Make no mistake. The capital expenditure earmarked for the coming financial year in the interim budget tabled on Thursday in Parliament is 11.1 lakh crore, a tidy 11% higher than that was earmarked for the ongoing financial year (2023-’24).
Yet, it failed to enthuse India Inc, with the Bombay Stock Exchange index tanking by 107 points. While leaders of Indian industry made the right noises commending Modi 2.0’s final accounts bookkeeping exercise before the general elections, the disappointment was palpable.
CII President R.Dinesh gave a tactful reaction on how the finance minister was “balancing growth with fiscal prudence,” despite the “constrained canvas’ of an interim budget.
ASSOCHAM Secretary General Deepak Sood said, “Intentions are quite clear in terms of focus on youth, women, skill development….(and) is in alignment with the national objective of making India a developed nation.”
While there is an increase in capex, it is nowhere close to the kind of spending spree the government had resorted to over the past few years, and not just through the budget — remember the ‘Atmanirbhar Bharat ‘mini-budget’ announced in the summer of 2020 at the peak of the first wave? For example, it is estimated that the increase in capex spending between FY22 and the ongoing financial year was as much as 28% (compared to just 11% between the ongoing year and the proposal for next financial year presented today).
And when you consider that not all of the proposed capex for this ongoing financial year is likely to be spent, the difference actually balloons to 17%
Sitharaman, almost as if she was making a final encore, did her flourish by chipping in for 'Viksit Bharat', including a long-term loan scheme for R&D in the startup sector that could well be narrative-changing, as well as schemes for rooftop solarisation and Electric vehicles. The sustainability and long term vision for ‘Amrit Kaal’ was unmissable, in place of the wanton big capital spending splurge that had warmed the cockles of big businesses, particularly over the past couple of years.
“We’ve given a good amount (for capex) this time also,” Nirmala said at her post-budget press conference. But what was left unsaid is the biggest question posed to the private sector — when will you play ball?
The government’s silent argument is that it has done enough heavy lifting over the past few years of economic slowdown, the pandemic and recent inflationary pressures by spending big in recent budgets, so much so that the fiscal deficit has ballooned. Now while the government will continue to focus on infra (this time with a lot of emphasis on railways), it is high time that the private sector also did its bit by loosening their pockets and investing big capital.
The multi-lakh crore question is, will India Inc put on a smiley face and step up?