Being the last Budget of the government of its current tenure, apprehensions and expectations were high amongst stakeholders from across sectors. Many thought that this would be a populist Budget with an eye on elections, but the visionary leadership has rightly chosen to push the country on a growth path with focus on investment and infrastructure so as to justify the tag of being the fastest growing economy in the world.
The economy will be clocking close to 7 per cent growth in FY23, which would come on top of over 8 per cent growth in FY22. The forecasts for the economy is close to those projected by international institutions. This also highlights that the growth story of India is intact and the economy will continue to be resilient despite global headwinds.
The government has kept the fiscal deficit under control and aims to bring it below 6 per cent next year and below 4.5 per cent by FY26. The fact that capital investment for the first time will cross ₹10-lakh crore shows the appetite of a growing economy aiming to become inclusive.
Urban demand is expected to slow down and, therefore, the Budget has rightly focused on agriculture as the good monsoon is likely to provide better purchasing power to rural people. Indian agriculture is in dire need of technology, and the Agri Accelerator Fund will likely encourage start-ups and innovators to provide requisite technology in the sector for increasing efficiency, reducing wastages and augmenting production.
The government is constantly focusing on infrastructure which is key to growth as it has a huge spin-off effect on the economy. The Budget has encouraged States to invest in infrastructure by offering 50-year interest-free loans.
While exports growth hitherto has been encouraging, the Economic Survey has already highlighted the geopolitical challenges having impact on inflation and consumption globally. This financial year is likely to end with exports of $450-460 billion.
The increasing utilisation of the recently signed free trade agreements (FTAs) and finalisation of new FTAs with the UK, Canada and GCC are expected to provide much better market access to us while entering into the new fiscal year. The PLI scheme is also likely to provide additional production in the sector where the scheme is already operational and new production where it has been rolled out recently.
The Budget has looked at providing competitiveness to various sectors by reducing Customs duties on key inputs and also increasing the same on many products to encourage imports substitution. The rise in import tariff on polymers, toys and parts of toys, bicycles, automobiles in SKD/CKD aims to provide a boost to domestic manufacturing by discouraging imports.
The reduction in import duty on denatured ethyl alcohol, acid grade fluorspar, crude glycerin will add to the competitiveness of chemical sector while reduction in duty on fish meal, krill meal, fish lipid oil, algal prime, mineral and vitamin premixes used in the manufacture of aquatic feed will push marine sector. Zero duty on seeds for use in manufacture of rough lab grown diamond (LGD) and R&D grant for LGD will help the gems and jewellery sector, which is one of the largest employers.
To encourage value addition in the mobile and electronic sector, Customs duty for camera module and input/parts for lens of camera module of mobile phone has been reduced to zero while duty on open cells of TV panel is cut to 2.5 per cent. This move will not only add to the value addition in the sector but will help India to develop as a component manufacturer for the mobile and electronic industry.
The initiatives for ease of doing business will particularly benefit the MSMEs as the cost of compliance for them is pretty high, and increasing digitisation will help the sector cut down transaction costs.
The cost of credit is one of the main constraints faced by the export sector. With hikes in key rates, the interest rates risen substantially. The government has provided substantial outlay for the Interest Equalization Scheme, aiming to provide subvention to the eligible sectors including MSME manufacturers. Since the Budget outlay has been increased by 24 per cent from ₹2,376 crore to ₹2,932 crore for 2023-24, we expect some more relief under the scheme.
The allocation for Market Access Initiative (MAI) is up by 25 per cent, which will help in better showcasing of Indian products abroad. But as the world is moving again from virtual to physical exhibitions, exports deserve a much higher allocation.
While the agri sector has been the focus of the Budget, a Transport and Marketing Assistance (TMA) scheme that provides support on international freight for agricultural commodities still eludes us. A revamped TMA scheme would have further emboldened agri exporters.
The writer is Director-General and CEO, FIEO
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