of sympathy for Indians grappling with the health and economic impact of the COVID-19 pandemic, Ms Sitharaman penned a poem From Mahabharata Before laying out its tax proposals for 2022-23. This includes imposing a 30% tax on all profits arising from transactions relating to virtual digital assets or crypto assets, bringing some clarity on the gray area for investors, even as further regulations are being worked out.
The minister said, “The king should make arrangements for the yogakshem (welfare) of the people by sacrificing any laxity and by ruling the state according to religion, as well as collecting taxes according to religion.” The government is drawing the wisdom on the path of progress from ‘our ancient texts’.
Summary of Union Budget 2022-23
The salaried and middle class, however, received no direct relief in the form of tax breaks to combat inflation and the COVID-hit on income and jobs, nor was there any significant nudge to boost private consumption Which is likely to end on 2021-22. below pre-pandemic levels.
Ms Sitharaman pointed out that the government has not increased tax in these COVID-hit budgets, but emphasized that several initiatives aimed at helping farmers, startups, micro, small and medium enterprises as well as affordable housing projects The proposals will ultimately benefit the middle class. “There are times when you can give [relief]There are times when it will have to wait a bit longer,” she said.
The contact-intensive service sector such as hospitality which is deteriorating even under 2019-20 levels was helped with the extension of the existing 4.5 lakh crore emergency credit line guarantee scheme to ₹5 lakh crore, availing this support. has been extended for one year till March 2023 with the window for
The minister acknowledged that jobs have been affected due to the impact of the pandemic across the world, but stressed that the government is taking steps to help. He said that production linked incentives for 14 sectors alone have the potential to create 60 lakh new jobs in the coming five years.
Highlights of Union Budget 2022-23
While the budget marked the continuation of the strategy adopted in the previous budget to lift the economy from the COVID lockdown-induced plunge of 2020-21, the minister reflected on reiterating several measures announced last year with the new outlay, some silencing others. Ranked the same way. Pleasant.
For example, there was a new emphasis on building livable cities and a better planning framework for urban areas, where half of Indians are expected to live by 2047, but no talk of the government’s existing programs for building smart cities. Wasn’t.
On the other hand, without mentioning China, the budget promised convergence of existing border area development programs to provide better physical and digital connectivity to sparsely populated villages on the ‘Northern Frontier’. Similarly, it was refreshing that there was no populist measure in the budget to woo voters in the ongoing assembly elections in the state.
While the economy has shown strong resilience in the last one year, the finance minister said more capital expenditure is needed to sustain recovery and increased the Centre’s capex plan to ₹7.50 lakh crore in 2022-23, on which he Emphasized that this is 2.2 times more than the outlay. in 2019-20.
Separately, in a move that should also reduce federal friction, it also announced ₹1 lakh crore 50-year interest-free loan for states to pursue important capital expenditure projects, which PM Gati Shakti The program is aligned with digitization or urban reforms. Ms Sitharaman said a similar ₹10,000 crore window announced for 2021-22 has been increased to ₹15,000 crore in honor of the requests of the state CMs.
The minister said the Life Insurance Corporation of India’s list is expected soon, which may translate into a fiscal deficit of 6.9% of GDP now projected for 2021-22. However, the ambitious ₹1.75 lakh disinvestment target for the year has been lowered to ₹78,000 crore, with expectations for 2022-23 set at a modest ₹65,000 crore.
Rating agencies such as Moody’s Investors Service reacted cautiously to the budget math, which pegs the fiscal deficit at 6.4% of GDP in 2022-23 without any significant revenue-generating plans.
Christian Day, senior vice president of Moody’s Sovereign Risk Group, said: “This suggests that the government is relying on strong economic growth to help drive fiscal consolidation in light of the massive jump in capital expenditure, and related to the pandemic.” This creates some uncertainty, given the magnitude of the risks.” Guzman.