What do the Budget 2022 numbers tell us?

The Budget 2022 has been presented amid concerns over subdued private demand and investment, less than fully recovery for the services sector, and high inflationary expectations. When the private demand is subdued, the employment and growth hinge on the public investment in job creating infrastructure.

The FM has managed to strike a healthy balance between promoting growth through boost to public and private investments while maintaining fiscal discipline. Accordingly, the budgetary allocation for direct capital expenditure has been augmented up to Rs 7.5 lakh crore, an impressive growth of 35.4% year on year basis. Overall, capital expenditure of the central is estimated at ₹10.68 lakh crores in FY 2022-23, amounting to about 4.1% of GDP.

This is a big boost for the infrastructure and manufacturing sector and to job creation and demand through high multiplier effects of these sectors. Rs 48, 000 crore allotted for PM Awas Yojana will also help create demand and employment. In 2022-23, the government will aim to help build 80 lakh houses for identified beneficiaries of the scheme. The other schemes targeted at the bottom of the economic pyramid include 60,000 crore allocated for access to tap water to 3.8 crore households, mostly in rural and semi-urban areas.

In addition, 80-lakh households will be helped under the affordable housing scheme, and 200,000 Anganwadis are to be upgraded for improving child health. At the same time, the FM has sought to give a leg up to the employment intensive Micro, Small and Medium Enterprises (MSMEs) sector.

To help this crucial sector cope up with the vulnerabilities arising out of the pandemic induced challenges the ECLG scheme has been extended for lending to the MSME sector. Simultaneously, the revamp of Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) will be an added incentive for banks to extend lending these units. On the downside, the crucial issues like budgetary allocation for the all crucial Skill India Mission, and the Asset Monetisation Programme were conspicuous by their absence. Given the comfortable fiscal position, it was widely expected that there would be announcements related to the measures to boost consumption and employment in the short-runs but they are missing from the budget.

The author is Director, Delhi School of Public Policy and Governance, and Professor, Delhi School of Economics

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