Budget 2023: Preparing for India's Amrit Kaal

The Union Budget 2023-24 is testimony to the government’s commitment to accelerate India’s economic growth while balancing sustainability. There has been a paradigm shift in overall macroeconomic priorities, from Covid-19 recovery to scaling new heights. The thrust of the Budget is on infrastructure development through higher capital expenditure, which now stands at Rs 10 lakh crore (up 33 per cent from last year), laying the foundation for achieving the ambition of a $5-trillion economy and improving prosperity for the populace. Strong infrastructure is a cornerstone of any developed economy, and this increased spending will provide great impetus to other critical areas such as education and skill development, urban development, green economy, job creation and improving global competitiveness.

It is a well-known fact that compared to its global peers, India suffers from higher logistics costs. If we are to truly develop as a strong manufacturing hub for the world, this is something we must correct. The government has acknowledged this in the latest Budget by attempting to develop a robust logistics network. Around 100 critical transportation-related infrastructure projects have been planned to enable first- and last-mile connectivity. The Railways received the highest-ever Budget allocation of Rs 2 lakh crore this year. The focus on funding coastal shipping projects and reviving 50 airports (including heliports, water-dromes and advanced landing grounds) will improve connectivity across major economic clusters. This is in line with the multimodal-focussed Gati Shakti initiative introduced in the Budget last year. However, there has been no incremental allocation towards the FAME II scheme that has been a key driver of electric mobility in India. In the context of the National Electric Bus Programme that envisages deployment of 50,000 electric buses, a lack of additional budgetary support—beyond the initial plan—towards deployment of electric buses could be a missed opportunity.

Though no new areas have been identified under the production-linked incentive (PLI) schemes, initiatives such as lowering of duties on component imports including lithium-ion batteries, parts of mobile phones and televisions, lab-grown diamonds, and concessional tax rates on new manufacturing co-operative societies should aid the Make in India agenda. At the same time, there could be plans to roll out more such schemes over the course of the year, and this shall indeed be a welcome move.

Cities in India are at the heart of economic growth, and a new fund with an annual allocation of Rs 10,000 crore would provide a vital push to the development of urban infrastructure across Indian cities. Emphasis has been placed on urban planning and reforms to create sustainable cities of tomorrow. This could mean efficient use of land resources and enhanced availability and affordability of urban land.

India’s commitment to a greener world as it transitions to a major economic hub is evident from the outlay of Rs 35,000 crore allotted for energy transition. This includes an outlay of Rs 19,700 crore for green hydrogen that can create an opportunity for export of green hydrogen and hydrogen-embedded low-carbon products. The Budget aims for India to reach annual green hydrogen production of 5 million tonnes by 2030, thereby reducing the dependence on fossil fuel imports and helping us shift away from a carbon-intensive economy. The vision builds on the theme of ‘Lifestyle for the Environment’ that Prime Minister Narendra Modi announced during COP26 in 2021, and it will help achieve the goal of carbon neutrality by 2070.

In terms of availability of skilled manpower in emerging sectors like medical devices, where India has huge potential to boost manufacturing, the focus on dedicated courses across key educational institutions is likely to enable availability of industry-responsive manpower. Leveraging the experiences of Covid-19, the government has proposed to facilitate R&D by providing access to ICMR labs for faculty of public and private medical colleges. In addition to this, 157 nursing colleges are to be established in co-location with existing medical colleges.

The Budget also places emphasis on promotion of R&D in priority areas. Three centres of excellence for artificial intelligence (AI) will be set up at top educational institutions. New-age courses for Industry 4.0 such as coding, AI and robotics will be introduced, and 30 Skill India International Centres shall be set up specifically to skill the youth. This will empower them to play a more significant role as India confidently marches towards inclusive prosperity. The importance of technology in traditional sectors such as agriculture has also been highlighted. Digital public infrastructure for agriculture shall be set up to support the growth of the agri-tech industry. An agriculture accelerator fund shall be set up in a bid to encourage young entrepreneurs in rural areas to aid in solving challenges of farmers through innovative tech-led solutions.

On the tax front, the key driver has been to simplify compliance, rationalise taxes and maintain the stability of the tax regime with the end goal of amplifying ease of doing business in India. Particular emphasis has been laid on GIFT City IFSC, with the introduction of several incentives and ironing out of the challenges faced in approvals and registration by launching a single-window clearance system. For individuals, the Budget has proposed to enhance the disposable income of the middle class and that is likely to augment the overall economic situation at the micro level.

The intention of the government appears to be to re-emphasise the focus on AatmaNirbharBharat through substantial capital expenditure, furthering Digital India, promoting sustainable choices such as green energy and improving economic stability, as they shall together drive inclusive development. The trickle-down effect of the ‘Saptarishi’ is likely to touch all sectors, including real estate, banking & finance, manufacturing, logistics and tourism. In essence, they will serve as a collective catalyst to paving India’s way towards a $7-trillion economy by 2030.

The author is Chairperson of PwC in India. Views are personal