Union budget saptarishi pillars
A lot of Budgets in the past have been statements of intent but have not outlined a vision from a long term perspective. Before we got into the 7 pillars (Saptarishi), let us look at the background to these Saptarishi pillars. Firstly, the capex for FY23-24 was raised 33% to Rs10 trillion; or 3.3% of GDP. Government has taken a brave stance reducing fiscal deficit from 6.4% to 5.9%, plus giving a glide path to sub-4.5% levels by FY26. The budget saw record outlays of Rs2.40 trillion for Indian railways, while cutting subsidies by close to 28%. Let us now turn to the Saptarishi (7 pillars) outlined in the Union Budget 2023-24 for Amrit Kaal.
1.Promoting inclusive development
Sabka Saath Sabka Vikas; this philosophy has surely facilitated inclusive development covering farmers, women, youth, and other under-privileged sections. Even the regional balance is being worked on for inclusive development. Here are some takeaways.
- Agriculture credit target for FY24 raised to Rs20 trillion combined with an agriculture accelerator program for encouraging agri-startups.
- Focus on alternate streams of income for farmers including horticulture, livestock farming, shrimp farming etc to de-risk their crop related risks.
- Massive investments planned in additional storage capacity for farm product to reduce wastage and perishability, a key missing link in supply chain logistics.
- Budget has allocated funds to make India a global hub for millets. These are not only nutritious grains, but also offer huge export potential.
2. Reaching out to the last mile of consumers
Most plans do not see the light of day due to inadequate focus on last-mile delivery. Unless that is done, plans remain plans. The COVID vaccination program was a classic example of leveraging resources for ensuring flawless last-mile connectivity. Here is what Budget 2023-24 proposes.
- Outlay of the Pradhan Mantri Awas Yojana to be enhanced by 66%. This is going to be a big booster for the affordable housing projects, a big focus area of the government.
- The free foodgrain scheme for all Antyodaya and priority households has been extended by one more year under the PMGKAY. The costs would be defrayed by cuts in subsidies.
- To ensure last mile education connectivity, the government will add a total of 38,800 more teachers for 740 Eklavya model residential schools.
- Government has drawn out big plans for financial assistance for micro irrigation projects with primary focus on the drought prone regions of Karnataka.
- A special and dedicated PTVG mission to be launched which is short for Particularly Vulnerable Tribal Groups to empower them to join the economic mainstream.
3. Investments in hard and soft infrastructure
Infrastructure investments have a multiplier impact on growth and employment. Budget 2023-24 has enhanced capex outlay by 33% to Rs10 trillion on a yoy basis. That is 3.3% of GDP and if one were to look at the Effective Capital Expenditure of the Centre; it is close to Rs13.7 trillion or about 4.5% of GDP. Here are the major takeaways.
- A dedicated infrastructure finance secretariat to assist the stakeholders in encouraging more private investments in infrastructure via PPP models.
- The Urban Infrastructure Development Fund (UIDF) to be established for promoting high quality urban infrastructure in Tier-2 and Tier-3 cities.
- The centre has agree to continue the 50-year interest free loan facility for state governments subject to the condition that it is only used for capex at state level.
- The hike in capex outlay to be largely financed by tax inflows and via reduction in subsidies across food, fuel and fertilizers.
- There is an outlay of Rs2.40 trillion for railway infrastructure enhancement and another Rs75,000 crore on last mile connectivity for coal, steel and fertilizer sectors.
4. Promoting ease of doing business to unleash potential
For a long time, red tape had been the bane of growth. In the recent past, the government has been instrumental in reducing more than 39,000 compliances and decriminalizing 3,400 legal provisions. To promote ease of doing business, the government has introduced the Jan Vishwas Bill to amend 42 Central Acts. Here are some key takeaways from the budget.
- Centres of excellence for artificial intelligence (AI) to be set up with 3 centres, to begin with so as to capitalize on the potential and also ensure a stream of skilled talent.
- Vivad se Vishwas to be tweaked for the sake of MSMEs to make contract execution less stringent. It will also help in easier settlement of contractual disputes.
- Allocation of resources to shift from input based to results based, to ensure that ROI on government budgetary allocations are maximized.
- A comprehensive Digi locker ecosystem to be set up for storage and secured retrieval of key documents to ensure seamless compliance and documentation for businesses.
- Phase 3 of e-courts to be launched in this fiscal year to ensure speedy administration and delivery of justice. After all, justice delayed is justice denied.
5. Enhancing the green growth footprint
This would broadly entail the following.
- Budget has provided Rs35,000 crore towards priority capital investments for energy transition and for zero objectives. This has to be managed within the ambit of energy security as defined by the Ministry of Petroleum.
- The GOBARDHAN scheme envisages 500 new waste-to-wealth plants with a total investment outlay of Rs10,000 crore. The idea is to mandate 5% of CBG (compressed biogas) for all organizations.
- The budget has also given an impetus to micro-farming or natural farming. Over 1 crore farmers will be encouraged to adopt natural farming supported by over 10,000 bio-input research centres. This would be eventually rolled out nationally.
- Scheme MISHTI to be taken for mangrove plantations. Over the last few years, the destruction of mangroves has been responsible for water-caused destruction in many places. This will prevent coastline depletion.
- In addition, the budget has also planned green credit schemes to promote and incentivize sustainable actions.
6. Harnessing youth power of India
Harnessing youth power is the key to ensuring that the demographic dividends do not become a demographic embarrassment. The following are some key takeaways.
- The Pradhan Mantri Kaushal Vikas Yojana will impact on the job training to the youth on AI, robotics, machine learning, 3D printing, drone technology etc in alliance with industry players.
The skill India digital platform will enable a digital ecosystem that will act as a platform for demand based formal skilling. This will link employers and job seekers where both can participate on an agnostic framework.
- The government to boost tourism by promoting 50 destinations with a full package of incentives like availability of guides, safety of tourists, help centres, maintenance of areas of interest, air/road/rail connectivity etc. It will be a total package.
- A massive national apprenticeship scheme is being planned that will support over 47 lakh youth over the next 3 years. This would be managed through the direct benefit transfer (DBT) scheme for easy administration.
7. Rethinking the finance sector
Some of the key measures announced include as under.
- Setting up a National Financial Information Registry to empower individuals, banks and businesses. A central data processing centre will also handle faster handling of administrative work under Companies Act.
- An outlay of Rs9,000 crore for giving credit guarantees to MSMEs to help them boost business without worry about the banking risks.
- The Overseas Derivatives Market (ODI) or P-Note market to be shifted formally to the IFSC in Gujarat.
The Saptarishi model has given an elegant structure giving form to the budget thinking.