Budget 2023 showcases A vision for India and a plan to propel Bharat
PremiumAs expected, the highlight of the budget was the record capital expenditure allocation of ₹10 trillion
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PremiumBudget 2023 is a stellar effort that encapsulates an inclusive growth agenda with an eye on the future. The twin focus on higher capital expenditure for infrastructure development and tax benefits to the middle class are going to drive growth and consumption in the coming years. With an expected GDP growth of 7% in FY23, the first budget in the ‘Amrit Kaal’ lays out the growth story for the next year and beyond.
At the same time, the finance minister has made a remarkable effort to stick to fiscal prudence and has indicated a glide path to < 4.5% by FY25/26, much to the comfort of the markets. By achieving the fiscal deficit at 6.4% of GDP for FY23 and keeping the market borrowing at ₹15.43 trillion with a fiscal deficit estimate of 5.9% for FY24, the budget has addressed one of the key concerns.
The vision to develop both India and Bharat through seven distinct focus areas – Saptarishi model - is progressive and pragmatic and strategically focuses on infrastructure investment, green growth, agriculture development and modernization, youth skill enhancement, financial literacy, and tourism.
As expected, the highlight of the budget was the record capital expenditure allocation of ₹10 trillion that will act as an economic multiplier in sectors like transport and housing. There was a holistic approach to capital expenditure, given the balanced allocation to develop railways, roads, urban infrastructure, and power, which are predominantly dependent on public resources.
But by setting up the infrastructure finance secretariat to assist all stakeholders with more private investment in infrastructure, the government has actively encouraged the PPP model, inviting the private sector to take lead. With the railways getting its highest-ever capital expenditure allocation of ₹2.4 trillion in FY24, India wants to improve last-mile connectivity. With over 50 airports and airdromes and renovation of existing aviation facilities, the growth juggernaut has been unleashed.
The Rs-10,000 crore Urban Infrastructure Development Fund – through priority sector lending shortfall – is another landmark that will transform the urban planning landscape, making the cities more sustainable via efficient use of land, adequate resources and transit-oriented development. The budget has also put much onus on the states to utilize, create and perform when it comes to creating infrastructure assets.
By simplifying direct taxes and making them friendlier to taxpayers, the budget is also a boost to urban consumption. While the finance minister hiked the rebate limit to ₹7 lakh from ₹5 lakh, no bracket of taxpayer has been left out in the overhaul. Even the highest tax rate of 42.73% has been reduced to a maximum of 39%, by revising the surcharge to 25% from 37%. Though the revenue foregone is close to ₹35,000 crore, the finance minister is counting on the boost to the overall consumption. Importantly, no change in the capital gains tax regime affected much to the comfort of the markets.
The focus areas like green growth and tourism development are going to create employment as well as attract investments. As per the Prime Minister’s vision, India is moving forward firmly for the ‘Panchamrit’ and net-zero carbon emission by 2070 that would ensure ‘green growth.’ As one could see it, the theme of green growth will now pervade all economic activities, helping India achieve its global promise of net zero and carbon reduction. It will also create employment and entrepreneurship opportunities.
The Budget scores on all fronts as there are several announcements for women, senior citizens and tribals among others, sustaining the inclusion aspect. It has laid a viable platform for technology in even traditional sectors like agriculture, left enough in the hands of consumers, strived hard to leverage internal strengths like tourism and kept an eye on the global leader with massive domestic capacity building and green focus.
This will certainly lead India to the path of becoming an economic superpower in the next decade.
The vision to create food and fuel security is clear; for example, the recently launched National Green Hydrogen Mission, with an outlay of ₹19,700 crore, will drive India’s transition to low carbon intensity, lower its dependence on fossil fuel imports, and lead the country as technology and market leader. This Budget has provided ₹35,000 crore for priority capital investments toward energy transition and net zero objectives, and energy security. The budget, gladly, has gone one step further to encourage a behavioural change by setting up a Green Credit Programme that will incentivize environmentally sustainable and responsive actions by companies, individuals, and local bodies.
Though India is a much-fabled country for tourists, seldom do we see an effort to promote India’s natural bounties. This budget has deep dived with ideas and resources to make India the destination for both domestic and international tourists. The promotion of tourism will be taken up on mission mode - along with States and under the convergence of government programmes – through the PPP model to create large employment opportunities.
The Budget continues the youth focus as the ‘Amrit Peedhi’ to realize their dreams with new projects and programmes by setting up 30 Skill India International Centres. It has envisioned a progressive outlook in skill development by focusing on new-age courses for Industry 4.0 like coding, AI, robotics, mechatronics, IOT, 3D printing, drones, and soft skills.
The Budget scores on all fronts as there are several announcements for women, senior citizens and tribals among others, sustaining the inclusion aspect. It has laid a viable platform for technology in even traditional sectors like agriculture, left enough in the hands of consumers, strived hard to leverage internal strengths like tourism and kept an eye on the global leader with massive domestic capacity building and green focus.
This will certainly lead India to the path of becoming an economic superpower in the next decade.
(Contributed by Shanti Ekambaram is whole-time director of Kotak Mahindra Bank.)
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