In the run up to the Union Budget, there was much anticipation.
Would India be cautious due to the economic headwinds sweeping across the globe or would it leverage its comparative economic advantage over the rest of the world and announce assertive proposals that made a statement? Would it encourage consumption or capital investment, now that the economic crisis that stemmed from the pandemic has passed? Would the tax structures be rationalized to maintain buoyancy in collections or reduced to give relief? Would the focus be on rural development or new age advancement? Most importantly, with elections approaching, would this be a populist budget or a budget that is genuinely for the people of India?
And in response to all these contradicting expectations, the budget surprised everyone by being completely unexpected and yet exactly what was hoped for!
At the outset, the Finance Minister affirmed that Budget 2022-23 is in continuation with the blueprint drawn for [email protected], pushing to fore the theme of “Vasudaiva Kutumbakam” that aims to address “global challenges” and “foster sustainable and inclusive development”. The journey during Amrit Kaal would envision a technology and knowledge driven society with strong public finances and a robust financial sector.
She identified 7 priorities – the Saptarishi, to fulfill the goals of providing ample opportunities, impetus for growth and job creation and strengthening macro stability. These top-line proposals assured that that the budget’s route to gaining global significance would not be in conflict with on-ground realities. Rather, it would make stability and job creation as the foundation.
Disregarding the choice between encouraging consumption and capital investment, the Budget 2023 chose to do both. There were budgetary proposals for capital expenditure of INR 10 lac crore on infrastructure, INR 2.4 lac crore on Railway capex and INR 1.3 lac crore on 50-year interest free loans to states for capex. At the same time, personal tax breaks were given to put more disposal income in the hands of individuals. All these giveaways factored in maintaining the fiscal glide path to 4.5% of GDP by FY26 with a 5.9% fiscal deficit in FY24.
The budget seamlessly ironed out the dilemma between focusing on rural development or new age advancement by introducing technology into agriculture. Of course there were numerous other proposals to boost the rural economy. These included ‘Women Empowerment’ by giving them opportunities and skilling. The approach taken was conventional and yet fairly innovative, as it envisaged setting up of large collectives and then facilitating them to scale up. There was also mention of a new scheme that would enable artisans to improve the quality, scale and reach of their products, integrating them with the MSME value chain by providing them with financial support, access to advanced skill training, digital and green technology, brand promotion, linkage with local and global markets, digital payments, and social security. These initiatives will not only bolster rural incomes but also tap into the talents of women – a relatively dormant resource, which will add substantially to economic growth.
There were various other measures to nurture a technology ecosystem and prepare India for a digital future too. Beyond setting up of three centres of excellence for Artificial Intelligence and 100 labs for developing applications using 5G services, there was talk of skilling youth in new age courses for Industry 4.0 like coding, AI, robotics, mechatronics, IOT, 3D printing, drones, etc. All these proposals suggest that the government is encouraging acquaintance with and use of new age technology.
The country has been reaping benefits due to the rise of Fintech services in India, which have facilitated digital public infrastructure such as Aadhaar, PM Jan Dhan Yojana, Video KYC, India Stack and UPI. To enable more Fintech innovative services, Budget 2023 proposed augmenting the scope of documents available in DigiLocker for individuals and also setting up ‘Entity DigiLockers’ for use by MSMEs, large business and charitable trusts to enable storing and sharing documents online securely, whenever needed, with various authorities, regulators, banks and other business entities. Sitting at the confluence of the Fintech and MSME space, this initiative will benefit both sectors.
Another master proposal for the financial sector was the setting up of a national financial information registry, which could serve as the central repository of financial and ancillary information. This will facilitate efficient flow of credit, promote financial inclusion, and foster financial stability. Budget 2023 even went so far as to offer digital continuity solutions to other countries by facilitating setting up of their Data Embassies in GIFT IFSC.
Coming to the last conjecture about whether Budget 2023 would play to the gallery, this being an election year, or be a budget that was genuinely for the people of India – it did both. However, there was nothing affected about its performance. It merely recounted the government’s achievements since 2014 and how far it has come while delivering on its promise of “Leaving no one behind”.
The numbers shared spoke more than words.