Even as India is still in its 75th year of Independence, the Budget outlined the path for India@100 with a more profound emphasis on sunrise areas electric vehicles, climate change, new energy, carbon-neutrality, central bank digital currency, natural zero-budget organic farming, drones, e-passports and more

The Budget 2022 was overall highly future-focused. The picture painted from the Economic Survey was well-placed macro-economic conditions with government reforms and Capex as critical drivers for growth. Further, laid out a vision for the next 25 years under the flagship program of Amrit Kaal.

Natural farming would be promoted along the Ganga corridor helping mainstream organic farming. Battery swapping policy to allow EV charging stations for automobiles will be framed. Keeping both the options of recharging technologies gives freedom to original equipment manufacturers and consumers in the choice of technology. There has been an additional Rs 15000 crore allocation for production linked incentives in manufacturing high-efficiency solar modules, the right step indigenises and develops the sizeable solar ecosystem. 

Make in India
Emphasising targeted induction of Make in India applications for defence forces to develop deep tech ecosystem, for FY 23 adoption target at 68 per cent against 65 per cent in FY22. Budgetary allocation in FY23 to interlinking of rivers is a much-awaited measure with plans to adopt five such projects during these 25 years.

The Reserve Bank of India is introducing a digital rupee by using blockchain technology, in furthering digitising financial transactions. High importance has been placed on developing e-services in a digital ecosystem to provide last-mile delivery of government policies to masses through interlinking of data and optimal use of artificial intelligence. The e-Desh stack portal is to be launched to promote digital infra for MSMEs by interlinking and widening the scope of Udyam, e-Shram, NCS and Aseem portals. Digital ecosystems for skilling and livelihood are to be launched, aiming to skill, reskill, upskill citizens through online training. Also, expansion of the PM eVIDYA program is likely to democratise school education delivery and enhance access to edu-tech aids. 

Balanced Budget
Overall, the Budget has performed a delicate balancing act of blending its reformist intent with social inclusion and welfare needs. It has also underscored education and skill development, agriculture, widening of healthcare infrastructure through stepping up allocations. 

Citing some significant points, the government would pay Rs 2.37 lakh crore towards the procurement of wheat and paddy under the minimum support price operations. Rs 1 lakh crore financial assistance will be provided to states in FY23 to catalyse investments. The national digital health ecosystem will see a roll-out of an open platform. Around 1.5 lakh post offices will come on the core banking system, accelerating financial inclusion. 

Growth in taxes has been estimated to be in line with nominal GDP growth of ~13 per cent for FY23. Post considering state capital expenditure, the overall number is expected to be closer to Rs. 10.5 lakh crore. This is much-needed support to economic growth, creating jobs, boosting incomes, and providing confidence to the private sector. Revenue expenditure is flattish on a YoY basis, which seems to be a step in the right direction given that capital expenditure has a much higher multiplier effect.

Realistic Targets
Roads account for the highest allocation within on-balance sheet capital expenditure, thus crediting the all-encompassing PM Gati Shakti plan, a broad-based push across the infrastructure. In addition, web-based payment systems to vendors would improve the working capital efficiency of infra developers, a step towards transparency. 

Unable to meet the FY22BE disinvestment target, the government has projected a more achievable number for FY23. A fiscal deficit of 6.4 per cent for FY23BE is envisaged, which appears conservative. Given the ongoing tax buoyancy and growth assessments below, most economists’ estimates could see pleasant surprises in the fiscal deficit.