On 1st February 2022, the Finance Minister of India unveiled the budget for the year 2022-23 in the Parliament. The year 2022 was crucial for the budget, as India marks the completion of the 75th year of independence and the mission of New India 2022. While the Indian economy is experiencing a fluctuating recovery from the post-pandemic era, the budget seeks to lay the foundation and provide a blueprint to steer the economy over Amrit Kaal. In light of this, the Ananta Centre organised a virtual session on “Union Budget 2022- What has it achieved” moderated by Mr Govindraj Ethiraj, Founder India Spend and Kamalayan Bajaj Fellow, Ananta Aspen Centre. The panel included Mr AK Bhattacharya, Editorial Director, Business Standard and Distinguished Fellow, Ananta Centre, Mr Nitin Desai, Chairman, Governing Council, The Energy and Resources Institute and Trustee, Ananta Centre and Mr Deepak Shetty, CEO and Managing Director of JCB India Limited.
The session focused on macroeconomic stances, government expenditure priorities, taxation initiative, reforms indicators and the overall trajectory and direction of Indian budget 2022-23. This Budget is a conservative budget due to a drop in the fiscal deficit to 6.9% in 2022. With the reiterated commitment of the Government, it is estimated that it will reach 4.5% of GDP by 2025-26. The current budget aims to under-promise and overachieve if compared to the budget numbers from nominal GDP to estimates in tax revenue, making the growth assumptions puzzling. In addition, the announcement to raise Capex for FY 2022-23 to 7.5 lakh crore is mainly fuelled by the 1 lakh crore worth of interest-free loans granted to states for 50 years.
On the taxation side, the union budget 2022 has made no significant change, as the tax base and deduction on the personal front remains the same, and the tax to GDP ratio has marginally increased.
The discussion also provided insights into budget estimate numbers and the possibility of having higher revised estimate numbers. Also, as the revenue expenditure has gone down, it will remain high because of the massive reliance on the total market borrowing of (Rs 11.6 lakh crore) 32% to meet expenditure requirements which will lead to spending up to a fourth on interest payment, leaving very little for creation of assets.
Also, the session covered the positive aspects and significant initiatives of the budget like the solid and consistent focus on infrastructure that recognises the 7 engines of growth like road, railways, ports, logistics, mass transport, airports and waterways. The budget also covered different technology verticals like 5G spectrum auction, confirmation on the launch of a digital version of the rupee as a currency, taxation structure for investment in virtual assets such as cryptocurrency, and boost for the electronics manufacturing will have a positive impact on the technology sector. In addition, the government has stressed and brought a new paradigm in defence and R&D by allocating Rs 14,217 crore for 2022-23.
To establish an overall conclusion regarding the discussion. The outlays and allocation of budget is philosophically in the right direction of spending more on creating capital assets, but in the future, the government should focus on widening the definition of assets by not limiting it to the economy. It should emphasise building on non-economic assets like social and developmental infrastructure eg. education, health, water, roads, and health to contribute to overall development.