September 20, 2025
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Syllabus: General Studies Paper 3
Context
Finance Minister Nirmala Sitharaman’s fourth successive budget, while common-sensical in its approach, is not exactly bubbling with new ideas.
Highlights of the budget:
- The Minister acknowledges the role public capital expenditure could play in crowding-in private investment at a time when “private investments seem to require that support” and help to ‘pump-prime’ demand in the economy, the Budget outlay of ₹7.50 lakh-crore for the capital account marks 24.4% increase from the revised estimate of ₹6.03 lakh-crore for the current fiscal.
- The Budget speech highlights the PM Gati Shakti, a “transformative approach for economic growth and sustainable development” that is to be powered by the ‘seven engines’ of roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure.
- ‘Master Plan for Expressways’ that will be formulated in 2022-23 under the scheme.
- It projects the addition of 25,000 kilometres of roads to the National Highways network.
- The talk of enabling seamless multimodal movement of goods and people and providing multimodal connectivity between mass urban transit systems and railway stations, however, all sound a familiar refrain from past speeches.
Social Sector got less lucrative allocations:
- Spending outlays on several other key sectors including health care, rural development and the vital jobs and income providing MGNREGS, have all shrunk as a percentage of overall expenditure in the Budget estimates for fiscal 2023 from the revised estimates for the current year, even if in some cases only marginally.
- Spending on health care ought to have instead been significantly increased, with the lessons from the ongoing pandemic’s first two waves serving to illuminate the need for a sizeable enlargement of the public health infrastructure.
- ‘National Tele Mental Health Programme’ to address mental health problems that have been exacerbated by the claustrophobic lockdowns and plethora of anxieties triggered by the pandemic.
- Tariff policy to boost self reliance or Atma Nirbharta, the Finance Minister has proposed a series of tariff and policy steps that could help bolster domestic manufacturing in the long run.
- To reduce import dependence in procurement for the country’s defence forces. To that end the Minister has proposed earmarking 68% of the armed forces’ capital procurement budget to domestic industry in 2022-23, a not insignificant increase from the current fiscal’s 58% target.
- The tariff rationalisations, which cover a broad swathe of items ranging from electronics, gems and jewellery, chemicals, inputs used by MSME units and project and capital goods, could, however, have varying short-term impacts.
- Specifically, the move to phase out the concessional rates in capital goods and project imports gradually and apply a moderate tariff of 7.5% could in the short term hurt infrastructure projects and the setting up of new manufacturing capacity, some proposed exemptions for advanced machinery notwithstanding.
Cryptocurrencies:
- Central Bank Digital Currency that she posits will impart a big boost to the digital economy and “lead to a more efficient and cheaper currency management system”. The RBI-issued Digital Rupee would leverage blockchain and other related technologies in this fiscal.
- Tax on other virtual currencies: In parallel, she intends to tax income from the transfer of any virtual digital asset at the rate of 30%, with deduction allowed only for the cost of acquisition.
- It remains to be seen if the Government’s efforts at bringing the mushrooming trade and investment in a multiplicity of virtual digital assets including cryptocurrencies under the tax net would have a salutary impact besides adding a revenue stream to the exchequer.
Monetization & Privatization:
- The Minister’s latest budget also skirts mention of the asset monetisation plan mentioned in the last Budget and shows a sharp decline in capital receipts from disinvestment.
- With just ₹65,000 crore budgeted from asset sale for fiscal 2023, as opposed to ₹78,000 crore as per the revised estimates for the current fiscal,
- Government’s keenness to broadly stick to a fiscal consolidation road map — with the Budget projecting a narrowing of the fiscal deficit to 6.4% of GDP in 2022-23, from a revised estimate for 6.9% — reflects on its priorities.
- The Minister has had to increase gross borrowings to ₹14.95 lakh-crore, a 24% increase from the current fiscal’s budget estimate but a far sharper 43% jump from the revised estimate of ₹10.46 lakh-crore.
- The resource crunch manifest in the proposed higher debt issuance is ultimately bound to get more acute in the days ahead, given the Budget’s lack of growth-invigorating proposals.
The Hindu link
Question- Write a short note on PM Gati Shakti scheme and importance of boosting transport infrastructure.
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