Budget 2022-23: World-beating growth, GatiShakti power, debut of digital rupee

The Union Budget 2022-23 was presented against the backdrop of a global economy grappling with the lingering effects of the COVID-19 pandemic and rising geopolitical tensions. India, like many nations, was navigating the path of economic recovery, aiming to restore pre-pandemic growth trajectories while also addressing structural issues. The government's economic strategy had already pivoted towards capital expenditure to stimulate demand and create long-term assets, a theme that was significantly reinforced in this budget.

The budget, presented by Finance Minister Nirmala Sitharaman on February 1, 2022, outlined a comprehensive economic recovery plan with a strong emphasis on four key priorities: PM GatiShakti, inclusive development, productivity enhancement, and financing investments. It projected a robust GDP growth, indicating the government's optimism about India's economic resilience. A crucial aspect was the focus on job creation, particularly through incentivizing the manufacturing sector, building upon initiatives like the Production Linked Incentive (PLI) schemes introduced earlier.

At the heart of the budget's infrastructure push was the transformative PM GatiShakti National Master Plan. Launched in October 2021, GatiShakti is an ambitious digital platform aimed at bringing together 16 ministries, including Railways and Roadways, to plan and implement integrated infrastructure projects. The budget highlighted GatiShakti as a multi-modal connectivity initiative designed to reduce logistics costs, enhance supply chain efficiencies, and boost economic growth. It identified seven engines for economic transformation: roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure, all to be powered by clean energy and leveraging technology.

Another groundbreaking announcement in the Budget 2022-23 was the debut of the Digital Rupee, India's own Central Bank Digital Currency (CBDC). The Reserve Bank of India (RBI) was tasked with launching the digital currency in the fiscal year 2022-23. This move positioned India among a growing number of countries exploring CBDCs to enhance efficiency and security in the digital payments ecosystem, potentially reducing reliance on physical cash, promoting financial inclusion, and also serving as a counter to the rise of private cryptocurrencies.

Key stakeholders in these initiatives include the Ministry of Finance, responsible for budget formulation and fiscal policy; the Reserve Bank of India, which plays a pivotal role in monetary policy and will be instrumental in developing and issuing the Digital Rupee; and various line ministries (e.g., Ministry of Road Transport and Highways, Ministry of Railways) crucial for the implementation of PM GatiShakti projects. NITI Aayog is also a key player in strategic planning and monitoring. Ultimately, Indian citizens and businesses are the primary beneficiaries, experiencing improved infrastructure, job opportunities, and a more efficient financial system.

This budget holds immense significance for India. Economically, the emphasis on capital expenditure through GatiShakti is expected to have a multiplier effect, stimulating demand, attracting private investment, and creating substantial employment. Reduced logistics costs will boost the competitiveness of Indian goods in domestic and international markets. The Digital Rupee represents a leap in financial innovation, potentially streamlining transactions, reducing costs, and enhancing financial inclusion by providing a sovereign-backed digital payment option. This also positions India as a leader in the global digital economy discourse.

Historically, Indian budgets have evolved from a socialist planning focus to a more market-oriented approach, with increasing emphasis on infrastructure development. Initiatives like the Sagarmala and Bharatmala projects laid the groundwork for large-scale infrastructure, with GatiShakti representing an integrated, technology-driven evolution of this approach. The journey of digital payments in India, from demonetization to the success of UPI, provides a fertile ground for the adoption of a CBDC. Constitutional provisions like Article 112, which mandates the presentation of the 'Annual Financial Statement' (Budget) to Parliament, and Article 265, which states that no tax shall be levied or collected except by authority of law, are fundamental to the budgeting process. The Reserve Bank of India Act, 1934, empowers the RBI to issue currency, which will be the legal basis for the Digital Rupee.

Looking ahead, the successful implementation of PM GatiShakti will depend on effective inter-ministerial coordination, efficient land acquisition, and robust project monitoring. Challenges in financing and execution for such large-scale projects are always present. For the Digital Rupee, future implications include its integration with existing payment systems, regulatory clarity, public acceptance, and its potential impact on commercial banks and monetary policy. This budget sets a trajectory for India's growth driven by infrastructure, technology, and inclusive development, aiming to solidify its position as a major global economic power.