Union Budget: Takeaways for NE

The Union Budget for 2022-23 presented by Finance Minister Nirmala Sitharaman has nothing much to cheer about for the north-eastern states. Initial allocation of Rs 1,500 crore for a new scheme - Prime Minister's Development Initiative for North-East is too little as the amount will be for all eight states of the region. The budget announcement that the new scheme for the region is to be implemented through the North Eastern Council (NEC) will keep alive the debate over dilution of NEC's role to a fund disbursing authority while it is mandated to function as a regional planning body. The Union Finance Minister, however, clarified in her budget speech that the new scheme will not be a substitute for existing central or state schemes. The new scheme will fund infrastructure, in the spirit of PM GatiShakti- the national infrastructure pipeline, and social development projects based on the felt needs of the region for enabling livelihood activities of youth and women. Priorities will be given for projects to be submitted by the states in the region while central ministries will also be allowed to submit their projects under the new scheme. Of the seven projects identified for the scheme, two projects for Mizoram - Construction of Aizawl By-pass on Western Side (Rs 500 crore) and Pilot Project for Construction of Bamboo Link Road at Different Locations in Various Districts in the State of Mizoram (Rs 100 crore) account for a major share of Rs 600 crore while Rs 129 crore has been earmarked for the establishment of "Dedicated Services for the Management of Paediatric and Adult Haemotolymphoid Cancers in North East India at Guwahati. Rs 122 crore have been allocated for two projects in Sikkim. A meagre amount of Rs 45 crore has been earmarked for promoting scientific organic agriculture while Rs 67 crore has been set aside for multi-state livelihood improvement projects for the entire region. This leaves Rs 537 crore for projects to be identified and submitted by states and central ministries to the NEC under the new scheme - PM-DevlNE. When the region is on the cusp of embarking on a new growth trajectory with India pushing connectivity projects that will provide the region access to the sea route for trade and commerce through seaports in Bangladesh and land border with Myanmar what the region expected was a quantum jump in budgetary allocation for infrastructure and development push in the Northeast and not incremental allocation for a few identified state-specific projects. The overall budget has, however, fuelled hope for accelerated growth with a 35.4% increase in capital expenditure to fund various infrastructure projects in 2022-23. The states in the region will have to build capacities for expeditious and judicious utilization of expenditures and timely submission of utilization certificates to capitalize on the new focus of the Union budget for a big push to infrastructure projects in the region. Allocation of Rs 1 lakh crore for providing the states' interest-free loans for 50 years over and above normal borrowings will help states mobilize resources for PM GatiShakti related and other productive capital investment of the states, supplemental funding for PM Gram Sadak Yojana including support for states' share and projects of digitization of the economy will bring huge opportunity for the cash-strapped region. The huge financial burden for the ongoing COVID-19 vaccinations and committed expenditures for distribution of subsidised food grain under public distribution scheme left limited fiscal space for the government to provide income tax relief to the pandemic-devastated middle class. Corporate Tax has been reduced from 18% to 15%. Opposition parties have alleged that reduction of budget outlay for Mahatma Gandhi National Rural Employment Guarantee Act (MNEGA) from Rs 98,000 crore to Rs 73,000 crore would affect rural employment generation. Allocation of Rs 60,000 crore for Har Gar, Nal Se Jal programme to provide tap water to 3.8 crore households in 2022-23 and an outlay of Rs 48,000 crore for construction of 80 lakh houses under Prime Minister for will also generate rural employment completion of 80 lakh houses for the identified eligible beneficiaries of PM Awas Yojana, both Rural and Urban, will generate huge employment which needs to be considered to draw a comprehensive picture on employment opportunities. Besides, huge capital expenditures in infrastructure projects will also generate employment opportunities that should not be ignored. However, compared to free or heavily subsidized food grain distribution that is entirely utilized in consumption, allocation under MNREGA also helps build creating rural assets as money is to be given to beneficiaries only as wage for unskilled manual work under the flagship scheme. Budget fine prints will present a clearer picture of allocations for the northeast region under the existing schemes in addition to allocations under PM-DevINE which the states will have to watch out for deciding allocations for their budgets and explore allocations for new schemes and projects.