The Union Budget 2023-24 has unleashed a series of transformative next-generation reforms with growth as the centrepiece that are bound to have a multiplier effect on the key macroeconomic indicators like GDP, employment, and per capita income, among many others. Exuding a fine balancing act with a path-breaking increase in capital expenditure while maintaining prudent fiscal discipline, the Budget has successfully outlined the pathway for catalysing demand and investments in “Amrit Kaal”. With India at the helm of G-20’s presidency, the policies and prescriptions made in the Budget for the current year are expected to further the government’s vision of achieving sustainable, holistic, and technologically-driven progress with an industry-centric agenda.
The Budget for the current year has indeed delivered on the key demands of the business community by laying the economic blueprint for the nation that rests on seven major pillars -- namely, inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power and financial sector. The pump priming of the economy with an emphasis on capital spending aimed towards critical areas of infrastructure, steel, telecom, bioenergy, among others, will provide an impetus to the investor sentiments, both domestically and globally. Further, the adoption of a whole-of-government approach to ensure that all segments of the industry benefit from the announced initiatives signal India’s successful establishment as the Global Value Chain (GVC) hub.
One of the most notable features of Budget 2023-24 is that in line with CII’s recommendation of providing continued capex support to the economy, the investment outlay has been increased by 33 per cent to Rs 10 lakh crores for the next fiscal, which is about 3.3 per cent of GDP in FY24. Indian industry lauds the government’s sustained focus on enhancing capex, especially, in the infrastructure-intensive sectors like roads and highways, the Railways, and housing and urban affairs. This will play a pivotal role in bringing back the “animal spirits”, while incentivising industry to invest more, which is crucial with the global economy in the midst of uncertainty. In the spirit of cooperative federalism, the 50-year interest-free loans to state governments have been continued for one more year, with an enhanced outlay of 1.3 lakh crores, which will not just spur investments while achieving fiscal consolidation but also ensure successful and coherent on-ground implementation of policy reforms.
The ramping up of capital spending on infrastructure with reform initiatives, including setting up of the Urban Infrastructure Development Fund (UIDF), assistance of the newly-established Infrastructure Finance Secretariat to all stakeholders for more private investment, review of Harmonized Master List of Infrastructure, revival of 50 additional airports, helipads, water aero-drones and advanced landing grounds, and most important, the highest-ever capital outlay of 2.40 lakh crores for the Railways, are all welcome steps. This strong thrust on infrastructure is expected to provide a boost to private investment and have a multiplier impact on employment.
Another overarching theme of Union Budget 2023-24 is, improving the ease of doing business, on the back of concrete measures that reap benefits across the entire lifecycle of a business for all segments of the industry. As part of this, the government has introduced the Jan Vishwas Bill to amend 42 Central laws, with the objective of decriminalising business laws to reduce the regulatory compliance burden on industry. Further, promoting this very model of trust-based governance, more than 39,000 compliances have been reduced and more than 3,400 legal provisions have been decriminalised. These legaslitive reforms, which CII has been advocating for, indicate the government’s focus on the principle of “Minimum Government, Maximum Governance”. Efforts aimed at decriminalisation will not just ensure smooth continuity of operations for businesses but also encourage them to expand their operations in a hassle-free manner.
With a view to ease the process of providing business approvals, licenses and renewals, the Union Budget 2023-24 relies heavily on digitisation and automation in a bold manner. The establishment of Digi-Locker service as a one-stop solution for reconciliation and updating of identity as well as address of individuals maintained by various government agencies, regulators and regulated entities is a testimony of the same. To complement this reform, the Budget has also announced the setting up of “Unified Filing Process” which will greatly simply filing of information on a single portal and providing legal mandate to the Permanent Account Number (PAN) to serve as a common business identifier. These reforms will eliminate the need for multiple submission of documents by the industry and enhance transparency, thereby improving the overall business climate.
Another key industry concern which has been successfully addressed in the Budget is improving the mechanism for commercial dispute resolution, by way of introduction of the second version of the “Vivad se Vishwas” scheme which shall facilitate settling disputes of government or government undertakings wherein arbitral award is under challenge in a seamless manner. Further, the digital upgradation of courts under Phase-3 of the E-Courts project with an outlay of 7,000 crore is also expected to improve the dispute resolution mechanism. The twin-pronged approach of the government to make the existing commercial court infrastructure more robust while promoting the Alternative Dispute Resolution (ADR) mechanism will facilitate greater ease of doing business.
The MSMEs also stand as one of the major beneficiaries from Union Budget 2023 with the corpus for the Credit Guarantee Scheme for MSMEs being extended with an infusion of Rs 9,000 crores. This will enable collateral for Rs 2 lakh crores in loans to MSMEs, which is expected to boost fund flow to the distressed and fund-starved MSME sector. Promotion of tourism has also been taken up on a “mission mode” with active participation of states, convergence of government programmes, and public-private-partnerships, as announced in the Union Budget for 2023-24. States will be encouraged to set up a “Unity Mall” in the state capitals. Additionally, there is also focus on green growth, the marginalised sectors and women empowerment. The social sector has been the priority in the Budget to ensure the protection of lives and livelihood.
In sum, the Union Budget 2023 has adopted a well calibrated and judicious fiscal management policy encompassing all sectors, which would be geared towards maintaining the growth impetus while at the same time safeguarding macro-economic stability and containing inflation. The Union Budget has many positive features, the hallmark being the accent on clarity and transparency to take the economy to higher echelons of growth with social welfare.
