Article 112 (1) of the Constitution of India states the following: “The President shall in respect of every financial year cause to be laid before both the Houses of Parliament a statement of the estimated receipts and expenditure of the Government of India for that year, in this Part referred to as the “annual financial statement””. The annual financial statement that the Constitution refers to is nothing but the Union Budget. Given this, one can technically argue that the Union Budget is supposed to be just a statement of annual financial accounts of the Government. A statement that outlines the receipts and expenditure proposals for the upcoming financial year. While that’s true, more importantly, what a Union Budget really reflects is the development vision and governance philosophy of any incumbent Government. The choices that a government makes while allocating scare financial resources that it has at its disposal reflects the development vision it envisages for the country.
So, the important question to ponder in this context is how should one analyse the Union Budget 2022? A nuanced analysis of various announcements made in the Union Budget 2022 indicate that the Modi Government is putting up a bold agenda to steer India towards a modern and futuristic economy where everyone has easy and equitable access to development opportunities. The following perspectives substantiate the key focus themes that emerge clearly in the Union Budget 2022:
Credibility: Demonstrating the focus on “walking the talk”
First and foremost, the Budget 2022 cements the fact that the Government doesn’t believe in mere talks, instead it relentlessly and consistently focuses on walking its talk.
Last year, in the Union Budget 2021, Finance Minister Nirmala Sitharaman had announced a target of investing INR 5.5 lakh crore as capital spend in FY 2021-22. As such the capex investment proposal was quite ambitious: 30% increase from FY 2020-21 (INR 4.1 lakh crores) and if one takes into account the fact that post Budget, the country witnessed the devastating second wave as well as the third wave of COVID pandemic during much of the last financial year, it would have been perfectly reasonable to expect the Government to fall short of its targets. Despite such challenging externalities, the Union Government ended up exceeding this target. Union Finance Minister announced in the 2022 Budget that the revised estimate of capital expenditure for FY 2021-22 was estimated to be INR 6.03 lakh crores (almost INR 50,000 crores higher than the original budget estimates). Similarly, on the fiscal management, the FM said that the fiscal deficit for FY 2021-22 was expected to be 6.9% of GDP as against the estimates of 6.8%, a minor slip from the target.
Contrast this with what used to happen before 2014. Union Budget presentations were mainly used as a national platform from where grand, populist announcements were made, only to be forgotten next year. New schemes got introduced and tough delivery targets were set every year. But most of them remained on paper, with hardly any real, tangible realizations of those targets.
So, when the FM announced another steep increase in the capex plan for FY 2022-23 to INR 7.5 lakh crores while at the same time tapering the deficit down to 6.4%, most stakeholders expressed complete confidence in the ability of the Government to deliver on this target as well, reflecting high credibility in governance.
Continuity: consistency with the longer-term development vision
Over the last several months, the Union Government has been rolling out development initiatives such as the AtmaNirbharBharat program, PM Gati Shakti, National Infrastructure Pipeline (NIP), National Monetization Pipeline (NMP), privatization of Public Sector Enterprises, Productivity Linked Incentive plan (PLI) etc. These initiatives are tools to realize the vision of the Government to build a modern, state-of-the-art infrastructure in India and make India self-reliant and a powerhouse for exports.
Given the very nature of these programs, they are large, complex, multi-year and multi-departmental programs. The proposals made in the Union Budget 2022 clearly demonstrated the continued focus of the Government towards ensuring smooth, fast and unhindered implementation of these programs.
Citizen-centricity: inclusive development and ease of living for all
The proposals of the Budget clearly reflect that the Government has put citizens at the center while devising its economic policy and development agenda. Realizing inclusive development and ease of living for all Indians stand out as a clear priority of the Budget.
Proposals to enable farmers access latest digital technologies such as drones, accelerating universal access to quality infrastructure and connectivity, piped water, housing, education and health services, nutrition, banking and financial services etc. through ongoing as well as new initiatives are examples which demonstrate the citizen-centricity in economic policy. Kick-starting Ease of Doing Business 2.0 and Ease of Living program by providing all citizens a single point access to Government services is another important strategy to enhance ease of living for all citizens.
Catalysing job creation
The Budget had a clear emphasis and focus on catalysing job creation in an economy which is witnessing a robust, resilient recovery.
To that extent, sharp increase in provisions for capex investments (from INR 5.54 crore in FY 2021-22 to INR 7.5 lakh crores in FY 2022-23 and to INR 10.68 lakh crore including the grants-in-aid to state ), extension of the emergency credit line guarantee scheme (ECLGS) for MSMEs, setting up online e-bills system for settling dues of suppliers and contractors and laying out supportive policies and light-touch regulations for making the already thriving Indian start-up ecosystem more vibrant and robust are proposals which would facilitate creation of jobs across all sectors and across skill-levels.
Climate Action: steering India towards a cleaner, greener and a zero-waste economy
Finally, the Budget also laid out several specific action items to accelerate transition towards a cleaner, greener and zero waste economy.
It’s proposed boosting the fiscal incentives to build fully integrated high-efficiency solar modules in India by 5 times (from INR 4500 crores originally to INR 24000 crores), enabling transition towards circular economy, promoting fast shift to electric mobility and increased public transport, battery swapping policy, co-firing biomass pellets in coal plants to reduce stubble burning and implementing measures for increasing efficiency of energy consumption. All these measures would accelerate transition towards a cleaner transport and cleaner energy mix in Indian economy.
The Union Budget 2022 puts forward a number of proposals to accelerate growth, sustain a virtuous cycle of investments and create a solid foundation for a truly modern, inclusive and developed India, that all Indians collectively aspire to be part of when we celebrate our 100 years of Independence. The 5C’s discussed above – Credibility (credible governance), Continuity, Citizen-centricity, Catalyzing job creation and Climate Action capture the important priorities that one can expect the Government to continue its focus on in the times to come.
(The author is a public policy professional and a former OSD at Economic Advisory Council to the Prime Minister (EAC-PM) and NITI Aayog. The views expressed are his own.)