Union Budget 2022-23: Hopes Abound, But Ideas Are Scarce

While Finance Minister Nirmala Sitharaman‘s fourth budget is sensible in approach, it isn’t exactly brimming with innovative ideas. Sitharaman has missed an opportunity to address the flagging consumer spending in the wake of erosion in real incomes and savings through a combination of tax breaks for the middle class and cash handouts for the poor, with the economy still in search of durable momentum that could help entrench the recovery from the previous fiscal year’s record contraction. Even though the Minister recognizes the role of public capital expenditure in crowding in private investment at a time when ‘private investments seem to require that support’ and helping to ‘pump-prime’ demand in the economy, the Budget outlay of INR 7.50 lakh crore for the capital account represents only a 24.4 percent increase from the revised estimate of INR 6.03 lakh crore for the current fiscal. To be sure, Sitharaman’s address emphasizes PM GatiShakti, a ‘transformative approach for economic growth and sustainable development’ fueled by the ‘seven engines’ of roads, railroads, airports, ports, mass transportation, waterways, and logistical infrastructure. While the broad scope of public infrastructure envisioned by the program might be really revolutionary if carried out as planned, the Budget is weak on information where it concerns the specifics and simply pencils in some figures for the roads and trains components. According to the b...