With an emphasis on investment in public infrastructure, finance minister Nirmala Sitharaman not only addressed the immediate issue of increasing demand in a slowing world but also clearly signalled the path through which India will become a developed economy: a focus on infrastructure and creating conditions conducive for private investment.
The 33% increase in capital investment outlay to ₹10 lakh crore and a total ‘Effective Capital Expenditure‘ of ₹13.7 lakh crore will have a multiplier effect, pulling in more private investment and consumption pushing growth and jobs. A critical element of the capital expenditure increase is that higher public capital spending is obtained by containing revenue expenditure to a nominal growth of only 1.2%. This ensures a lower fiscal deficit and keeps interest rates low. In the current environment when interest rates are high, this is one of the most important factors that will make the multiplier effect strong.
Enhancing opportunities for private investment in infrastructure, providing relief to MSMEs, reducing compliances and decriminalisation of legal provisions will further crowd-in private investment. A common business identifier, an entity DigiLocker and a unified filing process as proposed will help reduce the cost of compliance for businesses.
To push green growth, GoI has committed an outlay of ₹19,700 crore to the National Green Hydrogen Mission. This will also reduce dependence on fossil fuel imports. Another ₹35,000 crore is provided for the energy transition and net-zero carbon emission targets. Energy storage is proposed to be formulated through a framework for pumped storage projects. To accelerate this shift, the budget has also proposed a green credit programme that will incentivise environmentally sustainable actions by companies.
The budget also takes on the skill constraints being faced in health and education. While earlier budgets mainly focused on spending on schools or hospitals, this budget emphasises spending on the supply side – on nursing colleges, medical research, pharma innovation, multidisciplinary courses for medical devices, teachers’ training and creation of learning material and libraries.
The budget puts very high priority on inclusive development, focusing on farmers, women, youth and socially and geographically neglected sections. This will allow us to explore niche and premium markets that have been growing around the world and have recently become even more attractive in the post-pandemic world. The budget also proposes to unleash innovation and research by startups and academia by providing access to anonymised data through a National Data Governance Policy.Budget 2023 poses the right balance between the short term and the long term, between growth and redistribution, between investment and consumption, while enabling all of them.
