Sitharaman proposes 35.4% hike in capex to Rs 7.50 lakh crore in Budget 2022-23
New Delhi, February 1, 2022
Stating that public investment must continue to take the lead and pump-prime private investment and demand, Finance Minister Nirmala Sitharaman today proposed a 35.4 per cent step-up in capital expenditure in the Union Budget from Rs 5.54 lakh crore in the current year to Rs 7.50 lakh crore in 2022-23.
"This has increased to more than 2.2 times the expenditure of 2019-20 and this outlay in 2022-23 will be 2.9 per cent of GDP," she said, presenting the Union Budget 2022-23 in the Lok Sabha.
With this investment, taken together with the provision made for creation of capital assets through Grants-in-Aid to States, the effective capital expenditure of the Central Government is estimated at Rs 10.68 lakh crore in 2022-23, which will be about 4.1 per cent of GDP, she said.
The Budget estimated India’s economic growth in the current year to be 9.2 per cent, highest among all large economies.
"The overall sharp rebound and recovery of the economy from the adverse effects of the pandemic is reflective of our country’s strong resilience," the Finance Minister said.
Referring to the Azad ka Amrit Mahotsav (75th Year of Independence) and the Amrit Kall, the 25-year-long lead-up to the centenary year of independence, she said the Government aimed to attain the vision of Prime Minister Narendra Modi in his Independence Day address.
These are: Complementing the macro-economic level growth focus with a micro-economic level all-inclusive welfare focus; promoting digital economy & fintech, technology enabled development, energy transition, and climate action; and relying on virtuous cycle starting from private investment with public capital investment helping to crowd-in private investment.
Sitharaman said that, since it came into power in 2014, the present Government's focus has been on empowerment of citizens, especially the poor and the marginalized and measures have been taken to provide housing, electricity, cooking gas, and access to water. The government also has programmes for ensuring financial inclusion and direct benefit transfers and a commitment to strengthen the abilities of poor to tap all opportunities, she said.
She said the Productivity Linked Incentive (PLI) scheme in 14 sectors for achieving the vision of AtmaNirbhar Bharat had received excellent response, with potential to create 60 lakh new jobs, and an additional production of Rs 30 lakh crore during next five years.
On the implementation of the new Public Sector Enterprise policy, she said the strategic transfer of ownership of Air India has been completed, the strategic partner for NINL (Neelanchal Ispat Nigam Limited) has been selected, the public issue of Life Insurance Corporation of India (LIC) is expected shortly and others, too, are in the process for 2022-23.
Sitharaman emphasized that this year's Budget would continue to provide impetus for growth. She said it would lay a parallel track of a blueprint for the "Amrit Kaal", which is futuristic and inclusive, which will directly benefit youth, women, farmers, the Scheduled Castes and the Scheduled Tribes.
She said there would be big public investment for modern infrastructure, readying for India at 100 and this shall be guided by the "PM GatiShakti" programme and be benefited by the synergy of multi-modal approach.
Moving forward, on this parallel track, he outlined the following four priorities: PM GatiShakti; Inclusive Development; Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, and Climate Action; and Financing of Investments.
The Finance Minister said PM GatiShakti was a transformative approach for economic growth and sustainable development. The approach is driven by seven engines -- Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure.
"All seven engines will pull forward the economy in unison. These engines are supported by the complementary roles of Energy Transmission, IT Communication, Bulk Water & Sewerage, and Social Infrastructure. Finally, the approach is powered by Clean Energy and Sabka Prayas – the efforts of the Central Government, the state governments, and the private sector together – leading to huge job and entrepreneurial opportunities for all, especially the youth," she said.
Similarly, PM GatiShakti Master Plan for Expressways will be formulated in 2022-23 to facilitate faster movement of people and goods. The National Highways network will be expanded by 25,000 km in 2022-23 and Rs 20,000 crore will be mobilized through innovative ways of financing to complement the public resources.
She added that contracts for implementation of Multimodal Logistics Parks at four locations through PPP mode would be awarded in 2022-23.
In Railways, the Finance Minister said that the "One Station-One Product" concept will be popularized to help local businesses and supply chains. As a part of Atmanirbhar Bharat (Self-Reliant India mission), 2,000 km of network woulf be brought under Kavach, the indigenous world-class technology for safety and capacity augmentation in 2022-23, she said.
She also said that 400 new-generation Vande Bharat Trains with better energy efficiency and passenger riding experience would be developed and manufactured and one hundred PM GatiShakti Cargo Terminals for multimodal logistics facilities would be set up during the next three years.
On the agriculture front, the Finance Minister said that Chemical-free Natural Farming would be promoted throughout the country, with a focus on farmers’ lands in 5-km wide corridors along river Ganga, in the first stage. Use of "Kisan Drones" will be promoted for crop assessment, digitization of land records, spraying of insecticides, and nutrients. She said that, to reduce dependence on import of oilseeds, a rationalised and comprehensive scheme to increase domestic production of oilseeds would be implemented.
She said that, as 2023 has been announced as the International Year of Millets, the government would ensure full support for post-harvest value addition, enhancing domestic consumption, and for branding millet products nationally and internationally.
Sitharaman said that the implementation of the Ken-Betwa Link Project, at an estimated cost of Rs 44,605 crore, would be taken up to provide irrigation benefits to 9.08 lakh hectares off farmers’ lands, drinking water supply for 62 lakh people, 103 MW of hydel power, and 27 MW of solar power. Allocations of Rs 4,300 crore in RE 2021-22 and Rs 1,400 crore in 2022-23 have been made for this project. Moreover, Draft DPRs of five river links, namely Damanganga-Pinjal, Par-TapiNarmada, Godavari-Krishna, Krishna-Pennar and Pennar-Cauvery have been finalized and once a consensus is reached among the beneficiary states, the Centre will provide support for implementation.
The Finance Minister said the Emergency Credit Line Guarantee Scheme (ECLGS) had provided much-needed additional credit to more than 130 lakh MSMEs to help them mitigate the adverse impact of the COVID-19 pandemic. She, however, added that the hospitality and related services, especially those by micro and small enterprises, were yet to regain their pre-pandemic level of business and after considering these aspects, the ECLGS will be extended up to March 2023. She said that its guarantee cover would be expanded by Rs 50,000 crore to a total cover of Rs 5 lakh crore, with the additional amount being earmarked exclusively for the hospitality and related enterprises.
Similarly, the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme will be revamped with required infusion of funds. This will facilitate additional credit of Rs 2 lakh crore for Micro and Small Enterprises and expand employment opportunities.
She said that the Raising and Accelerating MSME Performance (RAMP) programme, with outlay of Rs 6,000 crore over five years, would be rolled out to make the MSME sector more resilient, competitive and efficient.
Udyam, e-Shram, NCS and ASEEM portals will be interlinked and their scope will be widened, she said.
On Skill Development and Quality Education, the Finance Minister said that startups would be promoted to facilitate "Drone Shakti" through varied applications and for Drone-As-A-Service (DrAAS). In select ITIs, in all states, the required courses for skilling will be started. In vocational courses, to promote crucial critical thinking skills, to give space for creativity, 750 virtual labs in science and mathematics, and 75 skilling e-labs for simulated learning environment, will be set-up in 2022-23.
Sitharaman said that, due to the pandemic-induced closure of schools, children, particularly in the rural areas, and those from Scheduled Castes and Scheduled Tribes, and other weaker sections, had lost almost two years of formal education and these children are mostly in government schools. To impart supplementary teaching and to build a resilient mechanism for education delivery, she said the "one class-one TV channel" programme of PM eVIDYA would be expanded from 12 to 200 TV channels and this would enable all states to provide supplementary education in regional languages for classes 1-12.
The Finance Minister said a Digital University will be established to provide access to students across the country for world-class quality universal education with personalised learning experience at their doorsteps. This will be made available in different Indian languages and ICT formats. The University will be built on a networked hub-spoke model, with the hub building cutting-edge ICT expertise. The best public universities and institutions in the country will collaborate as a network of hub-spokes.
Under Ayushman Bharat Digital Mission, an open platform for the National Digital Health Ecosystem will be rolled out and it will consist of digital registries of health providers and health facilities, unique health identity, consent framework, and universal access to health facilities.
Sitharaman said that, as the pandemic has accentuated mental health problems in people of all ages, a National Tele Mental Health Programme would be launched for better access to quality mental health counselling and care services. This will include a network of 23 tele-mental health centres of excellence, with NIMHANS being the nodal centre and International Institute of Information Technology-Bangalore (IIITB) providing technology support.
She announced an allocation of Rs 60,000 crore to cover 3.8 crore households in 2022-23 for Har Ghar, Nal Se Jal. Current coverage is 8.7 crores and of this 5.5 crore households were provided tap water in the last two years.
Similarly, in 2022-23, 80 lakh houses will be completed for the identified eligible beneficiaries of PM Awas Yojana, both rural and urban and Rs 48,000 crore has been allocated for this purpose.
Sitharaman said a new scheme, Prime Minister’s Development Initiative for NorthEast, PM-DevINE, would be implemented through the North-Eastern Council to fund infrastructure, in the spirit of PM GatiShakti, and social development projects based on felt needs of the North-East. An initial allocation of Rs 1,500 crore will enable livelihood activities for youth and women, filling the gaps in various sectors, she said.
The Finance Minister announced that, in 2022, all 1.5 lakh post offices in the country would become part of the core banking system, enabling financial inclusion and access to accounts through net banking, mobile banking, ATMs, and also provide online transfer of funds between post office accounts and bank accounts. This will be helpful, especially for farmers and senior citizens in rural areas, enabling interoperability and financial inclusion.
To mark 75 years of independence, the government has proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks to ensure that the benefits of digital banking reach every nook and corner of the country in a consumer-friendly manner.
The issuance of e-passports using embedded chip and futuristic technology will be rolled out in 2022-23 to enhance convenience for the citizens in their overseas travel, she said.
The Finance Minister announced that, for developing India-specific knowledge in urban planning and design, and to deliver certified training in these areas, up to five existing academic institutions in different regions will be designated as centres of excellence. These centres will be provided endowment funds of Rs 250 crore each.
"The animation, visual effects, gaming, and comic (AVGC) sector offers immense potential to employ youth and therefore an AVGC promotion task force with all stakeholders will be set up to recommend ways to realize this and build domestic capacity for serving our markets and the global demand," she said.
Sitharaman said that telecommunication in general, and 5G technology in particular, could enable growth and offer job opportunities. She informed the House that required spectrum auctions would be conducted in 2022 to facilitate rollout of 5G mobile services within 2022-23 by private telecom providers. A scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme, she added.
On the Defence front, the Government reiterated its commitment to reducing imports and promoting self-reliance in equipment for the Armed Forces.
She said 68 per cent of the capital procurement budget would be earmarked for domestic industry in 2022-23, up from 58 per cent in 2021-22. Defence R&D will be opened up for industry, startups and academia with 25 per cent of defence R&D budget earmarked.
Referring to Sunrise Opportunities, the Finance Minister said Artificial Intelligence, Geospatial Systems and Drones, Semiconductor and its eco-system, Space Economy, Genomics and Pharmaceuticals, Green Energy, and Clean Mobility Systems have immense potential to assist sustainable development at scale and modernize the country. They provide employment opportunities for youth, and make Indian industry more efficient and competitive, she said.
To facilitate domestic manufacturing for the ambitious goal of 280 GW of installed solar capacity by 2030, an additional allocation of Rs 19,500 crore for Production Linked Incentive for manufacture of high efficiency modules, with priority to fully integrated manufacturing units from polysilicon to solar PV modules, will be made.
Sitharaman said that, as a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds would be issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.
The Government proposed to introduce Digital Rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23 for more efficient and cheaper currency management system.
Sitharaman said the Central Government had enhanced the outlay for the Scheme for Financial Assistance to States for Capital Investment from Rs 10,000 crore in the Budget Estimates to Rs 15,000 crore in the Revised Estimates for the current year. Moreover, for 2022-23, the allocation is Rs 1 lakh crore to assist the states in catalysing overall investments in the economy. These fifty-year interest free loans are over and above the normal borrowings allowed to the states. This allocation will be used for PM GatiShakti-related and other productive capital investment of the states.
The Finance Minister also announced that in 2022-23, in accordance with the recommendations of the 15th Finance Commission, the states would be allowed a fiscal deficit of 4 per cent of GSDP of which 0.5 per cent will be tied to power sector reforms, for which the conditions have already been communicated in 2021-22.
She said that the revised fiscal deficit in the current year is estimated at 6.9 per cent of GDP as against 6.8 per cent projected in the Budget Estimates. The fiscal deficit in 2022-23 is estimated at 6.4 per cent of GDP, which is consistent with the broad path of fiscal consolidation announced by her last year to reach a fiscal deficit level below 4.5 per cent by 2025-26.
While setting the fiscal deficit level in 2022-23, she called for nurturing growth, through public investment, to become stronger and sustainable.