By Kumar Mangalam Birla
Budget FY23 is a landmark budget that has the potential to rev up all engines of economic growth, including capital and consumer spending and exports. The Budget has several important initiatives that will provide an impetus to the Make-in-India agenda in general, and the resurgence of India’s exports, in particular. For several years, India’s export growth has been tepid. This fiscal, though, we have seen splendid growth on the back of restocking demand and strong global growth. Recognising this potential of exports being a key and sustainable driver of growth, the budget has made it a centre-piece.
First is clearly the continued thrust on upgrading India’s infrastructure. The Budget reinforces the credibility and visibility of the ambitious National Infrastructure Pipeline—with an unprecedented 35% jump in the provision for the Centre’s capital expenditure. Given the government’s stated intentions, one always expected infrastructure allocations to increase. But the extent of the increase budgeted for FY23, which comes on the base of already higher expenditure this year, has been a hugely positive surprise. This large and upfront commitment from the government will encourage private investors as well and set the stage for the creation of a future-ready infrastructure. Inadequate infrastructure, high logistics costs and related delays have long been a bone of contention for Indian manufacturers and exporters. One, therefore, looks forward to a step improvement in the competitiveness of the Indian Industry over the coming years.
The second aspect pertains to the various tweaks that have been made to customs duties; these are broadly pragmatic interventions to support value addition and jobs creation in Indian manufacturing. These tweaks include gradual rationalisation of those customs duty concessions and exemptions that were affecting the competitiveness of local manufacturers and certain reduction in duty rates on inputs used by export-intensive sectors.
The third is the announcement regarding a new legislation for Special Economic Zones (SEZs). The concept of SEZs, which India adopted many years ago, sought to create large pockets of export-intensive activities, supported by world-class infrastructure and a favourable duty structure. The early part of China’s success story in manufacturing exports was scripted by SEZs, and India was aiming to replicate it. Unfortunately, however, SEZs could not become a significant engine of exports for India. While the details of the proposed rejig of India’s SEZ model are not yet known, the Budget speech talks about enabling state governments to become an important partner in the scheme and improving the ease of doing business for exporters in SEZs.
Besides these announcements, the Budget also contains proposals for expanding the production-linked incentives scheme, stepping up domestic procurement of defence equipment and extending the timeline for availing lower corporate tax by new manufacturing entities. All these proposals will help in realising India’s manufacturing potential. India’s ongoing initiatives on striking trade agreements with major markets of India’s labour-intensive manufacturing sectors will be a further catalyst. In light of this Budget’s proposals, therefore, one looks forward to strengthening India’s manufacturing backbone—which also supports the overall economic vitalism and creates quality jobs for Indian youth.
This Budget is futuristic in many ways. Going through the FM’s speech, one realises that the Union government is possibly as enthusiastic about digitisation as the private corporate sector is, if not more. It talks about digital tools and platforms for delivery of health services, skills development programs and monitoring of the PM Gati Shakti programme. The government will promote the use of ‘Kisan drones’ for crop assessment, land records and spraying of insecticides. The Budget also mentions the launch of the ‘digital rupee’ by RBI in FY23, which will make India among a handful of countries with their own central bank-issued digital currency using blockchain technology. India will be launching Sovereign Green Bonds this year, again being amongst one of the pioneers. All these initiatives seed India’s adoption of leading technologies and practices.
Overall, this is a bold and imaginative Budget that reignites the animal spirits in the economy and invests in India’s future. The economy is already showing signs of a very strong rebound, and the budget will sharply accelerate the wheels of economic activity. I will be watching the economy take off.
The author is Chairman of Aditya Birla Group. Views are personal.