Union Budget Lays Foundation For India’s Economic Growth For Next 25 Years

Finance minister Nirmala Sitharaman presented the fourth Budget of the Modi 2.0 government in the Lok Sabha on February 1.  Union Budget 2022-23 would lay the foundation for India’s economic growth and expansion for the next 25 years, Finance Minister Nirmala Sitharaman said while presenting the budget in the Lok Sabha. This is a forward-looking budget which is both inclusive and progressive says the experts.

“This Union Budget seeks to lay the foundation and give a blueprint of the economy over Amrit Kal of next 25 years – from India at 75 to India at 100,” Sitharaman said while presenting her fourth union budget. She said India is in a strong position to withstand future challenges. The Finance Minister said the government’s focus will continue on boosting public investment to modernise infrastructure.

India’s fiscal deficit would unexpectedly rise to 6.9 per cent of GDP in the current fiscal and it is being targeted to be cut to 6.4 per cent in the next financial year. The fiscal deficit or the gap between expenditure and revenue was estimated at 6.8 per cent of the gross domestic product (GDP) in the current financial year ending March 31, 2022.

Total expenditure during the current year is estimated at Rs 39.45 trillion while total resources mobilisation would be Rs 22.84 trillion.  

The economy is expected to grow at 9.2 percent in the current fiscal, Finance Minister Nirmala Sitharaman said while presenting the Union Budget for financial year 2022-23 on February 1. GDP growth in 2021-23 expected to be 9.2%, says Nirmala Sitharaman.

Sitharaman also said the virtuous cycle of investment is expected to revive on account of capital expenditure and crowd in private investment.

“Government’s focus since 2014 is on poor and marginalised. The government strives to provide necessary ecosystem to middle class,” Sitharaman said in her Budget speech, while announcing the estimated economic growth rate.

On January 31, the Economic Survey released by the government estimated FY22 real gross domestic product (GDP) growth to be 9.2 percent, on par with the first advance estimates released by the Central Statistical Organisation recently.

The International Monetary Fund (IMF) had, last week, raised its forecast for growth in India’s GDP in FY23 by 50 basis points (bps) to 9 percent. The hike in the forecast for India for the next financial year was accompanied by a downward revision in the growth estimate for FY22 to 9 percent.

Centre to borrow Rs 11.6 trillion in FY’23 to meet expenditure requirement. The estimated amount is Rs 2 trillion higher than the current estimate of Rs 9.7 trillion.

Total market borrowings of the government for 2022-23 are estimated to stand at Rs 11.58 trillion according to the Budget document. The Revised Estimates for the same for 2021-22 are Rs 8.75 trillion as against the Budget Estimates of Rs 9.67 trillion.

The budget is focussed on ensuring assured income to farmers with an announcement of Rs 2.37 trillion towards direct payments for minimum support price (MSP) to wheat and paddy farmers. These payments would be made over the next year, April 2022-March 2023.

This comes two months after the farmers’ agitation demanding guaranteed MSP for farm produce ended with the government recalling three farm reform laws brought in 2020. The protest was dominated by farmers from poll-bound Uttar Pradesh and Punjab.

Nirmala Sitharaman said, “Farm procurement value for FY23 to be Rs 2.37 trillion.” She announced a plan to promote oilseed cultivation to reduce import dependency and for promotion of millet production with emphasis on exports. Sitharaman said the government would promote chemical-free natural farming throughout the country to boost sustainable agricultural productivity and income of the farmers.

She said the government would promote the use of Kisan drones for crop assessment and spaying of pesticides. She said digitisation of land records would be expedited to bring more transparency in the agriculture sector.

Sitharaman announced Ken-Betwa river linking project. She said the project would be undertaken at a cost of Rs 440 billion.  She said this project would benefit 900,000 farmers. She said the draft DPR (detailed project report) for five river links have been finalised.

100 year infra plans on the cards, blueprint on next 25 years in this budget. The Finance Minister announced massive, big public investment for modern infrastructure for the next 25 years — the Rs 100 trillion Gati Shakti Plan. The Finance Minister, Nirmala Sitharaman, while presenting the budget, introduced the Gati Shakti guided by the synergy of a multi-modal logistics approach.

PM Gati Shakti is a transformative digital approach for economic growth and sustainable development. The approach is driven by seven engines; Roads, Railways, Airports, Ports, Mass transport, Water transport, Logistics infrastructure and will bring together 16 ministries.

80 lakh houses will be completed for identified eligible beneficiaries of PM Awas Yojana in both rural and urban areas in 2022-23. Rs 480 billion has been allotted for the project, said FM Sitharaman in Parliament.

Finance Minister Nirmala Sitharaman said the speed in the coverage of vaccination has helped in economic recovery. Presenting the Budget for 2022-23, she said the country is in the midst of the Omicron wave.

The fiscal deficit for FY’22 will settle at 6.9% of the GDP, which is higher than the 6.1% projected by a Bloomberg poll of economists.

“Budget 2021-22 provided sharp increase for public investment. Throughout the year…our economic recovery is continuing to benefit from the multiplier effect. This Budget continues to provide impetus to both. One, a blueprint which is futuristic…and number two, big public investment for modern infrastructure ready for India at 100 years,” the finance minister stated.

The government capital expenditure for FY23 is pegged at Rs 7.5 trillion, forming about 2.9% of India’s GDP. The capex announced is 35.4% higher than the budget estimate of Rs 5.54 trillion in FY’22.