Budget will lay down a blueprint for India@100
2 min read 02 Feb 2023, 12:22 AM ISTThe budget will rejuvenate growth drivers, give a push to production capacities
PremiumThe finance minister should be commended for laying down a comprehensive, inclusive, action-oriented and progressive budget that presents a masterplan for a building healthy and strong economy and would act as a blueprint for India@100. The budget includes seven priorities that are meant to work in tandem and serve as the ‘Saptarishi’ guiding the nation through Amrit Kaal, propelling towards a brighter future.
India made significant efforts to fuel the post-pandemic recovery, despite a dismal external environment, geopolitical tensions and subdued global demand, making it evident that growth, innovation and infrastructure will remain the key focus to ensure resilience.
One of the top priorities in this year’s budget was infrastructure and investment. By increasing the capital investment outlay by 33% to ₹10 trillion consecutively for the third time, the government has made its priorities clear. This would spur the investment cycle, aid growth and development, and boost job creation. At the budgeted level of ₹10 trillion, the Centre’s capex would be 3.3% of the GDP. Further, the states that will spend more on capex will be incentivized by 50-year interest-free loans. The budget has also made provision for ₹35,000 crore towards energy transition and net zero objectives.
The government has identified 100 projects for last and first mile connectivity for ports and other important sectors such as coal, steel, fertilizer and food grains. This will give an impetus to exports in these sectors, increase efficiency and reduce the cost of doing business. The finance minister also proposed 50 additional airports, heliports, water aerodromes and advanced landing grounds that will be revived for improving regional connectivity. The highest ever outlay provided for railways shows that it continues to be a focus area.
To improve the ease of doing business in India, more than 39,000 compliances have been reduced and more than 3,400 legal provisions have been decriminalized. Further, the Jan Vishwas Bill will amend 42 Central Acts which will further strengthen the trust of the stakeholders in the government.
Lack of information on financial credentials and creditworthiness hinders lending. To overcome this, the government has proposed to set up National Financial Information Registry.
To protect MSMEs from the government contract failure during the covid-19, the government has decided to refund 95% of the forfeited amount as a gesture for the immense contribution made by the small entrepreneurs.
The budget lays a strong foundation for innovation, with centres of excellence for artificial intelligence being one major force. Another interesting proposal is on lab-grown diamonds, a technology and innovation-driven emerging sector. With the depletion in deposits of natural diamonds, this is a commendable step to seize the opportunity. Customs duty on seeds used in lab-grown diamond manufacturing has also been reduced.
The government intends to encourage domestic production of electronic vehicles, televisions, mobile phones, household appliances, and specialty steel. Custom duty have been reduced on key components to encourage domestic production of EV batteries, mobile phone components such as cameras, components of TV panels, and steel for cargo to encourage domestic production, while custom duty on electric chimney has been increased to encourage domestic production.
The budget will rejuvenate the growth drivers, give a push to production capacities, improve infrastructure and logistics, reduce cost inefficiencies, boost exports and generate employment, amid mounting challenges posed by slowing global growth. It will further provide a great opportunity to India to be a part of the global value chains and emerge as a global manufacturing hub.
Dr Anish Shah is senior vice president, Ficci, & MD and CEO, Mahindra & Mahindra Group.
