High public spending will rev up India's economic growth
However, fiscal deficit at 6.4% of GDP for FY23 may lead to many problems in future
image for illustrative purpose
I feel it is a balanced budget supporting economic recovery. Considering the constraints, the Finance Minister (FM) didn't have much space to experiment. So on the lines of last year, this year again the budget focussed on a familiar strategy of driving capital expenditure to drive growth through higher public spending. Increase in capital expenditure by 4.1 per cent is a boost to the economy. Moreover, she has in fact tried to weave in short-term capital spending with the long-term 25-year investment plan. About specific policy announcements, the change in custom and import duties to align it with the long-term goal of Atmanirbhar Bharat is a welcome move. Specific initiatives on education and mental health issues are well-recognised in the budget.
The much-awaited central bank digital currency is likely to have an impact on banks, but the implications of the same will have to be thought through further as FM didn't elaborate much on that.
Allocation towards the development of railway infrastructure is again good. Simplified regulation for ecommerce exports in gems and jewellery sector is welcome. Finance Minister has extended the emergency credit line till March 2023 for the MSME sector and the guarantee cover has also been extended by another Rs 50,000 crore taking the total cover under the scheme to Rs 5,00,000 crore. As a representative of MSME sector I welcome this gesture. MSME sector makes up for about 40 per cent of exports, and almost 30 per cent of the national GDP. So this announcement will go a long way.
However, I'm disappointed with a higher fiscal deficit of 6.4 per cent of GDP for FY23 as it may lead to many problems in future before the government. I'm also not happy with complete neglect of salaried class. But at this nascent stage of recovery the FM had no choice. Overall, this budget will lead to growth in our GDP.
(The author is Advisor SME Chambers of India for AP & Telangana & National President International Chambers of Public Relations)
