FY23 Budget more directional with long-term growth, says Piyush Goyal

The government presented a budget with no tax increases and thus no new revenue generation measures but chose to do record borrowings to fund a budgeted 35% increased capital investment at Rs 7.5 trn

Stating that the budget 2023 is more directional with a quarter of a century of sustained growth in mind, Commerce and Industry minister Piyush Goyal on Saturday sought to deflect criticism in certain quarters that the government focused more on the supply-side than on growth-boosting demand side of the economy.

On February 1, the government presented a budget with no tax increases and thus no new revenue generation measures but chose to do record borrowings to fund a budgeted 35 per cent increased capital investment at Rs 7.5 lakh crore and also offered an additional Rs 1 lakh crore to the states for capital investment in interest-free loans. Together with the states, the overall capital expenditure next fiscal will be at a record high of Rs 10.5 lakh crore.

This will have the government borrowing hitting a historic high with gross borrowing at Rs 14.95 lakh crore and net borrowing of Rs 11.6 lakh crore.

Demand has been the biggest missing link in the economy even before the pandemic hit the nation and scuppered the last strain of demand as those who had money chose to save and not splurge while tens of millions became jobless.

"I am surprised at the criticism in a section of the industry that the budget is supply-side focused while what was more needed was boosting demand. The fact is that this is a direction setting budget, with clear focus on the macro as well as micro issues plaguing the economy. Such a focus will lead to faster and deeper trickle-down effect. Because through this budget, government wants to work towards a much brighter future for everyone by the time we celebrate the first century of our independence," Goyal told a post-budget gathering of industry representatives organized by the BSE.

Those criticizing the budget are missing the key point that most of the time supply side push also creates demand as a resilient supply-chain is crucial to secure sustained growth over the long-term. "So when we are pumping in so much money in capex (Rs 7.5 lakh crore by the Centre and Rs 3 lakh crore by the states, which is the biggest demand push any government has given in a year,) there will be all-round demand generation in all key sectors of the economy be it cement, steel or other metals which will an impact on overall demand too," he explained.

Moving on to exports, which are already a record high by crossing USD 336 billion by January, he said he is doing everything to ensure that we cross the USD 400 billion target set for the next fiscal by mid-way. Towards this the government is speeding up free trade talks with key nations such as Britain, Canada and Australia and also began with the GCC nations.

"On the FTA with the UK you will have positive surprises in a few days while with Australia it is being worked out on a priority basis. Recently the GCC grouping also expressed interest in inking a free trade agreement with us," Goyal said.

"That we've been earning over USD30 billion in each of the ten months of the fiscal is a clear indication that our competitiveness has gone up," he said, adding our services industry is also on course to net USD240 billion this fiscal.

Going forward our export story will be a race to the topa race between the services and merchandise exports both have to race clock USD 1 trillion each over the next five-six years when the economy will be a USD 5 trillion giant.

The minister also urged the industry, exporters in particular to be more demanding from the government in general and him specifically, so that he can make better bargains with other nations while engaging in trade negotiations.