Blueprint for New India: Here are 15 takeaways from the Budget 2023-24

The Budget is a blueprint and strong foundation for a New India; takes a long-term view of the economy

Here are 15 takeaways from the Budget 2023-24:

1. The Budget is a blueprint and strong foundation for a New India. There is a focus on infrastructure, inclusion, agriculture, rural economy, digital India, start-ups, green economy, improving ease of doing business, and inclusive development. 

2. The Budget takes a long-term view of the economy. There were no shortcuts or populist announcements in the context of the upcoming elections. It demonstrates responsible fiscal management.

3. There is focus on inclusive growth. Over the past few years, the government has provided 90 million drinking water connections to rural houses, Rs 2.2 trillion to 114 million farmers under PM-KISAN, 96 million LPG connections, 446 million insurance under the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), etc. This Budget pushes this further by focusing on creating Digital Public Goods for rural areas, focus on agri-tech, accelerator fund for agri-start-up, etc, that can give a further push to rural digitisation and inclusion. The agriculture credit target has been increased to Rs 20 trillion.

4. There is a focus on a new digital India and creating digital public goods. For realising the vision of make AI in India and make AI work for India, three centres for excellence will be set up in top educational institutions. Leading industry players will partner in conducting interdisciplinary research and develop cutting-edge applications and scalable problem solutions in areas of agriculture, health, and sustainable cities. This will galvanise an effective ecosystem and nurture quality human resources in the field. This can also lead to a revolution in rural and urban India.

5. Nominal GDP for FY24 has been assumed at Rs 301 trillion, which is an increase of 10.5 per cent over GDP of FY23 of Rs 273 trillion. Growth estimates are quite pragmatic.

6. Growth in tax collections is assumed at 15 per cent, which is again quite reasonable.

7. The fiscal deficit at 5.9 per cent of GDP is on expected lines, and consistently coming down since the pandemic.

8. Gross borrowings (Rs 15.4 trillion) and net borrowing (Rs 11.8 trillion) on expected lines.

9. The outlay for capital investment increased by 33 per cent to Rs 10 trillion. The government has been consistent in its focus on infrastructure. If we stay the course for the next 10 years on this, India will create serious efficiencies in transportation, logistics, and ease of doing business, which will set India up for sustainable growth and become competitive globally.

10. Fifty-year interest-free loans for states will be required to be spent on urban planning, housing for police personnel, children's library, unity mall, digital infrastructure, etc, within the next 1 year.

11. Against the fiscal deficit of 5.9 per cent, investment infrastructure is planned at 4.7 per cent of GDP (including central government investment of 3.5 per cent + 1.2 per cent of GDP for infrastructure development support to states, under 50-year zero-interest rate loans). Hence, our fiscal deficit is largely going for building infrastructure, say railways, roads, ports, highways, etc. For example, investment in railways up 29 per cent, from Rs 1.4 trillion to a Rs 1.8-trillion investment in railways, up 9 times in 9 years. We indeed need such modern infra for the long-term growth of our country. 

12. To be sure, Rs 10 trillion of infrastructure spend cash flows will still reach down the pyramid for consumption through the contractor, their employees, etc, and increase income down the line, but the infrastructure that would be created in the process will boost the economy in a sustainable manner for decades to come.

13. Focus on Green growth, setting up 10,000 bio-input resource centres to facilitate farmers to adopt natural farming, promotion of coastal shipping, replacing old polluting vehicles, the GOBARdhan scheme for circular economy etc.

14. Focus on ease of doing business: 39,000 compliances have been reduced; 3,400 legal provisions have been decriminalised.

15. There was a material reduction of personal income tax slabs. 

Overall, the FY24 Budget is for a New India. It is credible, fiscally prudent, consistent with the past focus on capex, rural inclusion and green economy. We feel doubly confident that our economy will continue to have strong and sound fundamentals, and will power beyond $5 trillion very soon. Welcome to New India.

The writer is MD and CEO, IDFC FIRST Bank