By Kiran Mazumdar-Shaw
Finance Minister Nirmala Sitharaman has presented the nation with a balanced Budget for FY23. The Indian economy needs a steadying hand at a time when it is trying to find its feet as the tremors from the global COVID-19 pandemic recede slowly. She has prudently laid the groundwork for a gradual economic revival by following a path of fiscal prudence and ensuring ‘ease of doing business.’
Ramping up Capex Outlay
In this Budget, the FM has raised the allocation for capital expenditure by 35% to Rs 7.5 lakh crore. At a time when private sector investments have been subdued, the FM wants to ramp up public capital spending to help crowd in private sector investments. This is a good strategy and will drive the creation of much-needed infrastructure and jobs.
At the same time, Finance Minister Nirmala Sitharaman has been careful in sticking to the path of fiscal prudence. The fiscal deficit for FY 22 has been kept at 6.9% of GDP while it has been pegged at 6.4% for FY 23.
Catalyzing Digital Transformation
The FM has rightfully focused on measures to build a strong digital architecture that supports digital governance, e-health, ease of doing business through voluntary compliance and building digital trust. At the same, she talked about investing in digital healthcare and digital education. These are all steps in the right direction because if India is to emerge as USD 5 trillion economy by 2030, we will have to make incremental investments over the years in building a robust digital future.
Salaried Class Disappointed
I think there is some disappointment among the salaried class as the Budget did not bring much relief to them in the form of a lower tax burden at a time when they are bearing the brunt of inflation and high medical expenses. Tax deductions pertaining to healthcare spends or an increase in the ‘tax free’ slab to Rs 3-4 lakhs from the present Rs 2.5 lakhs would have been welcome.
Informal Economy Needed a Boost
The Budget could have done more on addressing the pain in the informal sector, which has seen huge job losses in the wake of the pandemic. This is evident from the decline in consumption in the rural economy. I believe the government needs to urgently address the distress in the informal sector, or else it will lead to a further deepening of economic inequalities.
A version of this article first appeared in Deccan Herald on 02 Feb 2022.