{"id":165916,"date":"2022-02-02T20:10:39","date_gmt":"2022-02-02T14:40:39","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=165916"},"modified":"2022-02-03T11:12:05","modified_gmt":"2022-02-03T05:42:05","slug":"a-takeaway-is-the-good-infrastructure-push","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/a-takeaway-is-the-good-infrastructure-push\/","title":{"rendered":"A takeaway is the good infrastructure push"},"content":{"rendered":"\n

News: <\/strong>Recently <\/strong>Union Budget 2022-23 has been released which has focused on expanding capital expenditure.<\/p>\n

The article discusses the projected growth, revenue, expenditure, debt and real growth.<\/p>\n

What is projected income growth?<\/strong><\/p>\n

Budget has projected a nominal GDP growth estimate of 11.1% for 2022-23. The real GDP growth is estimated of 8% with an implicit price deflator (IPD)-based inflation of 2.9%. It will deliver nominal growth of 11.1%.<\/p>\n

But what could be real GDP?<\/strong><\/p>\n

According to NSO, real GDP in 2021-22 will exceed marginally from 2019-20 level. In the second half of 2021-22, real GDP growth was only 5.6% without any base effects. But the IPD-based inflation will be relatively high in 2022-23.<\/p>\n

The reason of high IPD- based inflation is high wholesale price index in the first half of 2022-23 due to high prices of global crude and primary products. Hence, the real GDP growth will be around 7%-7.5% in 2022-23 with nominal growth assumption of 13% and IPD-based inflation will be 5%.<\/p>\n

What is projected revenue and expenditure?<\/strong><\/p>\n

One<\/strong>, the Centre\u2019s gross and net tax revenues are estimated to grow at 24.1% and 23.8%. However, the tax buoyancy has been reduced to 0.9. But the Centre\u2019s tax buoyancy will be higher than 0.9 due to digitization and formalization of the economy.<\/p>\n

Two<\/strong>, the total expenditure will grow by 4.6%. But the revenue and capital expenditures will grow by 0.9% and 24.5% respectively. This structural change will increase output and act as employment multiplier.<\/p>\n

What is projected level of debt and fiscal deficit?<\/strong><\/p>\n

As per Economic Survey for 2021-22, the general government debt relative to GDP is close to 90% at the end of 2021-22 and 2022-23. The debt-GDP ratio will increase in 2022-23 which will cover major part of the Government\u2019s revenue budget.<\/p>\n

There will be reduction in fiscal deficit by 0.5% points and the target is to reach a level of 4.5% by 2025-26. This will result in reduction of 0.63% points in fiscal deficit per year in the next three years.<\/p>\n

What are the other changes made in Budget 2022?<\/strong><\/p>\n

One<\/strong>, it incentivized States to expand capital expenditures by permitting a fiscal deficit limit of 4% of GDP. 0.5% is marked for expanding power infrastructure. Also, \u20b91 lakh-crore has been allocated to States for capital expenditure in 2022-23 as 50-year interest-free loans.<\/p>\n

Two<\/strong>, subsidies are reduced to 1.2% of GDP in 2022-23 from 1.9% in 2021-22 to reduce the burden of interest payments which has gone up from 3.5% in 2021-22 to 3.6% in 2022-23. Interest payments are also rising due to increased borrowings from the market.<\/p>\n

What is the way forward?<\/strong><\/p>\n

First<\/strong>, there should be medium-term assessment of the National Infrastructure Pipeline (NIP) to indicate the sectors of deficient investment to increase transparency.<\/p>\n

Second<\/strong>, Fiscal Responsibility and Budget Management (FRBM) Act should be re-examined to give the sustainable levels of debt and fiscal deficit and the adjustment path given the high debt-GDP levels.<\/p>\n

Third<\/strong>, there is need to correct the under-assessment of tax buoyancy and nominal GDP growth assumption. It will increase fiscal space for raising expenditure.<\/p>\n

Source<\/strong>: This post is based on the article \u201cA takeaway is the good infrastructure push\u201d <\/strong>published in\u00a0The Hindu<\/strong> on<\/strong> 2nd<\/sup> Feb 2022<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

News: Recently Union Budget 2022-23 has been released which has focused on expanding capital expenditure. The article discusses the projected growth, revenue, expenditure, debt and real growth. What is projected income growth? Budget has projected a nominal GDP growth estimate of 11.1% for 2022-23. The real GDP growth is estimated of 8% with an implicit… Continue reading A takeaway is the good infrastructure push<\/span><\/a><\/p>\n","protected":false},"author":10316,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10498],"class_list":["post-165916","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704690850},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/165916","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10316"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=165916"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/165916\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=165916"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=165916"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=165916"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}