Hon’ble FinanceMinister Nirmala Sitharaman presented a balanced andgrowth orientedbudgetwithastrongemphasis on long term growth andavoidedanyannouncement of election-relatedpopulist measures.
It focussed on four pillars — productivity, climateaction, financinginvestments & PM GatiShakti plan— and has laid a roadmap for economicrevival, against the backdrop ofuncertainty amidst the COVID Infections.
Though the fiscal deficit is tad higher at 6.9% for 2021-2022 and at6.4% for 2022-23, but given the 35% increase in capital expenditure, governmenthaschosentobepro-growthand has rightly refrained fromundertaking aggressive fiscal consolidation at this early stage of economicrecovery.TheDisinvestment
Target of ₹65,000croreseems to be conservative given that the divestment candidates are clearly identified andgovernment now has a well-oiled process for divestment in place as it has successfullydivested “AirIndia” — one of the most difficult ones todivest. Furthergiventhebuoyancy in tax collections, it is highlypossiblethatBudget will surpass revenue assumptions which to an extentwill help fiscal consolidation and also improve the Tax to GDP ratio.
Continuing the focus on the Prime Minister’s vision of ‘Housing For All’, the Finance Minister announced 80 lakh homes to be built by 2023 under thePradhanMantriAwasYojana (PMAY).
Additionally,theBudgetmade an allocation of ₹48,000 crore under PMAY urban and rural for building these homes. Further, the government has rightly acknowledged the need to reducetimerequiredforlandand construction related approvals for promotingaffordablehousingformiddle class and economically weaker sections inurbanareas. This will be extremely helpful in scaling up the execution ofPMAY across geographies. India hasseenamassive rise in start-ups in the last few years. The Budget hasfocusedmore on the Made in India initiative to minimise thedependency. Toencourage the start-up ecosystem government has introduced flexiblepolicies to help start-ups.
The use of drones for start-ups will pushforexcellence.Thepromotionoffintechandtechnology-baseddevelopmentwillhelpthe economy gain a pace as well as create a better job prospects for individuals. Micro,Small and Medium Enterprises (MSMEs) continue to be the backbone of economic growth.In abidto boostlocalmanufacturingand promote self-reliance, FM announced extending the Emergency Credit Line GuaranteeScheme (ECLGS) up to March 2023. This will go a long way in supporting theMSME sector and revive industrial activities.TheBudget also focuses on sustainable and equitable growth. There is push for tech excellence.Infrastructurestatusgiven to Data Centres will provideahugeboosttothefastevolving digital environment of thecountry. Moving towards digital economy, the Budget announced the launch of CBDC (Central Bank Digital Currency) in2022-23.
The introduction ofdigitalrupeewillgive a big boost to the digital economy and bring in efficient currency management.Thepandemic has made people recognise the importance of a roof over one’s head.
The government could have given further boost to the housing sectorthroughtaxbenefits given the strong multiplier effect the sector has onthe economy. The CLSS schemes under the PMAY have been a great example of a successful Public- Private partnership and its extension especially for the EWSandLIGcategorywould have helped immensely to achieve the goal of “Housing for All”
(Renu Sud Karnad is Managing Director – HDFC Ltd.)
