Finance Minister Nirmala Sitharaman will introduce the Union budget 2023 on February 1; Image: Shutterstock
Finance Minister Nirmala Sitharaman will present the Union Budget 2023 on February 1 and all eyes are on the Centre's plan on allocating funds to various ministries. The next Annual Financial Statement, as it is formally called, is expected to provide relief to the middle class while setting India on course to becoming a $26 trillion economy by 2047. While the next budget most likely will be worth more than that of 2022 (Rs 39.45 lakh crore), here is a look at the key sectors that might get (positively or negatively) impacted this year.
The central government allocated Rs 5.25 lakh crore to the defence sector last year. This was a 10% increase from the previous year. The Centre might be looking to boost its defence industry as several potential buyers of defence equipment manufactured in India have emerged lately. In January 2022, Philippines inked a deal worth $375 million for the BrahMos cruise missile which is jointly developed by Russia and India.
India’s defence sector is heading towards self-reliance! #AatmaNirbharDefence pic.twitter.com/K8zHDKmTrW— MyGovIndia (@mygovindia) April 23, 2022
Apart from the cruise missile, other assets such as the light combat Tejas fighter jet, military radars and helicopters are also on the list and countries such as Malaysia and Egypt is in line as buyers. Defence Minister Rajnath Singh, in December 2022, revealed that India's defence exports hit Rs 14,000 crore in 2021-22 which is the highest ever. According to Singh, this number was up from Rs 900 crore in 2014. He said that defence exports will cross Rs 19,000 crore in 2023 and Rs 25,000 crore by 2025. With increased spending on manufacturing, India will be able to export more to neighbouring countries and boost the number.
India has emerged as one of the largest markets in the digital sector and the Centre would like to double down on its development, especially after its role in making the nation home to the third-largest number of startups. India also received immense praise for its digital initiatives at the World Economic Forum in Davos for its advancement in the digital space. Last year, the Ministry of Electronics and Information Technology (MeitY) received Rs 10,676.18 crore, a 67.13% jump from the previous year (Rs 6,388 crore).
New India, a leader in digital transactions.— BJP (@BJP4India) January 24, 2023
Thanks to UPI as it currently constitutes over 40% of all digital transactions taking place in India!#DigitalIndia pic.twitter.com/u5IRVVoXri
The 'Digital India' initiative launched by the central government in 2015 has proved to be a gamechanger for the country's digital ecosystem which is expected to rise to $1 trillion by 2025, according to a McKinsey report. Moreover, core digital sectors such as information technology & business process management, digital communication services and electronics manufacturing are likely to double their GDPs to $355-435 billion by 2025.
It is the advancement in the digital sector that several countries including France, UAE, Saudi Arabia, the US, Australia, Bahrain, Singapore, Maldives, Bhutan, and Oman have adopted the Indian RuPay and UPI payment systems. According to official data, UPI transactions worth Rs 12 lakh crore were reported last year, strengthening the online infrastructure.
India is making giant leaps in the space sector since the central government established IN-SPACe (Indian National Space Promotion and Authorisation Centre), the autonomous agency under the Department of Space which has allowed the participation of private companies in the space industry. The Union Ministry of Science and Technology in 2022, received Rs 14,217 crore which was a drop of 3.9% from the previous year. Out of the total, the Department of Science and Technology (DST), Department of Biotechnology (DBT), and Department of Scientific and Industrial Research (DSIR) received Rs 6,000 crore, Rs 2,581 crore and Rs 5,636 crore, respectively.
VIDEO: Congratulations India! A historic landmark under PM @narendramodi !— Dr Jitendra Singh (@DrJitendraSingh) November 18, 2022
A turning point for Indian #StartUps! A new beginning for #ISRO!
First ever private Rocket “Vikram-S” is in Space.#OpeningSpaceForAll pic.twitter.com/Los0kfjF0x
This number might increase considering the success India has had with the inclusion of the private sector. In 2022 alone, India launched its first private rocket, launched by Skyroot Aerospace as well as the launch of private satellites developed by Dhruva Space and Pixxel.
ISRO may need increased funding considering the ambitious missions that are awaiting fruition. The much-awaited Gaganyaan programme will take off with the launch of the first test flight later this year and the development of the Shukrayaan mission to Venus, targeted for launch in 2024, is also underway.
India's space economy was pegged at $9.6 billion in 2020 and is likely to increase to $13 billion by 2025, according to a report by Ernst and Young and the Indian Space Association (ISpA). The report said the satellite launch market including private companies will be the biggest contributor to this rise. In the global space economy, India currently has a 2.6% share and increased spending can help India capture a bigger share.
Following the GatiShakti strategy, the Finance Ministry might also have planned to strengthen connectivity by an increased fund allocation to the Railways. In 2022, the Railway Ministry was allocated Rs 1,40,367 crore, which was Rs 20,311 crore more than the previous fiscal. Explaining the reason for higher funding, Finance Minister Sitharaman said the Ministry will manufacture 400 new Vande Bharat trains by 2025 that will be energy efficient.
Besides, the Indian Railways is working on developing bullet train corridors. "More bullet train corridors will be built in the country. Survey work is going on in Varanasi to start a bullet train," Railways Minister Ashwini Vaishnaw said, while the bullet train project between Mumbai and Ahmedabad is underway. Vaishnaw added that 200 railway stations across the country will get a facelift with modern amenities soon.
Additionally, the Centre may also choose to prioritise roads, airports, ports, mass transport, waterways, and logistics infrastructure to take India on the path to becoming a $26 trillion economy as predicted by Ernst and Young.
The COVID-19 pandemic kept India's health infrastructure engaged through the better part of the last two years. While the health system's shortcomings were exposed during this period, it also motivated the government to build a strong medical infrastructure.
For the year 2022-23, the Ministry of Health was allocated Rs 86,200 crore. It is hard to predict how much the government is willing to spend on health infrastructure considering the previous year’s allocation was considerably less than the 137% increase witnessed in 2021.
In 2021, Sitharaman announced Rs 2.23 lakh crore, out of which the Department of Health and Family Welfare received the highest (Rs 71,269 crore). The Centre is running a multitude of crucial schemes in the health sector, including the National Health Mission, the vaccination drive, the Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), Pradhan Mantri Jan Arogya Yojna (PMJAY) and the newly-introduced Prime Minister Atmanirbhar Swasth Bharat Yojna.