Finance Minister Nirmala Sitharaman’s last full budget before the general elections next year was expectedly focused on giving consumption a boost, especially in the rural markets. To that effect, it laid out seven key priorities, which Sitharaman said would act as the ‘Saptarishi’ (seven sages who find mention in ancient Vedic texts), guiding “us through the Amrit Kaal.”
These include – Inclusive Development, Reaching the Last Mile, Infrastructure and Investment, Unleashing the Potential, Green Growth, Youth Power and Financial Sector.
Many of the measures announced in the budget then centered around these priorities.
So, aimed at the farmer and the wider agriculture sector, the budget proposed setting up digital public infrastructure enabling farm-centric solutions and services for crop planning and health, improved access to farm inputs, credit and insurance and market intelligence.
An agriculture accelerator fund will be set up for agri-startups aiming to bring solutions to problems farmers face. An outlay of Rs 2,200 crore has been proposed to launch a clean plant programme to boost availability of disease-free, quality planting material for horticulture crops.
“An agriculture accelerator fund and digital public infrastructure for agriculture could lead to the emergence of a new set of agri-fintechs, which has been restricted so far due to market constraints,” said Abhishant Pant, founder, YAN Angel Fund.
There is also a proposal to make India a global hub of millets and in that regard, the Indian Institute of Millet Research, Hyderabad, will be supported as Centre of Excellence for sharing best practices, research and tech at the international level.
The agri credit target will also be increased to Rs 20 lakh crore with focus on animal husbandry, diary and fisheries.
Educating farmers on the new-age technology and realigning crop planning based on climatic conditions is a necessity and it is here in that digital open infrastructure will play critical role – improving access to farm inputs as well as intelligence, says Balram Yadav, managing director of Godrej Agrovet.
“With India emerging as a net exporter of agriculture and allied products, this budget can be termed tech-focused inclusive budget for Indian farmers – the one which focuses on supply and input sides to enable farmers get better price for their produce,” said Yadav.
Staying on rural India focus, a mission to improve the conditions of particularly vulnerable tribal groups was also proposed in the budget as a part of its second major priority.
“This will saturate PVTG families and habitations with basic facilities such as safe housing, clean drinking water and sanitation, improved access to education, health and nutrition, road and telecom connectivity, and sustainable livelihood opportunities,” said Sitharaman.
To implement the mission, Rs 15,000 crore will be made available in the next three years under the Development Action Plan for the Scheduled Tribes.
The focus on the vast hinterlands also includes recruiting 38,000 teachers and support staff for 740 Eklavya residential schools serving 3.5 lakh tribal students, a central assistance of Rs 5,300 crore towards sustainable micro-irrigation in Karnataka’s drought prone areas and raising PM Awas Yojana outlay by a whopping 66 per cent to over Rs 79,000 crore.
This increased outlay, along with the income tax benefits announced in the budget, could boost affordable and mid-segment housing, said Suresh Subudhi, global leader for infrastructure practice at BCG.
In the backdrop of the pandemic, and slowing consumer demand, private sector investment has remained lackluster in recent years and the government has had to do much of the heavy lifting. That continues in this budget too, with the capital investment outlay being steeply increased by 33 per cent to Rs 10 lakh crore. This will be almost three times the outlay in 2019-20.
“This substantial increase in recent years is central to the government’s efforts to enhance growth potential and job creation, crowd-in private investments, and provide a cushion against global headwinds,” said Sitharaman.
The government will also continue its support to state government for capital investment, through 50-year interest-free loans, with an enhanced outlay of Rs 1.3 lakh crore. The budget also proposed a capital outlay of Rs 2.40 lakh crore for the railways, which Sitharaman said was almost nine times the outlay made in 2013-14.
Hundred critical infrastructure projects for last and first mile connectivity for ports, coal, steel, fertilisers and food grains are to be taken up on a priority with a Rs 75,000 crore investment.
Boosting infrastructure in the tier II and tier III towns is also going to be focused on and an urban infrastructure development fund is to be established through use of priority sector lending shortfall. For this purpose, Rs 10,000 crore per annum is to be made available.
Unleashing the potential also figured high on government’s agenda, with finance minister Sitharaman pointing to learning and skills upgradation opportunities made available to lakhs of government employees to reducing 39,000 compliances for enhancing ease of doing business.
Digital will be the future and to that effect a National Data Governance Policy was proposed. The government also plans three centers of excellence for Artificial Intelligence.
The Narendra Modi government has been pushing green energy hard. Not surprisingly then that this remained a key priority in this year’s budget, too. The budget provides Rs 35,000 crore for priority capital investments towards energy transition and net zero objectives, and energy security.
Battery storage systems with capacity of 4,000 MWh will also be supported with viability gap funding. The Inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh will be constructed with investment of Rs 20,700 crore including central support of Rs 8,300 crore.
“A significant increase of 33 per cent in the capital investment outlay to Rs 10 lakh crore, revamped credit guarantee to MSMEs, easing of the credit cycle and rationalisation of custom duties would add significant impetus to capital formation and job creation. The green growth agenda of the government, especially on energy transition, seeks to consider the environmental impact of industrialisation,” noted Yezdi Nagporewalla, CEO, KPMG in India.
The budget has proposed a revamped credit guarantee scheme for MSMEs, which will take effect from April 1, 2023 through infusion of Rs 9,000 crore in corpus. This will enable additional collateral-free guaranteed credit of Rs 2 lakh crore.
The budget proposed reducing the number of basic customs duty rates on goods, other than textiles and agriculture, from 21 to 13.
From an individual’s perspective, a one-time new small savings scheme, ‘Mahila Samman Savings Certificate,’ will be made available for a two-year period up to March 2025. This will offer deposit facility upto Rs 2 lakh in the name of women or girls for a tenor of 2 years at fixed interest rate of 7.5 per cent with partial withdrawal option. The maximum deposit limit for Senior Citizen Savings Scheme is also to be enhanced to Rs 30 lakh from Rs 15 lakh.