Ashok Hinduja. Photo: special arrangement
The Rs 45 trillion spending budget 2023 announced by the Minister of Finance on February 1, 2023 outlined the contours of India’s economy which has witnessed an increase in size from the 10th largest to the fifth largest in the world, to the over the past nine years.
India assumed the presidency of the G20. India’s road to the future is to travel to the year 2047 and arrive as a developed nation. The prime minister whose party will raise the flag from Delhi’s Red Fort on August 15, 2047 is moot in 2023, but the leadership is no secret.
Notable features of the budget are:
Green energy transition
An expenditure of ₹35,000 crore will be earmarked to achieve energy transition and net zero targets and energy security by the Ministry of Petroleum and Natural Gas, among seven government priorities. Describes: (i) the recently launched National Green Hydrogen Mission with an expenditure of ₹19,700 crore, to reduce reliance on fossil fuel imports; (ii) the government will provide viability gap financing for the 4,000 MWh battery energy storage systems; (iii) Renewable Energy Evacuation, Interstate Transmission System for Evacuation and Grid Integration of 13 GW of Ladakh Renewable Energy will be constructed with an investment of ₹20,700,000,000; (iv) the vehicle replacement expenditure announced to support the scrapping policy is a step towards promoting a cleaner environment.
The inference: India is trying to emerge as a green leader in the world.
Infrastructure and investment
Capital expenditure for FY 2023-24 was increased by 33% to ₹10 trillion (₹7.50 trillion in FY 2022-23); spending for Prime Minister Awas Yojana to be increased by 66% to ₹79,000 crore; and ₹2.40 lakh crores is the expenditure of the railways. The new investment expenditure will amount to 3.3% of GDP. Also on offer are 50 new airports; ₹10,000 crore will be set aside for urban infrastructure development.
The inference: the investment cycle and job creation must move in tandem.
There is an 11% increase in agricultural credit target to ₹20 crore lakh for the next fiscal year, with a focus on livestock, dairy and fisheries. A 2% interest subsidy aims to ensure that farmers obtain short-term loans of up to ₹3,000,000 at an effective rate of 7% per annum; the RBI to increase the limit of unsecured agricultural loans to ₹1.6 lakh. The creation of the Agricultural Acceleration Fund to encourage agricultural start-ups by young entrepreneurs is a welcome step. The project to set up large decentralized storage capacities to help farmers over the next three years; a crore of farmers to get support to adopt natural farming, are progressive steps.
The inference: Value-added agriculture is the next chapter of growth.
Budget proposals include fiscal support for digital public infrastructure; expanding the scope of documents in DigiLocker for use by MSMEs and large enterprises; PM VIKAS scheme to include access to digital payments and social security.
The inference: more companies 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 of Hinduja Group of Companies (India)