Editorial Articles

Issue no 46, 11-17 February 2023

Amrit Kaal Budget 2023 Provides Roadmap for India to Become $5 Trillion Economy

Dr Ranjeet Mehta

The Union Finance Minister, Smt. Nirmala Sitharaman, presented the Budget for 2023-24 to the Parliament on 1st February. The budget is an outstanding effort that embodies an inclusive growth strategy with an eye toward the future. In the coming years, growth and consumption will be driven by a dual emphasis on higher capital expenditures for infrastructure development and tax breaks for the middle class. With an anticipated 7% GDP growth in FY23, the first budget of the 'Amrit Kaal' outlines the growth scenario for the upcoming fiscal year and succeeding years.The Budget provides a road map for fueling India's aspirations and expectations as the nation embarks on its journey towards India@2047. To ensure acceleration and reaffirm commitment to Atmanirbhar Bharat, the Union Budget 2023 has unveiled a number of substantial incentives with a view to India@100.

In spite of the massive global slowdown caused by the pandemic and the war, the world has recognised India as a point of light. Our growth for the current year is estimated at 7.0%, the highest among all major economies. The income per capita has increased to Rs 1.97 lakh. In the past nine years, India's economy has risen from the tenth to the fifth largest in the world.In addition, the Finance Minister has made an extraordinary effort to adhere to fiscal prudence and has indicated a path to less than 4.5% by FY25/26, much to the industry's comfort. By achieving a fiscal deficit of 6.4% of GDP for FY23 and maintaining market borrowing at Rs 15.43 trillion with an estimated fiscal deficit of 5.9% for FY24, the budget has addressed one of the most pressing issues.

The vision of the budget for the Amrit Kaal includes a technology-driven and knowledge-based economy with robust public finances and a robust financial sector, and that to achieve this, Jan Bhagidari through Sabka Saath Sabka Prayas is necessary. Finance Minister also added that the economic agenda for achieving this vision focuses on three things: providing ample opportunities for citizens, especially the youth, to realise their aspirations; fostering growth and job creation; and bolstering macroeconomic stability.

The total size of the 2023-24 Budget was Rs 45.03 lakh crore, a 7.5 percent increase over the revised estimate for 2022-23, and the Centre will borrow a record Rs 15.43 lakh crore from the market through the issuance of bonds to help close the gap between its income and expenditure. The estimated net amount of the borrowing programme is Rs 11,81 lakh crore.To finance the fiscal deficit of Rs 17,87 lakh crore for the coming year, which is 1.8% higher than the revised estimate of Rs 17,55 lakh crore, the government will rely heavily on market borrowing.

The progressive and pragmatic, the Saptarishi model focuses strategically on infrastructure investment, green growth, agriculture development and modernisation, youth skill enhancement, financial literacy, and tourism to develop India and Bharat through seven distinct strategic priorities. As anticipated, the highlight of the budget was the record allocation of Rs 10 trillion for capital expenditures, which will serve as an economic multiplier in sectors such as transportation and housing. Given the balanced allocation to develop railways, roads, urban infrastructure, and power, which are primarily dependent on public resources, there was a comprehensive approach to capital expenditures.

In comparison, by establishing the infrastructure finance secretariat to aid all stakeholders in increasing private investment in infrastructure, the government has actively promoted the PPP model and invited the private sector to take the lead. India intends to improve last-mile connectivity in FY24, when the railways will receive their highest-ever capital expenditure budget of Rs 2.4 trillion. With the construction of over 50 airports and airfields and the refurbishment of existing aviation facilities, the growth locomotive has been set in motion. The Rs 10,000 crore Urban Infrastructure Development Fundthrough priority sector lending shortfall- is an additional landmark that will reshape the urban planning terrain by making cities more environmentally sustainable through the use of land efficiently, necessary funding, and transit-oriented development. The budget has also placed a great deal of responsibility on the states to utilise, create, and execute infrastructure assets.

By streamlining direct taxes and trying to make them more taxpayer-friendly, the budget also serves to increase urban consumption. While the Finance Minister increased the rebate limit from 5 lakh to 7 lakh, no tax bracket was excluded from the reform. Even the highest tax rate of 42.73 percent has been reduced to 39 percent by reducing the surcharge from 37 percent to 25 percent. Even though the lost revenue is close to 35,000 crore, the Finance Minister anticipates an increase in overall consumption. Importantly, no change there in capital gains tax regime significantly affected market confidence.

Key aspects, including green growth and tourism development, will generate jobs and encourage investment. In accordance with the vision of the Prime Minister, India is moving resolutely toward the 'Panchamrit' and net-zero carbon emission by 2070, which will ensure 'green economy.' As far as can be determined, the concept of green development will now permeate all economic activities, assisting India in achieving its global commitments of net zero and carbon reduction. Additionally, it will generate employment and entrepreneurial opportunities. The inclusion aspect of the budget is supported by numerous announcements for women, senior citizens, and tribal groups, among others. It has established a viable business model for technology in even traditional sectors such as agriculture, left enough in the hands of consumers, worked diligently to capitalise on internal capabilities such as tourism, and maintained a keen eye on the leading nation with massive domestic capacity building and a green focus. This will undoubtedly place India on the path to economic superpower status within the next decade.

The shared vision for energy and food security is unmistakable; for instance, the recently launched National Green Hydrogen Mission, with a budget of 19,700 crore, will keep driving India's transition to low carbon intensity, reduce its reliance on fossil fuel imports, and position the nation as a market and technology leader. This budget allocates 35,000 crore for priority capital investments in the areas of energy transition, net-zero emissions, and energy security. The budget has thankfully taken one step further to incentivise a behavioral change by establishing a Green Credit Programme that will reward ecologically sound and responsive actions by businesses, private citizens, and local governments.

Even though India is a well-known tourist destination, the country's natural resources are rarely promoted. This budget is rich in thoughts and resources to make India a premier tourist attraction for both international and domestic visitors. To generate a large number of job opportunities, the promotion of tourism will be undertaken in mission mode, in collaboration with states and under the convergence of government programmes, using the PPP model.The current budget keeps going the 'Amrit Peedhi' focus on youth to help them realise their aspirations by establishing 30 Skill India International Centres. It has envisioned a pragmatic outlook for skill development by emphasising new-age courses for Industry 4.0, such as coding, AI, robotics, mechatronics, IOT, 3D printing, unmanned aerial vehicles, and leadership abilities.

In conclusion, the Budget is successful on all fronts, as a variety of announcements for women, senior citizens, and tribal communities, among others, support the inclusion aspect. It has established a platform for innovation that will place India on the path to economic global dominance within the next decade.The budget demonstrates the government's commitment to growth and welfare policies that will benefit all segments of society, including young entrepreneurs,MSMEs, farmers, and professionals. It is a budget to promote modern infrastructure in the nation, which will lay the groundwork for a new India and enhance the lives of 1.4 billion Indians. Giving a boost to education, skill development, entrepreneurship, research and development, digital infrastructure, green growth, and job creation, the Amrit Kaal Budget sets the stage for transforming India into a technologydriven knowledge economy. It is anticipated that the Budget will bring about changes that will help India become a $5 trillion economy soon.

(The author is Deputy Secretary General, PHDCCI, New Delhi Email ranjeetmehta@gmail.com)

Views expressed are personal.