FEW OBSERVATIONS on the BUDGET 2022-23

The Union Budgetl 2022-23 presented in the 75th year of independence sets the stage for a Amrit Kaal over the next 25 years culminating a vision for 2047.The goals of Amrit Kaal are broadly to 1.Focus on growth and all inclusive welfare 2.Promoting technology enabled development, energy transition and climate action and 3.Virtuous cycle starting from private investment, crowded in by public capital investment. The stated four priorities are A.PM GatiShakti.  B.Inclusive Development.C.Productive Enhancement and Investment, Sunrise opportunities, Energy Transition and Climate Action .and D.Financing of Investments. 

 Total budget expenditure for 2022-23 is estimated to be ₹39.45 lakh crores out of which revenue receipts are₹2204422 crores and revenue expenditure ₹ 3194663 crores whereas effective budgeted capital expenditure is ₹1067889 crores as against the capital receipts of ₹1740487 crores to make up the difference in revenue budget.As per the budget 35% of receipts come from borrowings and other liabilities, 16% from GST,corporation tax and Income tax 15% each, union excise duty 7% and non debt capital receipts 2%. Maximum share of expenditure goes to interest payments 20% followed by States' share of taxes and Duties 17%,Central sector schemes 15%,Finance commission and other transfers 10%,other expenditures and and centrally sponsored schemes 9% each,Defence and subsidies 8% each,and pensions 4% .As far as fiscal sustainability is concerned even though the fiscal deficit is projected less from 6.9 in 2021-22 (RE) to 6.4% in 2022-23 the debt GDP ratio is slated to be higher. Interest payments to revenue receipts ratio in 2021-22 and 2022-23 are 39.1% and 42.7% respectively.Similarly the burden of interest payments as a percentage of GDP has gone up from 3.5% in 2021-22 to  3.6% in 2022-23. However Fiscal deficit is stated to reach 4.5% of GDP by 2025-26.

 Present budget hopes to trigger virtuous cycle of investment led output and employment growth by 'crowding in' effect of public investment on private investment especially in the context of decline in private consumption expenditure. Dynamic increase in capital expenditure has been a major land mark of this budget by a record 35.4% from 2021-22 ( BE )(and 24.4 %from RE)₹5.4 lakh crores to ₹ 7.50 lakh crores in 2022-23 inclusive of ₹1lakh  crores 50 year interest free loans set aside to the states for infrastructure sector.  This has increased to more than 2.2 times from the infra expenditure of 2019-20.Recently announced infrastructure development program PM GatiShakti  is driven by seven engines namely Roads,Railways, Airports, Ports,Mass Transport, water ways and logistic infrastructure. Under this National Highways network will be  expanded by 25000 km in 2022-23 and ₹20000 crores will be mobilized through innovative ways of financing to complement public resources.Four hundred new generation Vande Bharat trains with better energy efficiency and passenger riding experience will be developed and manufactured during the next 3 years.In addition to that mass transport including connectivity to Railways. National Ropeways development program capacity development to infrastructure projects are included in the budget. National Infrastructure pipeline will be aligned with PM GatiShakti framework along with infrastructure developed by state governments in accordance with GatiShakti guidelines to meet economic transformation, seamless multimodel connectivity and logistics efficiency. It may be noted here that since the above mentioned infrastructure projects are largely machine intensive the demand for labour or employment generation may be limited.  

 For agricultural sector apart from providing minimum support price of ₹ 2.37 lakh crores (less than previous year) the implementation of river linking project is estimated to cost ₹44605 crores. Promotion of natural farming,  delivery of Digital and Hi Tech services to farmers in ppp mode, agricultural startups, food processing, drinking water and irrigation schemes, utilization and provision of solar or Hydel power are mentioned in the budget document though the allocation is not sufficient .

   Budget push for a transition toward a greener economy. Supports are extended largely to startups,MSMEs , Green technologies,5G, Digitalisation, Artificial intelligence, semiconductors, defence sector and other industries, and also affordable  housing.contact intensive services such as hospitality that are also languishing under pandemic levels get a helping hand with the expansion of existing rupees 4.5 lakh emergency credit line guarantee scheme to 5 lakh crore extended upto March 2023.ECLG scheme has provided much needed additional credit to morethan130 lakh MSMEs.The Production Linked Investment (PLI) scheme in industry is aimed at increasing output in 14 sectors of the economy are intended to generate 60 lakh new jobs within 5 years .Skilling programs and partnership with industry will be reoriented to promote continuous upskilling and reskilling facilities for employability and sustainability. 

      Despite poor rankings in Human Development Index (131 out of 189), Global Hunger Index (101 out of 116) and ILO ranking of employment to population ratio of only 43% in 2020 and impact of the pandemic in the country, social security provided in the current budget is inadequate.The outlay for MGNREG scheme has been cut by 25% to 73000 crores in the budget 2022-23 despite wages are already pending to the tune of rs 3358 crores and payment due for material cost of rupees 11027 crores.PM poshan Shakti allocation has been reduced from 11500 crores to rupees 10233 crores .P M Garib Kalyan Anna Yogana (PMGKAY) food subsidy of rs 2.06 lakh crores for 2022-23 is less than the revised estimate of 2021-22. of 2.86 crores.₹48000 crores is allocated for PM awas yojana for completing 80 lakh houses.8.7 crore households will be provided with tap water for which ₹60000 crores has been allocated to cover 3.8 crore households in 2022-23. Budget for school education allocation improved from 54813 crores in 2021-22 to 63449 crores in 2022-23  Health and family welfare allocation also increased from ₹ 82921 crores to ₹ 83000 crores in 2022-23, 

  Other major policy decisions include setting up of  an International Digital University, Introduction of Central Digital currency by Reserve Bank of India using block chain and related technology in 2022-23. Taxing of income from crypto digital assets. Digital banking by post offices and all post offices to come under the core banking system.  Scheduled commercial banks to set up 75 Digital banking units in 75 districts.Decision to introduce digital currency by the central bank will lead to a more efficient and cheaper currency management system. 

  On the whole the thrust of the budget on capital expenditure and infrastructure development is laudable. Inspite of Atmanirbhar Bharat and PLI scheme our trade deficit with China has been continuously increasing.An evaluation of PLI scheme will give better insight into the lapses.As far as employment is concerned incentives to MSMEs and infra projects though largely machine intensive will provide jobs. However despite poverty and inequality substantial reduction in allocation for schemes like MGNREGS and other social sector welfare schemes are not justifiable especially when country's tax buoyancy is higher.