Budget has done well in maintaining its growth focus

One of the key features of the budget was the pump-priming of the economy with an emphasis on capital expenditure aimed at creating productive assets and creating a multiplier effect. It is pertinent to mention here that the government’s capital expenditure thrust over the years has been visionary. 4.3 trillion in 2020-21 7.5 trillion in 2022-23, a jump of over 75% in just two years. It goes without saying that it has been one of the major growth drivers of the economy.

The sustained increase in capital expenditure bolsters the government’s vision of raising the growth potential of the economy by promoting overall productivity. At a time when private investment is taking the green light, crowding out private investment and high public capital expenditure was crucial to catalyze board-based recovery.

In the true spirit of cooperative federalism, the central government’s move has led to a sharp increase in the support given to the states for capital expenditure. Revised to 1 trillion in 2022-23 15,000 crore in the year 2021-22 through issuance of 50 year interest free loan and paves the way for greater participation of states in the nation building process.

Importantly, capital expenditure in the economy has been boosted on a spurt in gross tax and non-tax revenues in 2022-23. The tax buoyancy will be supported by strong economic growth, which is expected in the range of 8.0-8.5% as outlined in the Economic Survey. This has helped the government to balance spending to support economic recovery with fiscal stability. A gradual glide path to fiscal consolidation will keep growth buoyant, and a fiscal deficit of 6.4% of GDP is prudent in the Budget for 2022-23.

In line with the ‘agile’ approach of using a safety-net for unsafe classes, as illustrated in Economic Survey 2021-22The budget announced comprehensive measures to support the distressed Micro, Small and Medium Enterprises (MSME) sector. Extension of Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023 with the allocation of 5 trillion is a big relief for small enterprises. The inclusion of the contact-intensive travel and tourism sector, which has still not reached the pre-pandemic level of production, within the ambit of the plan, is commendable. Excessive 2 trillion has been allocated to MSMEs to meet their financial needs under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which will go a long way in supporting the revival of the sector Jobs are also important. as a livelihood.

In the past, reforms towards improving ease of doing business as well as enabling policies of the government to nurture the start-up ecosystem have helped catalyze entrepreneurship, and many of these new technology ventures have become unicorns. went. This has enabled India to emerge as the third largest ecosystem for start-ups globally. The budget has taken forward the good work of encouraging start-ups through schemes like extending the existing tax benefits by one more year. The continued support extended to start-ups will help them emerge as a key driver for growth over the next 25 years.

Overall, through comprehensive policy measures, the budget has shifted its focus to growth, while fast-tracking digital measures that will go a long way in preparing the country for the future. The fiscal position appears to be under control with a reliable glide path. Along with improving the growth rate in the immediate term, the measures are also expected to lay a solid foundation for the revival of the economy in the next 25 years.

(Chandrajit Banerjee, Director General, Confederation of Indian Industry, views expressed in this article are personal)