Budget Decoded: Another brick in the walls to house a strong economy

To paraphrase what a wise man once said, the Union Budget tells us where money should go, instead of leaving you wondering where it went. This year, finance minister Nirmala Sitharaman made it very clear what the money was going to go: infrastructure and its financing, inclusive development and productivity-enhancing public expenditure.

The Union Budget for FY23 presents a wide-ranging, expansive vision that builds on earlier ones. Creating growth-enabling infrastructure has been a continuing theme with this government, and this year is no exception. The 35%-plus increase to Rs 7.5 lakh crore for FY23 over the capital expenditure budget for FY22 is substantial.

In her speech, FM also acknowledged that the revised estimates for FY22 were over Rs 51,000 crore higher, attributed to unplanned payments that were due from previous years. Adjusted for that amount, the revised estimates were about Rs 4,000 crore less than FY22 budget estimates, perhaps the result of the pandemic.

But the Budget also responds to that unexpected situation. FM has made provisions to improve efficiency by committing that the government would make at least 75% of its contracted payments for its infrastructure projects when they fall due.

The inclusive development agenda in FY23 also builds upon investments and outlays made in earlier years, like AB-PM JAY that provides health insurance cover for 500 million people who needs access to healthcare the most. This year, however, the FM put another brick in that edifice by proposing the setting of National Mental Telehealth 'centres of excellence' across India, with digital support from a leading digital technology institute. The National Mental Health Survey 2016 found that mental health disorders are significantly higher in households with low levels of income, education or limited employment. The NMHS also estimated that at any given point in time 11% of the population suffers from mental disorders from depression to neurosis.

The FM recognised the importance of public and private investments for growth to move to the next level, for which new models of finance and protection would be required. One such is the introduction of surety bonds in place of bank guarantees for large scale investment and infrastructure projects. Appropriately, she also accepted that government-led projects would be the best test of how these would work.

In October 2021, the Insurance Regulatory and Development Authority of India (IRDAI) came up with a format and outlined the structure of surety bonds. It was a timely effort, as issues over the enforcement of bank guarantees have been at the centre of a lot of recent litigation in 2021. Clearly, these could enhance productively significantly and cut down time and cost overruns.

Last but not the least, the FY23 Budget would be remembered for the announcement of a blockchain-based digital currency, issued by the Reserve Bank of India (RBI). Many countries have considered it, few have acted on it. This could be a game-changer.

The author is MD and CEO of Mahindra & Mahindra.