For progressive India, Budget should AIM on 3 key sectors

The forthcoming Budget must focus its attention on three significant sectors of the economy - agriculture (A), infrastructure (I) and mobilisation (M) of funds.

Government's credit target for the agriculture sector stands at Rs16.5 trillion for the current financial year FY22. With a view to give a boost to the agriculture sector, the government has been increasing the credit target for the farm sector every year and this time also, KR Choksey believes the target is likely to be increased to Rs18-18.5 trillion for FY23 in the upcoming budget. Reforms like the Pradhan Mantri Fasal Bima Yojana, crop insurance, profitability for farmers, facilities to trade electronically, and improvement in agro-processing will help revive the segment as a whole and boost farmer income.

In its bid to achieve the investment target of Rs111 trillion as per the NIP (National Infrastructure Pipeline), the Government will have to announce more steps in the Budget. Government is likely to increase its Gross Budgetary Support towards the infrastructure sector with focus on roads, railways and urban infrastructure segments. To expedite projects like high-speed rail (including bullet trains), Sagar Mala, smart cities, inland waterways developments etc, government should provide some dedicated allocations towards these projects in the budget. Increased allocation for NHAI will help achieve Bharat Mala project targets.

Coming on monetisation of assets, it will be done through National Monetisation Pipeline (NMP), which estimates an aggregate potential of Rs6 trillion from core assets between 2022 and 2025. The current fiscal year's asset monetisation target of Rs80,000 cr was spelt out when the NMP was announced and not in a budget document.

After having eluded the nation during the previous fiscal due to onslaught of the pandemic, fiscal deficit is likely to be lower at 6.5 per cent from budget estimate of 6.8 per cent of GDP for the current fiscal. This 30-bps improvement would be due to the robust revenue collections. Anything less than 5.8 per cent of GDP for FY23, as per EcoScope study, may help bring down yields and anything over 6.2 per cent could push them higher.

While the rains in the recent past will help increase the Rabi crop harvest, the better tax collections and a tab on budgetary sops will prove to be a milestone for the government in realising the dream of gradual economic recovery.

The real picture of Budget is likely to come in March post Assembly polls only. Still, it seems to be clear that no new Budgetary sops in forms like in increase in income tax waiver limit or reduction of tax on any item, as was being demanded, may not see light of the day. The reason was that the government, which was in a hurry to make the country a $5 trillion economy by 2025 or so, will be left with a Hobson's Choice of going beyond the conventional popular Budget and rather saying 'yes' for a progressive Budget which was the need of the hour.