The Union Budget, presented by Finance Minister Nirmala Sitharaman on February 1, 2022, has several forward-looking reforms and announcements that are expected to re-energise the growth engines of the economy. Progressive and growth-oriented, this year’s Budget has introduced wide-ranging reforms across sectors focussing on infrastructure, digital economy, ease of doing business, education and healthcare, among others. These will go a long way in stimulating the economy and accelerating the ongoing economic recovery process.
Creating holistic Infrastructure has been a central element of the Budget. The PM Gati Shakti Master Plan driven by the seven engines of growth — roadways, railways, airports, ports, mass transport, waterways and logistics, with a focus on promoting seamless multimodal connectivity and logistics efficiency by leveraging technology — will reduce the cost of doing business and help raise productivity.
With a massive allocation of ₹7.5-lakh crore towards capital expenditure, which has been stepped up by 35 per cent from the previous year, the Budget has provided a big push to infrastructure, which is critical for enhancing the productive capacities of the economy. This in turn will stimulate demand and spur investments and will have strong multiplier effects in the economy. This will also enhance significantly the employment potential.
Digital economy is a mainstay of the Budget and several announcements, including the move to set up 75 digital banking units of scheduled banks in 75 districts to encourage digital banking, the introduction of a digital currency by the RBI, the launch of the DESH-Stack e-portal or creating a digital ecosystem for skilling and livelihood, are all landmark measures and will lay the groundwork for a robust digital economy.
Other initiatives including the creation of a digital university to facilitate quality e-learning and the rolling out of the Ayushman Bharat Digital Mission — a national digital health ecosystem — will empower citizens and promote sustainable living, while accelerating the use of digital technology.
In line with the Government’s intention of promoting sustainable and inclusive development, a key pillar of the Budget, several announcements were made including the use of ‘Kisan Drones’ for crop assessment and digitisation of land records; promotion of chemical free natural farming; public-private partnerships for the delivery of digital and high-tech services to farmers across the country; and a fund with blended capital facilitated through NABARD to finance start-ups and rural enterprises.
These reforms are expected to positively impact the rural economy, by leveraging technology and promoting digital literacy.
The government’s intent and its focus on clean energy and sustainable development were also reflected in other measures including the big push for EVs and special mobility zones with zero fuel policy, Battery Swapping Policy and interoperability standards, and intensifying R&D. These are all welcome steps
Ease of doing business
The Budget also has measures that promote ease of living and stability and continuity of policies. These are expected to bolster the medium- and long-term growth prospects of the economy. The announcement of the launch of Ease of Doing Business 2.0 and the government’s commitment towards promoting trust-based governance will help improve the productive efficiency of capital and human resources.
The active involvement of States, the digitisation of manual processes and interventions and integration of Central and State level systems using information technology, will further improve the business ecosystem. The move towards a stable tax regime and expansion of the GIFT city to speed up dispute resolution are other positive developments that will help India in becoming a global business hub.
The government’s decision to extend the Emergency Credit Line Guarantee Scheme (ECLGS) up to March 2023 and to increase the guarantee cover to ₹5-lakh crore is an encouraging development. The emphasis on hospitality and related services, especially those by MSMEs, will provide much-needed respite to the sector in mitigating the adverse impacts of the pandemic.
The Government’s resolve to strengthen the health and education sectors and initiatives such as the National Tele Mental Health Programme and allowing foreign universities to offer courses in financial management, FinTech, technology, engineering, etc,. free from domestic regulations, are laudable.
The Budget lays a strong emphasis on providing an impetus to growth and, in doing so, has rightfully focussed on introducing measures to promote inclusive development, accelerate digital adoption, and boost logistical efficiency and infrastructure. The comprehensive measures focuses on the holistic development of the economy and will also help address several challenges faced by the economy posed by the pandemic.
Overall, the Budget is promising and forward looking, which will bolster the economy’s growth prospects and fuel a sustainable economic recovery. The article first appeared in Business Line on 2nd February 2022.