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Insights into Editorial: Big on hopes, short on ideas: On Union Budget 2022-23

 

 

Context:

Finance minister Nirmala Sitharaman on February 1 presented a budget worth Rs 39.45 lakh crore with massive push to infrastructure spending.

Spending outlays on several other key sectors including health care, rural development and the vital jobs and income providing national rural employment guarantee scheme have all shrunk as a percentage of overall expenditure in the Budget estimates for fiscal 2023 from the revised estimates for the current year, even if in some cases only marginally.

 

About Budget Formulation:

Budget is the government’s blueprint on expenditure, taxes it plans to levy, and other transactions which affect the economy and lives of citizens.

According to Article 112 of the Indian Constitution, the Union Budget of a year is referred to as the Annual Financial Statement (AFS).

The Budget Division of the Department of Economic Affairs in the Finance Ministry is the nodal body responsible for preparing the Budget.

In Parliament, the Budget goes through six stages:

  1. Presentation of Budget.
  2. General discussion.
  3. Scrutiny by Departmental Committees.
  4. Voting on Demands for Grants.
  5. Passing of Appropriation Bill.
  6. Passing of Finance Bill.

 

Budget 2022-23: Infrastructural Support:

  1. The Finance Minister acknowledges the role public capital expenditure could play in crowding-in private investment at a time when “private investments seem to require that support” and help to ‘pump-prime’ demand in the economy, the Budget outlay of ₹7.50 lakh-crore for the capital account marks just a 24.4% increase from the revised estimate of ₹6.03 lakh-crore for the current fiscal.
  2. Finance Minister speech highlights the PM GatiShakti, a “transformative approach for economic growth and sustainable development” that is to be powered by the ‘seven engines’ of roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure.
  3. While the broad sweep of the public infrastructure envisioned by the programme could potentially be truly transformative if it were to be executed as imagined, the Budget is largely short on details where it concerns the specifics and pencils in some figures only for the roads and railways components.
  4. The Budget lists a ‘Master Plan for Expressways’ that will be formulated in 2022-23 under the scheme and projects the addition of 25,000 kilometres of roads to the National Highways network.
  5. The talk of enabling seamless multimodal movement of goods and people and providing multimodal connectivity between mass urban transit systems and railway stations.

 

Health Sector:

National Digital Health Ecosystem will be rolled out and it will consist of digital registries of health providers and health facilities, unique health identity, consent framework, and universal access to health facilities.

Announcement of a ‘National Tele Mental Health Programme’ to address mental health problems that have been exacerbated by the claustrophobic lockdowns and plethora of anxieties triggered by the pandemic.

Integrated architecture: Mission Shakti, Mission Vatsalya, Saksham Anganwadi, and Poshan 2.0 launched to provide integrated benefits to women and children.

Two lakh Anganwadis to be upgraded to Saksham Anganwadis that have better infrastructure and audio-visual aids, powered by clean energy and providing improved environment for early child development.

 

Capital Investments:

The Budget estimates the effective capital expenditure of the Central government at Rs 10.68 lakh crore in 2022-23. This would be about 4.1 per cent of the GDP.

The Finance Minister announced allocating 1 lakh crore to assist the states in catalysing the economy. There would also be 50-year interest-free loans provided to the states. The money would be useful in aiding schemes like Gati Shakti etc.

Special Economic Zones Act would soon be replaced with new legislation for the development of various enterprises and hubs.

The government would be investing INR 7.50 lakh crore as capital expenditure next year, which is much more than Rs 5.54 lakh crore in the current year. It is a jump of 35.4 per cent in capital expenditure to fund various infrastructure projects in 2022-23.

 

Agriculture Sector & Environment:

Ken-Betwa linking project would be implemented costing almost INR 44,605 crore.

It would benefit 9 lakh farmers of the region with irrigation facilities, provide drinking water to 62 lakh people and generate power at around 103 MW (Hydro) and 27 MW (Solar).

There would also be an additional allocation of 19,500 crores for the manufacturing of solar modules to facilitate 280-gigawatt domestic power through solar plants by 2030.

 

Education:

Finance Minister also announced the formation of a digital university to provide world-class education to Indian students.

This university would provide will lessons in all regional languages through a network of ‘hub and spoke’ model.

Also, some new e-learning content delivery platforms would be launched using the internet, Television networks and smartphones to help students in rural and semi-urban areas.

 

MSME:

  1. Udyam, e-shram, NCS and ASEEM portals to be
  2. 130 lakh MSMEs provided additional credit under Emergency Credit Linked Guarantee Scheme (ECLGS).
  3. ECLGS to be extended up to March 2023.
  4. Guarantee cover under ECLGS to be expanded by Rs 50000 Crore to a total cover of Rs 5 Lakh Crore.
  5. Rs 2 lakh Crore additional credit for Micro and Small Enterprises to be facilitated under the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).
  6. Raising and Accelerating MSME performance (RAMP) programme with an outlay of Rs 6000 Crore to be rolled out.

Prime Minister’s Development Initiative for North-East (PM-DevINE):

New scheme PM-DevINE launched to fund infrastructure and social development projects in the North-East.

An initial allocation of Rs.1,500 crore made to enable livelihood activities for youth and women under the scheme.

 

Critics argument on Budget:

Finance Minister fourth successive budget, while commonsensical in its approach, is not exactly bubbling with new ideas.

With the economy still in search of durable momentum that could help entrench the recovery from the last fiscal year’s record contraction, Ms. Sitharaman has missed an opportunity to address the flagging consumer spending in the wake of erosion in real incomes and savings through a combination of tax breaks for the middle class and cash handouts for the poor.

 

Conclusion:

India is celebrating Azadi ka Amrit Mahotsav and it has entered into Amrit Kaal, the 25-year-long leadup to India@100, the government aims to attain the vision of Prime Minister outlined in his Independence Day address.

India’s economic growth in the current year is estimated to be 9.2 per cent, highest among all large economies.

The overall, sharp rebound and recovery of the economy from the adverse effects of the pandemic is reflective of our country’s strong resilience.