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Why India could see a consistently high GDP growth rate of over 9%
The Union Budget for 2022 presented by the Finance Minister highlights the government's intention to accelerate growth despite the disruptions caused by the pandemic. The proposed increase in capital expenditure by 34% to Rs 7.5 lakh crore in 2022-23 clearly reflects the government's priority for accelerated and sustainable economic growth over the next few years.The significantly increased spending is expected to have a manifold impact on the economy as the private sector also picks up the pace of capital expenditure as seen in the past few months.
Along with several steps to improve ease of doing business in India, the Finance Minister announced policy measures to ease dispute resolution. The proposed GIFT City Arbitration Centre, which will be set up on the lines of international arbitration centers in Singapore and London, is expected to make India a more attractive investment destination. The proposed changes in the Insolvency and Bankruptcy Code (IBC) will facilitate cross-border insolvency and speedy resolution of disputes.
The introduction of Sovereign Green Bonds is another step in the right direction as reduction in carbon intensity is prioritized and furthermore, lenders insist on ESG compliance by borrowers. These bonds are expected to finance green infrastructure projects and tackle issues arising out of climate change.
In 2021, the private sector raised more than $6.5 billion through green bonds, and the government's move is expected to further accelerate India's goal of installing 500 gigawatts of renewable energy capacity by 2030, according to COP26 in November 2021 . stated in the summit. It remains to be seen whether the government prohibits Indian investors from borrowing on green bonds or looks at climate-conscious investors outside India
Fintech gained further momentum with the announcement of setting up of 75 Digital Banking Units in 75 districts. Additionally, the move to bring 1.5 lakh post offices under the core banking system will accelerate the digitization of banking in the country and benefit financial inclusion in many underprivileged areas of India. The extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till the end of the next financial year will provide support to MSMEs that are still battling the impact of the pandemic.
After months of speculation about the country's stance on blockchain-based currencies, India is expected to have its own digital rupee. The move is expected to move India towards a digital economy and move towards more efficient currency management.
Overall, this year's Union Budget continues the government's intent to drive India's long-term growth prospects. It has taken many positive steps and if implemented with the same enthusiasm, India will witness a consistently high GDP growth rate of over 9%.
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