The emphasis on infrastructure development in the Union Budget 2022-23 will help ensure greater multiplier effect, as well as create assets that will last for several years, said finance minister Nirmala Sitharaman. She was talking to stakeholders from industry, large taxpayers and professionals, as part of her two-day post-Budget outreach in Mumbai on Monday.
In the Budget tabled before the parliament on February 1 for the coming financial year, Sitharaman announced a 35.4% rise in outlay for capital expenditure, increasing it from ₹5.54 lakh crore to ₹7.50 lakh crore.
“The Union Budget 2022-23 is a budget which has been made for a time when the economy is coming out of the pandemic and recovery is the most important thing all of us have to focus on. We have hence tried balancing the focus on growth and sustained recovery; continuing with the story of investing in public infrastructure building,” Sitharaman said.
“The Budget has chosen spending on infrastructure as the more favourable route to ensure greater multiplier effect, which will also result in asset creation which can last for several years,” she further added.
The Budget also touches upon themes of sustainability, a predictable tax regime, and continuing good measures from last year, like transparency in accounting, the finance minister stated.
Sitharaman lauded the use of technology to overcome the challenges of the pandemic. “We are building on digital not only for payment, but also for filling the gaps in the education sector the pandemic has caused. We are using technology in agriculture as well, for helping farmers.”
The finance minister expressed confidence in the contribution to the economy by start-ups. “We want to build on the innovation capacity of our youth; we want to cash in and build on the innovation they bring especially in frontier technologies.”
The present stakeholders raised several issues related to the economy and various sectors. These included strengthening the Production Linked Incentive (PLI) schemes for encouraging investment and domestic manufacturing, digital advancement and skill development across value chains, especially among women and women entrepreneurs, credit extension and increasing user friendliness of banks, introductory new capital classes, and promoting blockchain.
On a question related to correction in tax inversion, Sitharaman noted that the reaction of the industry on this is mixed - both for and against. Since a section of the industry is still not ready for it, a decision was taken after consulting the GST Council to not correct the inversion, she said. She also informed that correction is required for PLI, for investment to come in.
Emphasising on credit disbursal, Sitharaman underlined that banks will have to be a lot more customer-friendly, not in terms of taking adverse risks, but in how they engage with and serve customers. She stated MUDRA and SVANIDHI schemes have been used by entrepreneurs to take hassle-free loans, and the performance in servicing them has been good too.
On a question regarding import duty on a certain type of long-staple cotton, Sitharaman said that while we need to use raw materials available in India rather than seek to import, there are opinions that even the little restriction the government brought in terms of duty on import of a certain type of long-staple cotton not grown in India should be removed. The Minister expressed the perception challenge involved in public policy formulation and implementation.
“There is a perception battle in every decision, and people ask for a retraction and comment on decisions much before studying the decision in full. What we need is a discerning debate, not passionate reactions.”
On blockchain technology, Finance secretary TV Somanathan said, “Government has nothing against blockchain technology. RBI digital currency itself will be based on a version of blockchain technology.”
The Reserve Bank of India will launch its own central bank digital currency (CBDC) based on blockchain, Sitharaman had announced in her Budget speech earlier this month. It will be act as physical rupee in the digital realm.