We still do not know if the worst is over. Neither do we know which way the wheels of fortune will swing with the Corona virus and what will be the impact of the next mutation. The oils prices are threateningly high, and drums of war are heard in Ukraine & Middle East.
But with all these risks, the FM presents the budget for a country that is a bright spot in an otherwise dark horizon. At 9.2%, India is the fastest-growing, large economy with over $630 billion of foreign reserves equaling 13 months of imports, inflation is under control and stock markets and corporate results shinning positively, and vaccination is a success with 93% of eligible population getting single dose and 70% fully vaccinated.
But the FM must know that there is a dark underbelly to the bright spot. That underbelly is unemployment rate. Officially, 7.2% is the unemployment rate but reality is far worse. It is possibly the single greatest challenge that the FM must address through her Budget.
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Clearly the FM has stepped up to the challenge. By allocating ₹7.5 Lakh crore in FY 23, which is 35% higher than previous year, she has clearly set the right tone. Infrastructure has triple effect. First employment, then revival of core sector and lastly productivity of the economy. We could not have asked for more.
Further, she has increased the Financial Assistance to States for capital Investments from ₹10,000 crore in FY22 to ₹1,00,000 crore in FY23. Clearly States are getting the right signal that they are partners with the Centre for building modern India. A large part of this focus is on PM Gatishakti, the initiatives to focus on logistics through development of roads, railways, airports etc. to ensure efficient movement of goods and this is aided by 100 multi-modal cargo terminals. Clearly, if Make In India is to succeed, Gatishakti initiative will play a vital role in making the cost of production competitive.
Digital India is another theme that runs across the budget. From recognizing virtual assets as a taxable asset class, issuing digital currency, e-passports, Digital University, Council for AVGC (Gaming, Animation Sector), emphasis on digital banking, land record digitization, facilitating payment platforms, auctioning 5G spectrum, building optical fibre network are efforts that will build up digital capacity of the country, improve efficiency and further boost employment in the services sector.
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The Amrit Kal initiative, plan for India completing 100 years post-Independence, presses the right button. Emphasis on urban planning and development, when 50% of India’s population will live in urban areas clearly is the right priority and will deeply improve quality of life and ease of doing business.
So, what did the Budget miss? Healthcare was expected to get a greater share of allocation. The pandemic has exposed the deficiencies in hospital capacity. One would have expected a public-private initiative with PLI type of incentives to be thrown open to this sector. Privatization, the big initiative in last budget along with Asset Monetization has under delivered. One would have expected reforms to ensure that those get back on track.
While there is mention of light touch regulation for AI, Green Energy, Clean Mobility, more was expected to accelerate growth in these sunrise sectors.
In closing, this Budget is foundational in its approach. It has its eyes set on 8.5% growth for FY23 and presses the right button to get the country there. An 8.5% on top of 9.2% in FY23 will bring India into the spotlight for investments. But there is a lot to be done before we get there. The devil is in implementation and with State elections a distraction and the ongoing pandemic, Team India has its hands full of challenges. The Budget has loaded the dice in favor of Team India. Now the time has come for it to deliver on its promises.
( Ashok Hinduja is Chairman, Hinduja Group of Companies (India)