During the Great Depression, the renowned economist, JM Keynes advised the government to increase public spending. This would counter recessionary trends, inject liquidity and industrial activity, all of which would lead to buoyancy in economic fundamentals and foster overall national growth. Clearly, 2022 is not a year of recession. However, the finance minister seems to have picked a leaf from Keynes’s book and transposed it in her budget speech, perhaps an upshot to the Covid revival pill. The Budget proposals are comprehensive, covering most areas of the economy without getting into the details of allocations, a common phenomenon in Budget speeches. The North Block mandarins have identified new avenues for investment and growth, with a thrust on Make-in-India and the revival of MSMEs, the worst-impacted segment in the pandemic. The finance minister’s speech listed four priorities for national growth—PM GatiShakti, inclusive development, energy transition, and financing of investments—all axiomatic touchstones for rebooting the economy. A correct description of the Budget speech would be that it was a holistic and pioneering in terms of reimagining the growth story and aspirations for achieving ‘developed country’ status.
What stands out is that the finance minister has resisted the temptation of considering FY23 as a year of economic revival post the Covid restrictions by not getting carried away with the growth in tax revenues. Instead, the budget estimates are conservative on growth and revenues, as she has envisioned the budget as a foundation for the next 25 years. Recognising the importance of the ease of doing business, an overhaul of SEZ regulations by making state governments as partners in the revival is visionary. The multifarious avenues for PPP and allowing start-up and entrepreneurial drives in new areas such as defence, digital, etc, are a step towards further expansion of India’s liberal pursuits and participative democracy, both in economic and regulatory terms.
The proposal to earmark every parcel of land through digitisation and assign unique land parcel ID is a step not just towards digitisation of land-records but also towards cutting red tape and rent-seeking; it keeps in mind tax evasion, too. Another key element on the wish-list, the unique health identity, has the potential to make healthcare cover accessible to the marginal classes, giving a fillip to the living conditions, life expectancy and promoting the ‘ease of living’ vision, if implemented in letter and spirit. Other reforms such as fast-tracking the introduction of 5G, energy transition, climate change, digital currency, etc, are laudable and tie in well with the vision on fast-track growth and demonstrate continued commitment towards a multilateral framework on ESG.
The Rs 1-lakh-crore assistance for capital investment by states can be dubbed as an attempt towards living the cooperative federalism ideal, which, along with GST and other Centre-State initiatives is no longer an aspirational vision, but a mantra for the functioning of two tiers of government. By digitising the municipal/ panchayat administration and opening up opportunities for rural India, it is evident that the next generation of Indians can stake claim in opportunities available, and transition away from the past inequities—the rural-urban divide—given the massive potential for reviving the rural economy and lessening reliance on farm income.
Elsewhere, the Budget has been monikered a “capex mahotsav”. This is a fitting tribute to the growth aspirations of the next generation of Indians and also addresses the pangs for shifting horizons of geo-economic exchanges in international trade and economic outlook.
The author is Partner, BMR Legal
Views are personal