Finance Minister Nirmala Sitharaman presented the Union Budget 2022, on February 1, at a time when several sectors are struggling against the disruptions caused by the third wave of the COVID-19 pandemic.

Share Market Live

NSE

However, the announcement of the Rs 7.5 lakh crore capital expenditure and one lakh crore grant to the states to set up capex in the Budget 2022 is being hailed as the government’s clear focus on building post-pandemic India. The government’s push for infrastructure, MSMEs and digital thrust for the agriculture sector are being viewed as a long term vision for growth and economic stability.

However, high fiscal deficit, huge public debt-to-GDP ratio and lack of any incentives for tax payers are being seen as major drawbacks of this budget. At the same time many Budget analysts are also highlighting the inadequate measures for the agriculture, education and healthcare sectors.

“It has set its sights firmly on building a post-pandemic India, with a sharp step-up in capital outlay to be undertaken in conjunction with the state governments. The biggest positive is the enhancement in the capital expenditure by Rs 1.5 trillion, two-thirds of which is by way of a loan to the states earmarked for capital spending,” wrote Aditi Nayar, Chief Economist, ICRA in her Budget analysis for the Financial Express.

Also Read: FM Sitharaman backs no change in income tax rates

On the other hand, well-known financial columnist Andy Mukherjee has raised a red flag over the Modi government’s 25 year vision as envisaged in the Budget 2022, calling it a ‘risky ploy’.

“Narendra Modi’s government decided to market its annual budget as a blueprint for the next quarter-century. Nothing wrong with that long-term focus on productivity, except that the success or failure of this year’s spending plan would be judged by how well it harnesses the potential energy of India’s young workforce,” wrote Andy Mukherjee for BloombergQuint.

Highlighting the risk of dependency on consumption taxes for revenue generation Mukherjee wrote that any pressure to raise revenue during the year may fall on regressive consumption taxes, and squeezing a population that has borne the brunt of job losses, especially in the informal sector, could further complicate the economy’s recovery.

“The pandemic has deepened inequality by boosting the profits and incomes of a tiny section of firms and households. By taxing this windfall, the government could have kept a lid on its borrowing. That would have made its capital expenditure plan both creditable and credible,” suggested Mukherjee.

Economist and columnist, Swaminathan Aiyar, analyses this Budget as a quick fix remedy to accelerate growth amid the ravages of the Covid-19 pandemic, despite the high fiscal deficit of 6.9 percent.

Also Read: Growth target at 8% achievable; hopeful of pickup in private investment, says FM

“Clearly the federal government views the economic system as nonetheless COVID-stricken and in want of stimulus. At a time when world inflation is rising quick, India’s wholesale value inflation is in double digits, and can quickly pull up shopper inflation, which is at 5.4 percent. Rather than a goal for fiscal consolidation to tame inflation, finance minister Nirmala Sitharaman has opted for excessive capex to gasoline quick progress, hoping this can remedy a myriad of issues,” Wrote Aiyar in his column for Economic Times.

Eminent public health expert Dr Chandrakant Lahariya criticised FM Sitharaman’s emphasis on TV channels for education through the PM eVidya scheme.

Food and agriculture policy analyst, Devinder Sharma raised the lack of adequate measures for the agriculture sector and the farmers.

“There’s an outlay of Rs 2.37 lakh crore for the procurement of wheat and paddy, which is less than the last year’s allocation. How can the government say it wants to double farmers’ income when the MSP is offered only for wheat and paddy,” Devinder Sharma was quoted as saying by Hindustan Times.

Finance Minister Niramala Sitharaman is also being hailed for lack of any populist measures in the Budget, at a time when five states— Uttar Pradesh, Uttarakhand, Punjab, Goa and Manipur— are going to polls. Significantly, the ruling Bharatiya Janata Party is in power in four of the five poll-bound states.

“This is not an election Budget in the sense that I might target the voter in the coming elections. No large yojanas or giveaways for farmers (western Uttar Pradesh, Punjab), no increase in direct benefit transfers or other relief payouts, and definitely nothing by way of tax breaks or exemptions that the middle class loves,” wrote Sekhar Gupta, eminent political analyst and Editor-in-Chief of The Print.

However, Gupta reads the underlying political messaging behind the focus on infrastructure by the Modi government. According to Gupta, Expressways are now the centrepiece of his Uttar Pradesh campaign. That’s why a lot more money is going in that direction. The third pillar of Modi’s electoral proposition is being concretised further.

For full coverage of Union Budget 2022, click here.

(Edited by : Aditi Gautam)

First Published:Feb 2, 2022 11:14 PM IST