Finance Minister at the beginning of the speech expressed empathy towards those who had to bear adverse health and economic effects of the pandemic. She noted that the present year is Amrit-Mahotsav of freedom and also termed the next 25years towards 100th year of independence as Amritkaal. This year Budget speech refers to the Amritkaal many times. Amritkaal according to BJP government is complementing macro-economic growth with micro level welfare, promotion of digital economy, technology enabled development, energy transition & climate action and helping crowd-in private investment with the help of public capital investment. FM claims that the vision of Amritkaal is drawn in the budget 2021-22. The government says that productivity linked incentive in 14 sectors for achieving Atma-Nirbhar-Bharat has potential of creating 60lakh jobs and additional production of 30lakh crore during next five years. The budget lays priorities on PM Gatishakti along with Amritkaal objectives. PM Gatishakti is an approach towards sustainable economic growth based on development of roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure. This is complemented by Energy transmission, IT communication, Bulk water and Sewerage, and Social infrastructure. The approach is powered by clean energy and synergises effort of all stakeholders – state and central governments and private sector.
While multi-modal capacity building is via infrastructure development, inclusive development is via crop procurement, promotion of natural farming, reduction in oil seeds, and tech promotion initiatives. Skill development, river linking, universalization of education, health initiatives, housing. To achieve this, capital expenditure (CAPEX) is increased by 35.4% to 7.5lakhCr (2.9%of GDP). The budget with these objectives has a total expenditure of 39.45 lakh crore. The size of the government is around 15.3% of GDP with an estimated GDP of 258 lakh crores. Revenue receipts is about 55.9% of the government size, and capital receipts is about 44.1% of the government size. Tax revenue is 49% of the revenue and Borrowings is about 42% of the revenue. About 23.8% of the revenue is being spent on interest payments. The fiscal deficit is 42% of revenue (or 6.4% of GDP) and primary deficit is about 18.2% of revenue (or 2.8% of the GDP). The government expects 11.1% of economic growth in the next year whereas India has registered economic growth rate of 9.2% and this is highest among the nations of the world. As rightly pointed out by FM, this reflects the robustness of Indian economy. The export growth is about 16% and import growth is at 29.4%.
In the recent years, the borrowings have increased from 5.4 lakh crore in 2017 to 16.6lakh crore in 2022 budgets. The increase was annually about 8000crore except for a big jump of 7lakh crores in 2021 budget due to pandemic.
Indian economy has three main components – agriculture contributing 18.8%, industry contributing 28.2% and services sector contributing 53% of the GDP. Last year, these sectors have recorded growth rates of 3.9%, 11,8% and 8.2% respectively. The consumption has grown at the rate of 7%. The balance of payments position of India is in good shape with 634B$ (42lakh crore). Inflation is at 5.6%.
The budget is generally considered as not populist. Mohandas Pai considers approach of the government as cautious and conservative in calculating taxes. He thinks that government could have given some relief with realistic assessment in taxation.
While Rahul Gandhi called it as zero-sum budget, MK Stalin termed the budget as anti-federal and anti-people. Chidambaram has stated that per capita income/expenditure and outlay to key sectors have declined, and unemployment rate has increased. He criticised the focus of longer term of 25 years in the annual budget as misplaced priority and mockery at the people.
