One of the key highlights of the Union Budget 2022-23 is the increased capital expenditure (by 35%) to provide further impetus to the economy recovering from the slump due to the pandemic. The focus has been on revamping and stepping up the infrastructure on several fronts in the country to meet the growing demands. The higher capital expenditure proposed in the budget also suggests that the increased public expenditure is required to drive economic growth as the private investments has remained muted for a long time.
The infrastructural boost is envisioned through the PM GatiShakti National Master Plan focussing on the seven engines- roads, railways, airports, ports, mass transport, waterways and logistics infrastructure. While the increase in capital expenditure allocation of railways has been modest when compared to the road network, the modernization of railways gains more importance through the implementation of KAVACH, 400 Vande Bharat trains and emphasis on line doubling.
If implemented well,the integration of the postal and railway network could open up the markets in a big way for the rural economy. Further, the Budget also gave more emphasis on urban sector and has announced schemes for better connectivity between urban transport system and railway network which is a long pending demand from many cities.
It is also interesting to note that the states are given a 90% increase in capital expenditure to boost the overall investments to the tune of Rs 1 lakh crore in the form on interest-free loans. This gives states more space to increase infrastructural spending.
The proposed Unified Logistics Interface Platform aims at seamless movement of goods across states reducing time and cost. The proposals for encouraging the domestic solar power equipment’s through PLI scheme and battery swapping policy were much needed steps in the transitioning to clean energy.The roll out of 5G network in 2023 and laying of optical fiber networks even in the remotest areas of the country would help improving the digital connectivity.
The huge jump in infrastructural outlays in the Budget is in continuation with the goals of the National Infrastructure Pipeline (NIP) with a target of investment of around Rs 111 lakh crore during FY 2020-2025 to provide world-class infrastructure. Even with a limited fiscal space, the government is making an attempt to revive the economy by pushing more capital expenditure towards infrastructure while reducing the growth of revenue expenditures. This augurs well for improving the potential growth of the economy.
Bipin Sony from Dr BR Ambedkar School of Economics University also contributed to the article
(Views are personal)
N R Bhanumurthy
Dr BR Ambedkar School of Economics University, Bengaluru