Budget 2022: Creating a mature, confident India

COLUMN in Financial Express 05th February 2022

The new budget 2022 blueprint paves the way ahead for short-term recovery and lays the long-term foundation for accelerated growth.

As the FM mentioned, reduction of 25,000 compliances and repealing of 1,486 union laws have fast-tracked the business process significantly.

This Budget comes with a lot of baggage and hence high expectations — the republic will be turning 75, the economy is recovering from Covid-19 shock and regaining the growth momentum, global winds of the taper tantrum, rising crude oil prices and turmoil in Eastern Europe as well as in West Asia have potential to derail all projections. The finance minister had a tough job to navigate through these and provide the appropriate framework to continue robust recovery. The blueprint presented by the FM is resource-wise optimal, implementation-wise feasible and paves the way ahead for short-term recovery and laying the long-term foundation for accelerated growth.

A robust increase in expenditure will definitely push economic recovery on a fast track. The total Budget expenditure of `39.6 lakh crore is a 50% increase from the expenditure of FY 2020-21. Capital expenditure being increased by 35.4% is a huge plus for infrastructure. PM Gati-Shakti scheme with a focus on seven areas will bring a transformative approach to infrastructure development.

The extension of ECLGS and steps to reduce delayed payments by introducing trust-based governance is a big step for MSMEs. Interlinking and expanding the scope of various portals, along with the programme to make MSMEs resilient and competitive through RAMP, is a much-needed initiative after the Covid-19 induced uncertainty in this sector. If implemented in the letter and spirit, these initiatives will unleash the growth potential of the MSME sector and propel manufacturing to the next level. Equally welcome is the move to ease the shutting down of businesses. A mature innovation-led economy must equally welcome successes and accept failures.

Ease of doing business has been a consistent theme and special focus of this government for the last few years. As the FM mentioned, reduction of 25,000 compliances and repealing of 1,486 union laws have fast-tracked the business process significantly. Introduction of Centralised Processing Centre-Green (CPC-Green) for all green clearances is the next logical step in this regard to reduce the time required for large infrastructure projects.

With the introduction of the digital rupee, this Budget has not shied away from addressing the elephant in the room; the FM has not just paved the way for legitimate and credible Central Bank Digital Currency (CBDC), but also made sure that unregulated crypto menace will be kept in check.

A reform that will hopefully receive more attention in the coming Budgets is measures to reduce the very high level of food stocks that we are holding (4X buffer stock requirements). This approximately two lakh crore in dead capital along with accelerated PSU disinvestment can possibly cover a large portion of the projected spending on capex needs.

Most importantly, the FM deserves applause for not venturing into populist measures and distributing freebies. Despite the fact that five major states, including Uttar Pradesh, have elections coming up, the government has strictly focused on economic recovery and growth. Budget and politics can be decoupled, which may be the most important signal for creating a mature and confident India.

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