The fourth budget of Union Finance Minister Nirmala Sitharaman is coming at a moment when after the pandemic shock in FY21 due to the rampaging second wave, India’s economy is flashing the uptick signs.
At such a critical phase, it seems the best bet for the Finance Minister is to spell out a short-term stabilisation fine print than a long-term vision. The road is not a luxury ride for the Fin Min Nirmala Sitharaman - because she has to do a tight rope walk of fiscal consolidation and pump-priming the economy.
While ICICI experts see the FY23 Union Budget being “fiscally prudent” as well as “growth supportive”, SBI and CARE economists think that the Budget will aim at gradual fiscal consolidation and will go for booster shots to employment-oriented and growth chips of the economy.
AIM-2022 - Torpedoing Slowdown
In order to accelerate the investment cycle and employment, the budget, as per CARE ratings will focus on the following.
- Infrastructure will continue to be the focus area, with emphasis on logistics and health infrastructure
- Employment generation measures to feature prominently
- New welfare schemes (largely aimed at boosting rural incomes) are expected, along with an increase in allocation and likely extension for existing welfare schemes (employment support, affordable housing (PM-AWAS)
- Formalisation (digitisation) of the economy to be accelerated
- Increased attention to ease of doing business
- Measures to promote exports are anticipated
- Policies for deepening of financial markets viz. bond markets likely to feature
- Capital Expenditure could be raised to around Rs 6 lakh crore (8% increase over FY22 BE)
Big Announcements For Farmers
- Fertiliser subsidy to be increased – could be around Rs 1.4 lakh crore (Rs 0.8 lakh crore in FY22 BE)
- Allocations under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) to be raised to Rs 1 lakh crore in FY23 (Rs 0.73 lakh
crore in FY22 BE) - PM-Kisan Samman Nidhi (income support to farmers) could be raised Rs 75,000 crore (Rs 65,000 crore in FY22 BE).
- As per SBI experts, KCC is to be positioned as a livelihood card for small and marginal farmers in the Budget.
Flash-Light On MSME/Rural economy: As per ICICI, the government is likely to extend ECLGS and other loan guarantee schemes for micro, small and medium enterprises (MSMEs), hospitality and tourism sector, and the health infrastructure beyond March 31.
- The budget will focus on MSP, agro marketing support, boost to rural infra and aid through cheaper funding to revive the rural economy.
- ICICI expects an enhanced outlay of Rs 1.4 lakh crore during FY23 (up ~19% from budgeted CAPEX of Rs 1.18 lakh crore during FY22) for roads.
Jal Jeevan Mission: As per ICICI experts, the scheme will see an increased allocation to the tune of Rs 60,000 cr. Under the JJM scheme, the Modi govt targets ensuring potable water connections to around 19.3 crore households by FY24.