India budget: Capex bazooka with long-term intent

Finance ministers are compelled to do a tightrope walk when it is Budget time – a balancing act with populism on one end and developmental imperatives on the other, more especially in an aspirationally developing economy. This predicament is obviously on an aggravated scale when polls are nearby – as could be the case of India where general elections that will cast a verdict on the incumbent government are one-and-a-half-years away or so.

I would say that the Finance Minister, Nirmala Sitharaman, while facing this dialectical dilemma straight up, has not lost sight of the vexed fiscal math. It is fair to congratulate her for betting on a long-term growth vision while being inclusive at the same time in the recent Union Budget. Her budget ticks the pertinent boxes of aspirations of India Inc., keeping growth on the radar, and paving a path of opportunity for Indian businesses and the overseas investor community.

To present a budget without being populist and with the long-term intent of an Amrit Kaal – which in a metaphorical vein presents a timeframe of a two-and-a-half decades of growth and development takes political confidence, and belief in the fundamentals of the Indian economy, despite the issues that crop up in between and its viral impacts.

The budget certainly points out the investment opportunities and growth dividends India has to offer for domestic and global investors, and reads well in the context of many positive indicators, including the UNCTAD World Investment Report (WIR) ranking India at 7th among the top 20 host countries that have received significant FDI flows. World Bank’s view of India as the fastest growing economy and IMF’s Kristalina Georgieva echoing it that the country has a better than global average growth, puts India in global focus

The bazooka that the finance minister has fired is the $122.29 billion Capex for 2023-24, enhanced by 33 per cent over the previous year, a bumper increase that is expected to give an impetus to private investment cycle, infrastructure development and job creation for a country with the world’s largest population of 1.417 billion people. . The demographic tapestry, of more than half of the population between the ages of 18-35 is a leverage as well as a responsibility to keep the economic engine revved up in the long-term.

The budget is bold in its economic growth projection of seven per cent, the highest among major economies, which will also help fuel investment flows to India. In order to foster ease of doing business and attract FDI, in the last few years India has reduced more than 39,000 compliances, 7,500 reforms have been implemented, decriminalised more than 3,500 provisions related to procedural defaults and put in place for Investors a National Single Window System for approvals & clearances. These sustained efforts, according to World Bank have enabled the Nation to rank 63rd in 2022 in Ease of Doing Business among 190 countries improving its rank from 142 in 2014.

Global investors are convinced of India’s growth potential which is vouched for by the increase in FDI inflows, recording $85 billion during financial year 2021-22. For instance, investments by the UAE’s sovereign wealth funds in India alone have crossed $10 billion, while overall investments, including from the private sector are more than double of this. I also feel that there is an equitable emphasis on each segment of the economy in the Budget, including a Green Growth strategy that is in line with the global sustainability focus and climate change mitigation thrust.

G. P. Hinduja is co-chairman of Hinduja Group. Views expressed are his own and do not reflect the newspaper's policy.

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