Indian Institute of Management Kozhikode (IIM-K) Professor of Economics Rudra Sensarma has termed the Union Budget presented by Finance Minister Nirmala Sitharaman a “fine mix of fiscal prudence and structural reforms.”
In an interaction with The Hindu , Prof. Sensarma said that the recovery in GDP growth had translated into record high tax receipts in the current fiscal. “Still the Finance Minister has been quite conservative in her revenue projections for the coming financial year,“ he said.
Also, he said that Ms. Sitharaman had assumed just 9.6% growth in tax revenues next fiscal, even while nominal GDP is expected to grow by 11.1%.. “This means that the Budget estimates are very realistic which is a good signal for bond investors,“ he said.
Three ‘I’s
Prof. Sensarma said that equity investors seemed to have welcomed the three ‘I’s of structural reforms covering Internet economy, inclusive growth and infrastructure. “The thrust on Internet economy can be seen from the announcement of digital rupee using blockchain technology, the setting up of 75 digital banking units and the emphasis on delivery of education and training via internet, “ he said.
He said that the taxing of income from digital assets at 30 % suggested that the Centre was interested in regulating crypto currencies instead of bringing any blanket ban. “ The cooperative sector has received a generous tax cut. The extension of the Emergency Credit Line Guarantee scheme till March 2023 comes as a shot in the arm for the beleaguered MSME sector, “ Prof. Sensarma said.
Generous allocation
He said that the rural drinking water (Jal Jeevan Mission), rural roads (PM Gram Sadak Yojna), health (Ayushman Bharat mission) and housing (PM Awas Yojna) have received the most generous increase in allocations.
On the other hand, he said that subsidies on food, fertilizers and petroleum are estimated to decline. The infrastructure focus of the government continues in this Budget. National Highways are set to be extended by 25,000 km next fiscal.
Prof. Sensarma said that the capital expenditure (capex) push is expected to generate a multiplier effect on jobs and growth by crowding in private investments. “The government seems to be clear that the only solution to the country’s unemployment problem is higher growth,“ he said.
Unfortunately, he said, the government had once again ignored the role of privatisation of PSUs which could have generated higher receipts and created a large number of productive jobs.
“The disinvestment target for FY23 (₹65,000 crore) is considerably lower than the FY22 revised estimate of ₹78,000 crore indicating that the success with privatising Air India has not really changed the government’s mind on disinvestment,“ Prof. Sensarma said.
