Budget FY24: Seeking sustainable, inclusive and green growth

The budget's thrust on private consumption and public expenditure-led growth will hopefully bring spinoff benefits to all, including those at the bottom of the pyramid

Elias George
Updated: Feb 7, 2023 02:48:38 PM UTC
Image: Shutterstock

This year’s budget will be remembered for its focus on the following three themes—enhanced public capex spending to provide boost to growth, fiscal consolidation and containment of revenue expenditure, as well as lighter direct and indirect taxation and compliance regimes for fostering consumption-led growth and the entrepreneurial spirit. There is also a welcome focus on key national aspirations like climate-friendly green growth, energy transition, improving infrastructure for modernising agriculture, and upgrading India’s digital public infrastructure and service delivery.

What is standing out in this budget is its emphasis on ramping up infrastructure creation with a trifecta of objectives in view—accelerating  GDP growth through pump-priming measures, enhancing the pace of employment creation, as well as improving the ease of living and reducing internal process friction in the manufacturing and services economy. Thus, the capital investment on public infrastructure has been enhanced by 33 percent to INR 10 trillion, while the 50-year interest-free loans scheme to state governments to incentivise investments in infrastructure has been extended. There is also a focus on ramping up transport infrastructure for ensuring end-to-end connectivity in core areas like ports, coal, steel, and fertilisers. The stock of public infrastructure in Tier-2 and Tier-3 cities is also expected to improve with the announcement of the creation of the Urban Infrastructure Development Fund (UIDF). While this focus on public capex will energise growth and employment, there is a need to revive the languishing pace of private sector spending in infrastructure. Hopefully, the year will see further progress on creating a more robust legal and contractual ecosystem for fostering public-private partnerships and smoother dispute resolution mechanisms for reinvigorating private investment in this domain.

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The budget also announces new departures for fortifying India’s leadership in the digital space—the introduction of a National Data Governance Policy, DigiLockers for businesses and charitable trusts, the creation of specialised Artificial Intelligence (AI) centres, as well as setting up of 100 labs for 5G services. The deployment of new-age digital technologies like AI, coupled with digital delivery of public services will help the country leapfrog over its legacy deficiencies in physical and social infrastructure, while improving the ease of living, and access to better livelihoods.

Another feature that stands out in the budget is its focus on green growth—the green credit programme to incentivise sustainable actions, promotion of battery energy storage systems, and the usage of alternative fertilisers, establishment of new 500 waste-to-wealth plants; are all measures that will further India’s aspirations and global commitments to be a leader along the pathway of climate-friendly, sustainable growth.

Compulsions around fiscal consolidation have possibly restrained any striking upsurge of expenditure focusing on critical schemes like the employment generating social security net programme Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), where outlays have declined; while there has been no remarkable uptick in spending on seminal welfare programmes like the National Social Assistance programme, the National Education Mission, and the National Health Mission. However, under the rubrics of ‘inclusive development’ and ‘reaching the last mile’, a number of catalytic programmes have been announced in sectors ranging from agriculture, to traditional artisanship, pisciculture, tribal welfare, and education and skilling. Another announcement not to be missed is that of financial support for poor people in prisons who are unable to pay-up penalties or bail amounts.

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This budget has broadly been well-received by industry, and the thinking classes for its aspirations of kickstarting the economy on to a higher growth path in this post-pandemic period of global uncertainty with recessionary overtones. Like all budgets, this one could also be open to criticism—that  more could have been done to mitigate India’s foundational problems of basic healthcare, education, and livelihood security. However, the budget’s thrust on private consumption and public expenditure-led growth will hopefully bring spinoff benefits to all, including those at the bottom of the pyramid.

The writer is national head-government and public Services, KPMG in India.

The thoughts and opinions shared here are of the author.

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