Jamshedpur, February 2: Dr. HK Pradhan, Professor of Finance and Economics, XLRI Xavier School of Management Jamshedpur, said that the Union Budget 2022 focuses on the broader macroeconomic dimensions of growth and investment, with a strong emphasis on capital expenditure. The Minister of Finance is taking a very decisive step to further support growth, with FY22 GDP returning to pre-pandemic levels, supported by buoyant GST revenue collection.

He said the finance minister is keeping medium-term growth at the center of fiscal policy, boosting investment in logistics and infrastructure projects, further expanding production-linked incentives (PLIs), extending the Emergency Line of Credit Guarantee Scheme (ECLGS) for the MSME sector until the next fiscal year and boosting the start-up ecosystem.

It has not ignored the path of budgetary consolidation by maintaining the deficit target of 6.4% for the 2023 financial year. This budget also incorporates the sustainable development strategy with the issuance of green bonds, more provisions for investment in renewable energy, urban infrastructure and allocations to the agricultural sector.

It takes the existing push on the digital economy even further, such as the launch of central bank digital currency backed by blockchain technology, the establishment of digital banking units in 75 districts, including the contribution of tax net digital assets such as cryptocurrency earnings. By officially bringing cryptocurrency assets and non-fungible tokens into the tax realm, FM may be allaying the fear of its outright ban.

The stock market held onto its gains, perhaps because investors’ attention gradually shifted from growth stocks to value stocks of a broader set of companies. The bond market also reacted slightly to the substantial increase in gross borrowing requirements of Rs 14.95 lakh crore over the coming year, with yields gradually rising. The market awaits the RBI’s monetary policy announcement next week, which should meet current inflationary expectations while supporting growth. The bond market has already priced the expected risk in terms of repo rates and diminished liquidity. Current inflationary pressures remain critical for fiscal and monetary policy, in the face of imported inflation such as rising palm oil and crude oil and rising domestic costs.