The ‘leap’ of the year turned out to be more of a ‘hop, skip and jump’. Cautiousness prevailed as Finance Minister Arun Jaitley reined in the fiscal deficit to 3.5 per cent of GDP and stood his ground.
Public spending is clearly the engine of revival. In the current scenario with the private sector badly bruised, capital is shy and only government-funded, large-scale infra projects can revive the economic cycle. The Finance Minister has proposed an outlay of US$ 32.6 billion for infrastructure. Of this, the Rail Budget proposes to spend $17.7 billion. The budget to electrify 2,000 km next year has witnessed an increase by 50 per cent. It has also targeted commissioning 2,500 km of broad gauge lines at 7 km/ day, almost 30 per cent higher than last year. In the roads sector, which has green-lit the infra revival, the Budget has accorded a higher allocation of US$ 14.26 billion and including an accelerated Pradhan Mantri Gram Sadak Yojana (PMGSY) with an outlay of US$ 3.97 billion. Rural development is the mantra of this year’s budget as US$ 12.91 billion has been provided for irrigation, electrification and welfare. Smart cities, too, would see RFPs of US$ 600 million by the end of this calendar year specifically while all other investments which contribute to its progress such as Digital India, Swachh Bharat Mission, AMRUT, HRDAY have their own budgets provided for deployment which will build the ground for an effective smart cities implementation.
The change in the complexion of state budgets like those of Bihar, Uttar Pradesh, Madhya Pradesh and Gujarat, among others, are great proof that federal empowerment is working and will be the true opportunity in the years ahead. All states are laying great emphasis on infrastructure investment, education, power and youth employment. The 14th Finance Commission’s largesse to states will see an amount of US $ 42.21 billion, which going by the composition of the spending, will see a greater thrust on infrastructure and social welfare. All considered, the Budget supports the creation of an ecosystem for the revival of rural demand for overall economic revival.