The government has shied away from providing for any direct steps to boost consumption demand. Instead, it has relied on multiplier effects of capital investments, ushered in the virtuous cycle and provides an atmosphere of productivity gains for sustained economic momentum.

The capital expenditures in the Budget have received a strong boost – expected at 2.9% of GDP in FY23 compared to 2.4% as per the revised estimates for FY22. At the core of the strategy to push infrastructure programme is the PM Gati Shakti that will dove-tail well into the National Infrastructure Pipeline.

Clearly the idea is that public expenditure would take the lead in crowding in private investments and demand. The Centre also envisages an allocation of Rs 1 trillion to the state governments to push forward the investment agenda.

Further, with a clear view towards ensuring proper implementation and prevent cost overruns, the Centre is expected to work alongside the states to reduce time required for land and construction related approvals.

The Budget has also envisaged the use of digital means to achieve its inclusive agenda.

A proposal has been placed to set up 75 digital banking units in 75 districts by the schedule commercial banks (SCBs).

A big leap towards financial inclusion will be to have post offices on the core banking system, whereby accounts can be accessed through net banking, mobile banking, ATMs, etc.

Further, the digital ecosystem is also envisaged to be used effectively for skilling, reskilling and upskilling efforts and towards providing universal education. Towards boosting of the agricultural value chain, a scheme in PPP mode is envisaged for delivery of digital and hi-tech services to farmers.

Due attention has been provided to nurture the domestic manufacturing sector, including the MSME sector, that still needs hand holding.

The Emergency Credit Line Guarantee Scheme (ECLGS) scheme has been extended for 1 more year while the guarantee cover has been enhanced by Rs 50,000 crore, earmarked for the hospitality sector.

The domestic manufacturing sector also receives more protection as this Budget continues with the direction of the earlier budgets towards rationalisation of customs rates along with doing away with exemptions.

While the equity markets have cheered the Budget due to its growth focus, the bond players are surely sulking. The fiscal deficit is higher in FY23 at Rs 16.6 trillion compared to Rs 15.9 trillion last year.

The gross borrowing programme of the Central government is placed closed to Rs 15 trillion and with some signs of credit growth, the supply of papers is likely to be higher than the demand. Indeed, the market was expecting some clarification to the tax laws that would allow inclusion of India into the global bond indices.

But unfortunately, the Budget is silent on this issue. Effectively, 10-year government securities yield shot up to 6.83% today and could well be headed to 7.50%, unless the Reserve Bank of India once again steps in to absorb a portion of the supplies.

The author is Chief economist, YES Bank