Union Budget FY23: IMF chief welcomes it as ‘thoughtful”
Virendra Pandit
New Delhi: International Monetary Fund (IMF) Managing Director Kristalina Georgieva has welcomed India’s Union Budget for fiscal 2022-23 as a very “thoughtful” policy agenda for the country, putting great emphasis on innovation in research and development on human capital investment and digitalization.
Finance Minister Sitharaman tabled an Rs.39.45 lakh crores Budget in the Lok Sabha on Tuesday, proposing higher spending on the development of infrastructure, ranging from highways to affordable housing, with a view to fire up the key engines of the economy to sustain a world-beating recovery from the pandemic.
Sitharaman stressed increased spending on infrastructure to create jobs and boost economic activity.
The Budget proposed a massive 35.4 percent jump in capital expenditure to Rs. 7.5 lakh crores, coupled with the rationalization of customs duty, an extension of time for setting up new manufacturing companies, the Reserve Bank of India’s plans for starting a digital currency this year, and tax crypto assets.
“We have been projecting a quite robust growth for India. Yes, there is a small downgrade versus our previous projection from 9.5 percent to 9 percent for 2022. But then we also have a small upgrade for 2023, because we think we will see a stable growth not very different from (those projected by) the (Union) Minister of Finance,” Georgieva said during a virtual round table with a group of journalists on Thursday, the media reported.
The IMF sees this proposed investment to spur growth being conditioned on several factors, including the pandemic’s impact on the Indian economy, and whether the tightening of financial conditions would be done with clear forward guidance and prudently, not creating any more significant shock, she said.
“So far, by the way, what we see is that the tightening of financial conditions is not translating into a big problem for emerging markets. In comparison to previous periods, the impact on rates is not at all significant. Why? Because emerging markets have worked to build buffers and strength for situations like this and because many of them themselves have taken prudent actions once they faced inflationary pressures,” Georgieva said.
“We are very positive on the fact that India is thinking of addressing short-term issues, but also long-term structural transformation, and that there is a great deal of emphasis placed on innovation in research and development on human capital investment and digitalization, as well as thinking of how India can accelerate the climate change agenda using economic instruments for that,” the IMF chief said.
“So, all in all, I read the (budget) statement and I thought it was a very thoughtful policy agenda for India,” she said in response to a question.
The Centre on Tuesday increased the budgetary allocation for the Union Environment Ministry from the last fiscal by 5.6 percent. It also increased the Budget for National Mission for Green India from Rs. 290 crores in FY 22 to Rs. 361.69 crore this year with the national afforestation program alone being allotted Rs. 300 crore, vis-à-vis Rs. 235 crore last fiscal.
