As we know, the pandemic has adversely impacted the economic and financial condition of an average urban as well as rural (health care cost and lost earnings) household. While there has been some amount of support being provided through various fiscal and financial measures during the last two years, the budget was an opportunity to help the households rebuild their finances. We have neither seen any reduction in direct taxes nor a major increase in support through various income or cost support programmes. For example, the MGNREGA allocation is down by 25,000 crore, compared to the revised estimates and the next year’s expenditure on PM Awas Yojana is the same as the current year (about Rs. 48,000). The lack of support makes it worse, as the households have been bearing the increased cost of petrol, diesel, gas and other daily needs goods and services even when the pandemic was destroying lives and livelihoods.
Banking and Finance: Increased Opportunities for Growth
We had few significant announcements that would impact the financial sector – the announcement of the launch of digital currency being one of them. In addition, the budget provides additional opportunities for sector’s growth, e.g., the extension of Credit and Finance Guarantee for MSMEs would help enhance the quality of credit portfolio, GIFT city is expected to facilitate sustainable and climate finance in India, provision of government support for blended finance will help banks and other intermediaries participate in financing sunrise opportunities, etc. In addition, the government is expected to drive capital investment through public-private partnership – creating an opportunity for growth of credit as well non-credit financial services.
Urban and Rural Infrastructure: Redefining Mobility
One of the most important announcements in the budget this year is about urban infrastructure. It involves setting up a high-level committee “to make recommendations on urban sector policies, capacity building, planning, implementation and governance.” The central government would also support policy formulation at the state level.
The government also expects to find “innovative ways of financing and faster implementation…and “building metro systems of appropriate type at scale.” It expects to make urban mobility easy through “multimodal connectivity between mass urban transport and railway Stations” on priority. In addition, the government has allocated an amount of Rs. 60,000 crore for Jal Jeevan Mission and an amount of Rs. 19,000 for Gram Sadak Yojana. Both missions have seen their allocation go up substantially this year.
Education: Leveraging technology to reduce the Digital Divide
The budget has brought additional focus to education this year. We are expecting to see an increased allocation for school as well as higher education. The government is investing to expand the ‘one class-one TV channel’, under the eVIDYA programme, from 12 to 200 TV channels. This investment is expected to “enable all states to provide supplementary education in regional languages for classes 1-12.” The National Education Mission is expected to get a significantly higher allocation at Rs. 40,000 crore.
Prof. Anil K Sood is a professor at the Institute for Advanced Studies in Complex Choices (IASCC). He is a PGDM (MBA Programme) and Fellow (PhD Programme) from Indian Institute of Management, Ahmedabad and combines strong industry and academic experience.