India's 2022-23 Budget: Ambitious $5 Trillion Economy Target, Capex Boost
The Union Budget for 2022-23, presented by Finance Minister Nirmala Sitharaman, has set ambitious targets to boost India's economy. The budget focuses on growth and digital measures, aiming to transform the country's economy over the next 25 years.
The budget's primary goal is to increase India's economy from $3 trillion to $5 trillion by 2026-27 and further to $9 trillion by 2030-31. To achieve this, the government has significantly increased capital spending, jumping from ₹4.3 trillion in FY21 to ₹7.5 trillion in FY23, a remarkable 75% rise in just two years.
The budget also includes substantial support for the MSME sector. The Emergency Credit Linked Guarantee Scheme (ECLGS) has been extended until March 2023 with an allocation of ₹5 trillion. Additionally, the budget prioritizes Gati Shakti, inclusive development, sunrise opportunities, energy and climate action, and investment financing.
The capex boost is backed by a projected jump in gross tax and non-tax revenue in 2022-23, with a fiscal deficit of 6.4% of GDP. The central government has also sharply increased support for states' capex spending to ₹1 trillion in 2022-23 through a 50-year interest-free loan.
The Union Budget 2022-23 is a visionary document that aims to pump-prime the economy with an emphasis on capital spending. This strategy seeks to create productive assets and generate a multiplier effect on various sectors. The budget also extends tax benefits for start-ups, supporting India's thriving start-up ecosystem. With these measures, the government is poised to transform India's economy over the next 25 years.
