Responding to the budget proposals, Mr T V Narendran, President CII, applauded the Hon'ble Finance Minister for recognizing the need for public investment to crowd in private investment and for setting the virtuous cycle of demand, investments, and jobs in motion. The proposed 35.4 per cent increase in the allocation for capital expenditure on top of the last year's increase of 34.5 per cent, is a booster shot for the economy. It will pump prime demand and private investment and create jobs; said Mr T V Narendran. In absolute terms the budgeted capital expenditure has increased from Rs 4 lakh crores in FY21 to Rs 7.5 lakh crores in FY23.
The capex push has been balanced well with fiscal consolidation, with fiscal deficit for FY 23 pegged at 6.4 per cent, he commendable. This is in line with the economic strategy of higher capex along with a gradual glide path for fiscal consolidation, as suggested by CII in its pre - budget suggestions to the Government. The capex push is not only limited to the spending by Union Government, but the budget also proposes to support State Governments in their capital expenditure. The allocation for the 'Scheme for Financial Assistance to States for Capital Investment' has been increased to Rs 1 lakh crores as against Rs 15,000 crores spent on the scheme this year. The scheme provides fifty-year interest free loans to states for capital expenditure.
The increase in public expenditure will not only help speed up infrastructure development, create demand and shore up economic growth but would create the much-needed jobs and provide the requisite impetus to our development journey. The budget proposals cater to multiple important dimensions of the Indian economy. It takes forward the thrust on infrastructure through the Gati Shakti interventions, which will boost the overall competitiveness of the Indian economy and create jobs.
It takes forward the thrust on manufacturing through interventions like the Ease of Doing Business 2.0, with trust as the basis for government business interface, and extending the 15 per cent corporate tax rate to manufacturing units coming into production by 31 March 2023, from the earlier 31 March 2022. The budget provides boost to startups, the engines of innovation, job creation and social impact. Climate Change action and sustainability have received significant attention, in line with the Hon'ble Prime Minister's commitments at COP26. The additional allocation of R 19,500 crores for the Production Linked Incentive for manufacture of high efficiency modules will help India achieve the ambitious target of 280 GW of solar capacity by 2030.
The budget has also extended support to the pandemic hit MSMEs, through the extension of the ECLGS upto March 2023 and an additional allocation of Rs 50,000 crores taking the total allocation to Rs 5 lakh crores. The tax proposals in the Union Budget have focused on stability and predictability, which is very important for nurturing the incipient revival in the private capex cycle. The higher gross GST collections for the month of January 2022 at Rs 1,40,986 crores which is the highest since the inception of GST is an indicator of the industry coming to a fast track, added Mr Narendran.
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