The 45-trillion-rupee-spending budget 2023 announced by the Finance Minister on 1 February 2023 outlined the contours of the Indian economy, which has witnessed an increase in size from the 10th to the fifth largest in the world, in the last nine years.
India has assumed the presidency of the G20. The road to the future of India is to travel to 2047 and arrive as a developed nation. The Prime Minister of which party will hoist the flag from Delhi’s Red Fort on 15 August 2047 is moot in 2023, but the direction is not a secret.
The noteworthy features of the budget are:
Green energy transition
An outlay of ₹35,000 crores will be set aside to achieve energy transition and net zero objectives and energy security by the Ministry of Petroleum and Natural Gas, amongst seven priorities of the Government. Outlined: (i) the recently launched National Green Hydrogen Mission with an outlay of ₹19,700 crores, in order to reduce dependence on fossil fuel imports; (ii) the Government will provide viability gap funding for 4,000 MWh battery energy storage systems; (iii) the renewable energy evacuation, the interstate transmission system for evacuation, and grid integration of 13 GW renewable energy from Ladakh will be constructed with an investment of ₹20,700 crore; (iv) vehicle replacement outlay announced to support the scrappage policy is a step towards emphasising a cleaner environment.
The inference: India is attempting to emerge as a green leader in the world.
Infrastructure and investment
The capital expenditure outlay for FY 2023-24 has been hiked by 33% to ₹10 trillion (₹7.50 trillion in FY 2022-23); the outlay for the PM Awas Yojana will be hiked by 66% to ₹79,000 crores; and ₹2.40 lakh crores is the outlay to the railways. The new outlay for capex will amount to 3.3% of the GDP. Also proposed are 50 new airports; ₹10,000 crore will be set aside for the development of urban infrastructure.
The inference: Investment cycle and job creation are to move in tandem.
Agriculture
There is an 11% hike in agriculture credit target to ₹20 lakh crore for next fiscal year, with a focus on animal husbandry, dairy and fisheries. A 2% interest subsidy is to ensure farmers get short-term loans of up to ₹3 lakh at an effective rate of 7% per annum; the RBI to raise the limit for collateral-free agriculture loans to ₹1.6 lakh. Setting up the Agriculture Accelerator Fund to encourage agri-startups by young entrepreneurs is a welcome step. The plan to set up large decentralised storage capacity to help farmers over the next three years; one crore farmers to get assistance to adopt natural farming, are progressive steps.
The inference: Value-added agriculture is the next growth chapter.
Fintech
Budget proposals include fiscal support for digital public infrastructure; the expansion of the scope of documents in DigiLocker for use by MSMEs and large businesses; PM VIKAS scheme to include access to digital payments and social security.
The inference: More businesses will be included in fintech; the ultimate goal is to create a digital economy for the entire nation including all economic activities.
Ashok Hinduja is Chairman, Hinduja Group of Companies (India)
