The ninth budget of the Narendra Modi government presented by Finance Minister Nirmala Sitharaman focused on growth and economic recovery through higher spending even as the country continues to undergo the pandemic induced pain. In her shortest speech ever, lasting 90 minutes, Sitharaman said she was laying the foundation for the next 25 years.
The Rs 39.45 lakh crore budget focuses on higher spending on infrastructure, including highways and affordable housing to boost economic recovery. The country's economy is projected to grow by 9.2 per cent in the current fiscal before slowing to 8-8.5 per cent in 2022-23. It had contracted by 6.6 per cent in the fiscal year ended March 31, 2021.
"The overall, sharp rebound and recovery of the economy is reflective of our country’s strong resilience. India’s economic growth in the current year is estimated to be 9.2 per cent, the highest among all large economies," Sitharaman said in her budget speech.
Sitharaman explained the roadmap to bring down fiscal deficit to 4.5 percent by 2025-26. The budget prioritised economic expansion over fiscal consolidation.
“The fiscal deficit in 2022-23 is estimated at 6.4 per cent of GDP, which is consistent with the broad path of fiscal consolidation announced by me last year to reach a fiscal deficit level below 4.5 per cent by 2025-26,” Sitharaman said. The revised fiscal deficit in the current year is estimated at 6.9 per cent of the GDP as against 6.8 per cent projected in the budget estimates.
By keeping the fiscal deficit level in 2022-23, the government has been conscious of the need to nurture growth, through public investment. In a number terms, the fiscal deficit for 2022-23 is estimated to be Rs 16, 61,196 crore. The revised estimates for 2021-22 indicate a fiscal deficit of Rs. 15,91,089 crore as against the budget estimates of Rs 15,06,812 crore.
“Our estimates on fiscal deficit are realistic. We have kept in mind the global headwinds, be it federal tapering or oil prices. It is the best estimates we can arrive at,” Finance Secretary T.V. Somanathan said in the post budget press conference.
The government has focused on continuity to maintain growth which it hopes to achieve through capital expenditure. It has been increased sharply by 35.4 per cent from Rs 5.54 lakh crore in the current year to Rs 7.50 lakh crore in 2022-23. “This has increased to more than 2.2 times the expenditure of 2019-20. This outlay in 2022-23 will be 2.9 per cent of the GDP,” government said.
The finance minister said that with capital expenditure taken together with provision made for creation of capital assets through grants-in-aid to states, the ‘Effective Capital Expenditure’ of the central government is estimated at Rs 10.68 lakh crore in 2022-23, which will be 4.1 per cent of the GDP.
She said that the capital expenditure has thus increased to more than 2.2 times the expenditure of 2019-20 and it would be 2.9 per cent of the GDP in 2022-23. “The virtuous cycle of investment requires public investment to crowd-in private investment. For the private investments to rise to their potential and to the needs of the economy, public investment must continue to take the lead and pump-prime the private investment and demand in 2022-23,” the minister said.
In terms of of total expenditure in 2022-23, it is estimated to be at Rs 39.45 lakh crore, while the total receipts other than borrowings are estimated at Rs 22.84 lakh crore. Sitharaman said that as against a total expenditure of Rs 34.83 lakh crore projected in the budget estimates 2021-22, the revised estimate is Rs 37.70 lakh crore.
Complimenting the budget, FICCI president Sanjiv Mehta said the finance minister has presented a forward-looking and growth-oriented budget that strengthens the drivers of long-term development. “It builds on last year’s budget and scores high on several counts – consistency, capex led growth, transparency in numbers, energizing many of the stressed sectors and continues the focus on simplifying the taxation policy.”
To mobilise resources, Sitharaman announced that sovereign Green Bonds would be issued as a part of the government’s overall market borrowings in 2022-23. The proceeds would be deployed in public sector projects which help in reducing the carbon intensity of the economy. The finance minister highlighted the role of capital investments in ensuring speedy and sustained economic revival and consolidation by creating employment opportunities, inducing enhanced demand for manufactured inputs from large industries and MSMEs, services from professionals, and help farmers through better agri-infrastructure.
In terms of market borrowings, for 2022-23, they are estimated to stand at Rs. 11,58,719 crore. The revised estimates for the same for 2021-22 are Rs. 8, 75,771 crore as against the budget estimates of Rs. 9, 67,708 crore.
In her interview to the public broadcaster, Doordarshan, Sitharaman said PLI scheme alone will create 60 lakhs jobs. She also listed a number of steps the government has taken to keep inflation under 6 per cent by easing pressures on edible oil imports or enhancing its production.