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Economic Survey 2021-22

State of the Economy

1. Indian economy is estimated to grow by 9.2 per cent in real terms in 2021-22 (as per first advanced estimates) subsequent to a contraction of 7.3 per cent in 2020-21.
2. GDP is projected to grow by 8- 8.5 per cent in real terms in 2022-23.
3. The year ahead is poised for a pickup in private sector investment with the financial system in a good position to provide support for the economy’s revival.
4. Projection is comparable with World Bank and Asian Development Bank’s latest forecasts of real GDP growth of 8.7 per cent and 7.5 per cent respectively, for 2022-23.
5. On the demand side, consumption is estimated to grow by 7.0 per cent, Gross Fixed Capital Formation (GFCF) by 15 per cent, exports by 16.5 per cent, and imports by 29.4 per cent in 2021-22.
6. Macroeconomic stability indicators suggest that the Indian Economy is well placed to take on the challenges of 2022-23.
7. A combination of high foreign exchange reserves, sustained foreign direct investment, and rising export earnings will provide an adequate buffer against possible global liquidity tapering in 2022-23.

Fiscal Developments

1. The revenue receipts from the Central Government (April to November 2021) have gone up by 67.2 per cent (YoY) as against the expected growth of 9.6 per cent in the 2021-22 Budget Estimates (over 2020-21 Provisional Actuals).
2. Gross Tax Revenue registers a growth of over 50 per cent from April to November 2021 in YoY terms. This performance is strong compared to pre-pandemic levels o f 2019-2020 also.
3. During April-November 2021, capex has grown by 13.5 per cent (YoY) with a focus on infrastructure intensive sectors.
4. Sustained revenue collection and a targeted expenditure policy have contained the fiscal deficit for April to November 2021 at 46.2 per cent of BE.
5. With the enhanced borrowings on account of Covid-19 the Central Government debt has gone up from 49.1 per cent of GDP in 2019-20 to 59.3 per cent of GDP in 2020-21 but is expected to follow a declining trajectory with the recovery of the economy.

External Sectors

1. India’s merchandise exports and imports rebounded strongly and surpassed pre Covid levels during the current financial year.
2. There was a significant pickup in net services with both receipts and payments crossing the pre-pandemic levels, despite weak tourism revenues.
3. Net capital flows were higher at USD 65.6 billion in the first half of 2021-22, on account of continued inflow of foreign investment, revival in net external commercial borrowings, higher banking capital, and additional Special Drawing Rights (SDR) allocation
4. India’s external debt rose to USD 593.1 billion at the end-September 2021, from USD 556.8 billion a year earlier, reflecting additional SDR allocation by IMF, coupled with higher commercial borrowings.
5. Foreign Exchange Reserves crossed USD 600 billion in the first half of 2021-22 and touched USD 633.6 billion as of 31 December 2021.

Prices and Inflation

1. The average headline CPI-Combined (CPI-C) inflation moderated to 5.2 per cent in 2021- 22 (April December) from 6.6 per cent in the corresponding period of 2020-21.
2. Food inflation averaged at a low to 2.9 per cent in 2021-22 (April to December) as against 9.1 percent in the corresponding period last year
3. Wholesale inflation based on the Wholesale Price Index (WPI) rose to 12.5 per cent during 2021-22 (April to December).

Boosting Infrastructure

The keystone of governance is to create economic growth and spread the benefits of growth to all. The benefits of growth are well recognized, ultimately leading to well being of citizens and meeting their aspirations. A better quality of life and “case of living” results from policies that aim to create right conditions for new economic opportunities. Higher economic growth leads to more funds being available for social development, finally taking us to a virtuous cycle of growth and development. The USD 5 trillion target for our GDP is an ambitious one, and strategy to achieve the same revolves around creating an ecosystem for growth, with its foundations on creation of infrastructure, and Atmanirbhar Bharat. As we celebrate 75 years of independence, Azadi ka Amrit Mahotsav, we have embarked upon an ambitious development journey. Infrastructure development has been at the core of the government’s efforts since 2014 to fuel economic growth. The focus has not only been on physical infrastructure but also digital infrastructure. The digital infrastructure created through the UPI initiative has been a singular success. The ease o f payment achieved by UPI could not have been visualised, and today one can buy a cup of tea from a street food vendor and make the payment electronically, utilising the UPI platform. The strength of the banking sector was in having a large branch network, but the robust digital infrastructure has led to accessible financial services to citizens without having to visit a bank. Similar digital initiatives like Bharat Net—providing broadband access to 2.5 lakh Gram Panchayats; Aadhaar; Ayushman Bharat Digital Health Mission, etc., are important parts of the digital infrastructure that enables financial and social inclusion, and people-centric governance. The creation of physical infrastructure is equally important with its multiplier effect on economic growth Good quality infrastructure improves productivity and for economic growth to be sustained, the growth has to be based on improving productivity. The government is pushing for investment in infrastructure, as it creates jobs, boosts private investment in core sectors, reduces logistic costs for the economy, improves the competitiveness of the manufacturing industry in domestic and global markets, enhances government tax revenues, and improves ease of living for citizens. Considering the massive investment required to build infrastructure, it was decided to lay down a clear roadmap of all infra development projects that were to be taken up. Hence, the National Infrastructure Pipeline (NIP) came into being, with projects requiring an investment of Rs 111 lakh crore. This was clear guidance to the markets about the ambition of the government, giving confidence to investors that a comprehensive approach had been adopted. To achieve the highest multiplier effect of investment in infrastructure, a piecemeal approach to planning and delays in implementation are two factors to be avoided. The NIP coupled with the recently launched GatiShakti programme will ensure a complete approach and timely delivery based on better coordination and planning. PM GatiShakti National Master Plan- launched by the Ministry of Commerce & Industry- is a programme that includes 16 Ministries (including Railways & Roadways) for integrated planning and coordinated implementation of infrastructure connectivity projects. It leverages a dynamic Geographic Information System (GIS) based ERP (Enterprise Resource Planning) platform planned in collaboration with Bhaskaracharya National Institute for Space Applications and Geo-informatics (BISAG-N), wherein data on specific action plans of all the concerned Ministries/Departments, will be incorporated within a comprehensive database. Developing infrastructure in a diverse country like ours requires detailed planning and facilitation. The process starts with a plan for the country and details into the entire network of roads & highways. The Bharatmala Pariyojana gave us the blueprint for highway development in an integrated manner. This blueprint could be used to initiate the preparatory work of detailed project reports, finalising alignments, land surveys, etc. Bharatmala Pariyojana is an umbrella programme for highway development that was envisaged to bridge critical infrastructure gaps across the country. The programme visualised construction of 34,800 km of National Highways to be implemented by three different agencies of the Ministry, i.e., NHAI (90%), MoRTH PWD (6%), and NHIDCL (4%). The programme follows a corridor-based National Highway development, connecting 550+ districts of the country and catering to 70-80% of total freight on National Highways. Currently, out 0f the planned 34,800 km, projects 0f length 19,470 km representing a total capital cost of Rs 5.76 lakh crore have been awarded. This programme represented a paradigm shift in terms of looking at the creation of expressways, as greenfield alignments. Brownfield expansion and improvement of highways serve an important purpose, but the game-changer in terms of reducing logistic costs is building access controlled greenfield expressways connecting key cargo origindestination centres. Consequently, 5 flagship expressways and 17 access-controlled corridors are being developed as part of Bharatmala Phase-I at a total capital cost of Rs 3.6 lakh crore. The 5 expressway projects- namely Delhi-Mumbai, Ahmedabad-Dholera, Bengaluru-Chennai, Delhi-Amritsar-Katra, and Kanpur-Lucknow- account for 2,485 km and a total capital cost of Rs 1.63 lakh crore. Additionally, the 17 access-controlled corridors of 5,924 kms (comprising of marquee projects such as Raipur-Vishakhapatnam, Ambala-Kotputli, Amritsar-Bhatinda- Jamnagar, etc.) are being developed at a total capital cost of Rs 1.97 lakh crore. About, 5,000 km out of 8,400 kms of these greenfield corridors have already been awarded and about 1,000 km will be completed and opened to traffic in the next few months. For the government, spreading economic benefits to all is a keystone, and these expressways, passing through underserved and under-developed regions, open economic opportunities to the people of these regions, encourage private investment, and bring the fruits of development to the people. It is now time for us to launch Phase 2 of Bharatmala programme, and we have high levels of ambition considering the expectations of people across the country. For a better perspective, it is useful to look at data on expansion in the overall network length and expansion. The pace of award of works for National Highways has almost doubled from an average of- 5,900 km per annum between FY 2009-10 till FY 2013-14 to -11,000 km per annum since FY 2014-15, as shown in Figure 1. Similarly, the pace of annual construction has increased by 1.8 times to -9,000 km per annum since FY 2014-15, as compared to - 4,900 km constructed per annum between pY 2009-10 till FY 2013-14, as shown in Figure 2. Specifically, in the last financial year, the Ministry of Road Transport and Flighways achieved a historical pace 0f National Highways construction of -37 km/day (i.e., 13,327 km in the year). Logistic costs must be reduced, and this happens to some extent by developing highways but that itself is not sufficient to maximise returns from the investment in highways. We need multi-modal logistic parks connected to highways, waterways, airports, and railways; to allow cargo to move seamlessly. Multi-Modal Logistics Parks (MMLPs) are critical enablers for ensuring integrated and efficient transportation as per the vision laid out in the PM GatiShakti National Master Plan. MMLPs enable seamless transfer of goods across modes and facilitate a hub and spoke model of freight movement with hub-to-hub line haul on more efficient modes such as rail/ocean/inland waterways or larger sized trucks and first mile/last mile movement on trucks. Ambitious plans to develop MMLPs have been drawn up. MMLPs shall also provide key services such as advanced storage infrastructure, first and last-mile connectivity to key nodes in freight networks, and value-added services such as customs clearance and provisions for late-stage processing activities. Therefore, MMLPs are expected to reduce logistics costs. MMLPs are being developed across the country in 35 strategic locations (such as Jogighopa, Nagpur, Chennai, Indore, Bengaluru, etc.) to address inefficiencies in the logistics sector. These 35 MMLPs will cater to over 50% of the nation’s road freight movement. The development of highways in left-wing extremism impacted districts has also received special attention since 2014. For instance, a Greenfield corridor between Raipur and Visakhapatnam is being developed passing through backward districts of Chhattisgarh, Odisha, and Andhra Pradesh. The corridors identified for development in Phase I of Bharatmala Pariyojana will improve connectivity in districts affected by Left Wing Extremism and in aspirational districts. Further, there has been a focus on border areas and North- Eastern States too in the 34,800 km planned under Bharatmala Pariyojana as indicated in figure 3. At 14.96 km, the Zojila tunnel on the Srinagar-Leh road will be Asia’s longest bi-directional tunnel. The tunnel will shorten the distance between Baltal (Sonamarg) and Minamarg in Ladakh from 40 km to 13 km, slashing travel time from three hours to 15 minutes. The level of infrastructure development requires investments at a mammoth scale. Giving advance guidance to the market of investment needs is a starting point. NIP is a step in that direction. Focus on timely completion and willingness of the government to step in when needed, helps in building investor confidence. GatiShakti is an initiative towards this end. Innovative methods of augmenting finance by understanding financial markets and offering diverse products is the other aspect of the solution. As part of the National Monetisation Pipeline (NMP), NHAI has launched its InvIT (Infrastructure Investment Trust) to monetise road projects. In view o f the long-term nature of the assets, the units of InvIT were placed with international and domestic institutional investors. NHAI InvIT attracted two international pension funds, namely Canadian Pension Plan Investment Board and Ontario Teachers’ Pension Plan Board, as anchor investors. The initial portfolio comprising of 5 roads raised Rs 8,000 crore with 50% of investment from foreign investors. Further, more roads are expected to be added to the InvIT later. NHAI has demonstrated its strong ability to attract a wide variety of sophisticated investors for NMP. Lastly and most importantly, protecting the environment while developing infrastructure is an efficient balancing act. My approach is to lean towards protecting the environment while faced with situations. Progress in the plantation of trees along highways is personally reviewed by me. MoRTH realised the need and importance of developing green corridor and promulgated Green Highways (Plantations, Transplantations, Beautification, and Maintenance) Policy in September 2015 to develop green corridors along National Highways for sustainable environment growth. Consequently, NHAI has been undertaking plantation drives from time to time to develop ecofriendly National Highways and has constantly addressed ecological concerns by adopting environmental friendly methods. In post-policy years from 2016- 17 to 2020-21, more than 2 crore plants have been planted. Till November 2021, over 63 lakh new plants have been planted by NHAI with avenue plantation accounting for 27.5 lakh, while median plantation accounting for 35.6 lakh new plants. Further, the plantation is closely monitored using the latest technology of drone videography and geo-tagging, along with the traditional methods of field inspections.

Strengthening Federalism

Central Government is committed to strengthening the hands of the States by enhancing their capital investment towards creating productive assets and generating remunerative employment. The Budget 2022-23 is a continuation of a series of reforms, policies and measures that have strengthened India's federal system. The increased capital expenditure on infrastructure will enhance economic activity across the nation. India is a country with continental proportions and draws upon her diversity as a strength. Federalism was the model adopted that would best suit an Independent India. In the wake of need for fast paced development of the nation as a whole, as well as the rising regional aspirations and quest for more share in the resources, the dynamics of Federalism in the country appear to be coming into attention more than ever before. To better serve the needs and aspirations of the people in the federal polity, in a major step moving away from centralised planning to a more decentralised and participative setup, the Planning Commission was replaced by the National Institution for Transforming India (NITI Aayog) on 1 January 2015. From a body like Planning Commission which imposed policies on States and tied allocation of funds with projects it approved, we moved to a think-tank which enables greater role for involvement of the States in policy making and offers expert guidance and policy advice through its state-of-the-art Resource Centre. Cooperation and competition are the two sides of the same coin—‘Federalism’. Both are essential to take the ‘New India’ march forward economically and socially. While on the one hand the States need to be assisted with resources and sound policy advice, on the other they need to be encouraged to improve their performance. NITI Aayog since its inception has been able to balance the two and provide necessary support to the States.

Cooperative Federalism

NITI Aayog works towards a shared vision of national development priorities with the active involvement of States to foster cooperative federalism. NITI’s Governing Council, chaired by the Prime Minister, comprises of all the Chief Ministers and Lieutenant Governors of UTs as equal members and a selected Government of India ministers. The Governing Council meets annually to evolve a shared vision of country’s economic development. In the 6th Governing Council Meeting held on 20 February 2021, a unique exercise took place where extensive workshops were held between NITI Aayog, Ministries and State Governments to finalise the agenda for the Governing Council’s deliberations One of NITI Aayog’s major initiative since its inception has been formulating the Strategy document in 2017 (India@75). Its preparation followed an extremely participative approach. Over 800 stakeholders from within the government—Central, State and District levels— and about 550 external experts were consulted during the preparation of the document. The overarching focus of the Strategy document was to further improve the policy environment in which private investors and other stakeholders can contribute their fullest towards achieving the goals set out for New India 2022 and propel India towards a USD 5 trillion economy. A number of steps have been taken by NITI Aayog to foster cooperative federalism. These steps are showcased in the development blueprints prepared jointly with Governments of Uttar Pradesh, Tripura, and Madhya Pradesh. Regular sharing of best practices; policy support and capacity development of State/UT functionaries, etc., are other areas where NITI partners with State governments. It has been observed that NITI’s interaction with the States have resulted in many changes at the institutional level with many States reimagining the roles of their planning and finance departments. The 17 goals and 169 targets under the SDGs are interdependent and inter- connected, and require concerted and coordinated action within the various departments. This inherent nature of the goals has forced States to dissolve silo-based functioning prevalent in government institutions. Such collaboration paves the way for convergence of developmental schemes with programmatic or beneficiary overlapping, better utilisation of resources and greater achievement of outcomes. Thus, new structures are laid for novel and goal-driven partnerships at State and sub-State levels. States and UTs have explored and innovated different ways for such institutional development.

Competitive Federalism

NITI Aayog attempts to promote competitive federalism by means of facilitating improved performance of States/UTs. It stimulates healthy competition among States through developing indicator frameworks and transparent rankings in various sectors, review mechanisms and capacity-building with a hand-holding approach. States are ranked through various indices measuring ease of doing business to Sustainable Development Goals. The ranking on social indicators based on quantitative objective criteria encourages States (and districts) to improve their performance. As one of its major transformative initiatives, NITI Aayog also releases rankings in the monthly changes in the performance of Aspirational Districts. The Aspirational Districts Programme (ADP) of NITI Aayog launched in January 2018 focuses on 112 of India’s most developmentally challenged districts across sectors such as health and nutrition; education; agriculture and water resources; basic infrastructure; and financial inclusion and skill development. The aim of these rankings is to promote immediate improvement through greater efficiency and convergence in governance and measuring progress by ranking districts on a monthly basis. Districts are challenged and encouraged first to catch up with the best district in their State, and then aspire to become one of the best in the nation, by competing and learning from others in the competitive and cooperative spirit of federalism. Promoting the spirit ot competitive and cooperative federalism, the districts are supplied supplementary funding from the Government of ndia to focus on key projects in their districts. Top ranked aspirational district gets Rs 10 crore, second best receives Rs 5 crore and sector wise best gets Rs 3 crore each. Some of the indices launched by NITI Aayog are Composite Water Management Index, India Innovation Index, Export Competitiveness Index, School Education Quality Index, State Health Index and Sustainable Development Goals Index.

Fostering Localisation of SDGs

Starting in 2018, NITI defined the contours of the national progress monitoring on SDGs based on key national development parities in its first ever framework for monitoring the country s progress on the SDGs- SDG India Index and Dashboard. Since then, this framework has been continuously revised with feedback from States/UTs and consultations with ministries to broaden the scope for the SDG-based monitoring framework. The latest version of die SDG India Index contains 100+ indicators. Now in its fourth year, it has been institutionalised and established as the country’s principal and official policy tool on benchmarking national and sub-national progress and has simultaneously fostered competition among the States. Most recently, as a part of its localisation efforts, NITI published the first regional index - The North-Eastern Region District SDG Index. The Index measures the performance of all the 100+ districts of the eight States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura on the SDGs and their corresponding targets. Taking the successful SDG localisation model further to the level of urban areas, NITI Aayog developed and released the SDG Urban Index & Dashboard (2021 -22) in November 2022. It ranked 56 urban areas on 77 SDG indicators and highlighted the strengths and gaps in ULB-level data, monitoring, and reporting systems. This interactive tool is aimed at strengthening SDG localisation at the city level and fostering the creation of an ecosystem in which all stakeholders are equipped to adopt and implement data-driven decision making. The process of localisation involves more than a mere local application of high-level agendas. Rather, SDG localisation encompasses a host of factors such as local agenda setting, decision-making and process monitoring with locally adapted indicators, which together generate the ownership necessary for successful SDG implementation on a local scale. It is thus critical that the apparatus of sustainable development focuses on being more responsive and relevant to local needs and aspirations. NITI Aayog has created strong partnership with States to achieve, SDG-oriented development agenda. This enables it to foster cooperative federalism with the convergence in the vision for development between States and the Union.

Strengthening Fiscal Federalism

Fiscal federalism has also seen substantial strengthening since 2014. The successive Finance Commissions have raised the share of States in tax revenues from 29.5% between 2000-05 to 42% currently. This has greatly expanded the fiscal space afforded to State governments to pursue their development priorities. This increase in devolution has been accompanied by the abolition of formal economic plans, and the dissolution of the Planning Commission. Centralised policy and decision making has now given way to a decentralised system, with more flexibility and financial autonomy for State Governments. The State Governments have frequently raised the issue of getting more unconditional transfers relative to the conditional transfers. These conditional transfers are generally in the form of Centrally Sponsored Schemes (CSCs). The share of general-purpose transfers, which are unconditional in nature and come with no strings attached, in total central transfers increased from 64.8% in 2011-12 to 74.2% in 2019-20, while that of specific purpose transfers, which are conditional in nature, have declined from 35.2% to 25.7% during this period. Among the key fiscal support measures by Centre to States to fight Covid-19 and support economic growth, it is important to highlight that the Centre increased the borrowing limits of States from 3.0% of GSDP to 5.0% for 2020-21, providing the States extra resources of Rs 4.3 lakh crore. As highlighted in Budget 2022-23, GST has been “a landmark reform of independent India showcasing the spirit of cooperative federalism”. Goods and Services Tax (GST) is governed by the GST Council, where States are equal partners. Despite the nationwide surge in Covid-19 cases, gross GST collections for the month of January 2022 were recorded at Rs 1,40,986 crore, which is the highest since the inception of GST. Total GST collections are estimated to grow 23% in 2021-22, as per revised estimates in the Budget. GST has played a major role in the formalisation of the Indian economy. The introduction of GST has eliminated transactions which were not recorded earlier in the books of accounts and were outside the tax net. The seamless flow of information facilitated by GST would eventually augment not only the Indirect Tax collections but also Direct Tax collections. It has enabled to keep a check on the fraud related to payment of tax (tax evasion) through stricter tax compliances and transparency. Reflecting the tine spirit of cooperative federalism, the Central Government is committed to strengthening the hands of the States by enhancing their capital investment towards creating productive assets and generating remunerative employment. In her Budget speech, the Finance Minister pointed out that the ‘Scheme for Financial Assistance to States for Capital Investment’ has been extremely well received by the States. In accordance with the requests received during her meetings with Chief Ministers and State Finance Ministers, the outlay for this scheme was enhanced from Rs 10,000 crore to Rs 15,000 crore in 2021-22. For 2022- 23, an allocation of Rs 1 lakh crore (10 times the initial outlay of 2021-22) has been made to assist the States in catalysing overall investments in the economy. These 50-year interest free loans are over and above the normal borrowings allowed to the States. The Union Budget also stated that in 2022-23, in accordance with the recommendations of the 15th Finance Commission, States will be allowed a fiscal deficit of 4.0% of GSDP o f which 0.5% will be tied to power sector reforms. The Budget seeks to provide an equal treatment to Central & State Government employees with an increased tax deduction limit from 10% to 14% on the employer’s contribution to the NPS (National Pension System) account of the State Government employees. The Budget also focuses on providing urban planning support to States. For urban capacity building, the Central Government will support States in implementing Modernisation of building bylaws, Town Planning Schemes (TPS) and Transit Oriented Development (TOD). The Central Government’s financial support for mass transit projects and AMRUT scheme will be leveraged f0r formulation of action plans and their implementation for facilitating TOD and TPS by the States. Among other key measures, a new scheme, the Prime Minister’s Development Initiative for North East (PM-DevINE) was announced to be launched with an initial allocation of Rs 1,500 crore. The Scheme will fund infrastructure, in the spirit of PM GatiShakti, and social development projects based on felt needs of the northeast. The Budget 2022-23 is a continuation of a series of reforms, policies and measures that have strengthened India’s federal system. The increased capital expenditure on infrastructure will enhance economic activity across the nation. Fiscal federalism, combined with cooperative and competitive federalism will lead India into the post-pandemic era of rapid and equitable growth, improvement in the peoples’ ease of living and environmental sustainability.

Harnessing Multiplier Effect

In the Union Budget 2022-23, the Finance Minister Nirmala Sitharaman unveiled a transformative approach to invigorate demand and accelerate economic growth. The approach relies on boosting capital expenditure, both by the public and the private sector. Capital expenditure is non-recurring, long term expenditure on creation and acquisition of capital assets. Why is capital expenditure so critical? Studies say that capital expenditure has a multiplier effect of 2.45 in the short run and 4.8 in the long term. Simply put, this means that Rs. 1 crore spent on capital is likely to add Rs. 2.45 crore to the Gross Domestic Product (GDP) in the short term. Cumulative impact of this investment on GDP in the long term is likely to be Rs. 4.8 crore. What is behind this multiplier effect? Capital expenditure leads to income augmentation, creates employment opportunities, expands ancillary industries and services, enhances the future productive capacity of the economy, and stimulates demand. Public capital expenditure also kicks off a virtuous cycle by crowding in private investment. Moreover, it enhances confidence in the economy and attracts foreign investment. In the Union Budget 2022-23, the Finance Minister has proposed a sharp increase of 35.4 per cent in the centre’s capital expenditure outlay from Rs 5.54 lakh crore in 2021- 22 to Rs 7.50 lakh crore in 2022-23.3The outlay proposed for 2022-23 is 2.2 times the outlay for capital expenditure in 2019-20. In addition, the States will also get grants for the creation of capital assets through various Centrally Sponsored Schemes. If this amount is added, the Central Government’s effective capital expenditure in 2022- 23 will jump to Rs 10.68 lakh crore. A massive capex support of Rs 1 lakh crore to States through the scheme of special assistance to States for capital investment is one of the key highlights of the Finance Minister’s Budget Speech 2022-23.

Bolstering Capital Expenditure in States

When the Covid-19 had struck in March 2020 both the Central and the State Governments faced a difficult fiscal environment due to a shortfall in tax revenues. Simultaneously, the demand for financial resources had soared, both on account of activities to fight the pandemic and to provide relief to the affected people. Many of the commitments of State Governments like salaries, pensions, and interest payments were fixed in nature and could not be reduced in the short run. Consequently, there was a strong likelihood of postponement of capital expenditure. Therefore, despite immense pressure on the central finances, the Union Government decided to extend a special Scheme of assistance to the State Governments in respect of capital expenditure during the financial year 2020-21. The Scheme was named “Special Assistance to States for Capital Expenditure” and an amount of Rs 12,000 crore was set aside for this purpose. Funds were provided under the Scheme in the form of a fifty year interest free loan. This loan was above the normal borrowing allowed to the States. The states could use the funds provided under the Scheme both for new and ongoing capital projects. They were also allowed to use the Scheme funds for settling pending bills in ongoing projects. The scheme design was kept simple and the States were given full flexibility to choose projects. Moreover, the information on proposed projects was obtained in a simple format without insisting on the submission of Detailed Project Reports (DPRs) The scheme was very well received by the States. All States except Tamil Nadu availed funds under the scheme. Considering repeated requires of the States, the second version of the scheme was launched in the Financial Year 2021-22 with an outlay of Rs. 10000 crore. This is proposed to be enhanced in the revised estimates by 50 per cent to Rs. 15000 crore. Tamil Nadu has also embraced the scheme in 2021-2022. Again, in the pre-budget consultations for 2022-23, Chief Ministers and Finance Ministers of States requested the Union Finance Minister for continuation and enlargement of the scheme. Considering the demand of the States, and embodying the true spirit of cooperative federalism, the Union Finance Minister made a path breaking announcement in her Budget Speech of 2022-23. She has not only declared that the Scheme for Financial Assistance to States for Capital Expenditure will continue in the financial year 2022-23, she also announced a tenfold increase in the outlay of the scheme as compared to the Budget Estimates of 2021-22. The proposed allocation of Rs. 1 lakh crore will greatly bolster the hands of the States in catalysing overall investment in the economy. The Finance Minister also announced in her Budget Speech 2022-23 that this allocation will be used for PM GatiShakti-related and other productive capital investment of the states. In addition, the allocation under the scheme is also proposed to be used for supplemental funding for priority segments of the Pradhan Mantri Gram Sadak Yojana (PMGSY), including support for the states share. Moreover, the Scheme will also be leveraged to motivate States to undertake reforms in the areas like digitisation of the economy, including and reforms related to town planning schemes; transit oriented development, building by laws, and transferable development rights.

Scheme for Special Assistance to States for Capital Expenditure, Version-1.0

The inaugural version o f the scheme had three parts. The first part covered the eight North Eastern and two Hilly States. In this part, while Uttarakhand and Himachal Pradesh were allocated Rs 450 crore each Assam was allocated Rs 400 crore. The remaining seven North Eastern States got Rs 200 crore each. Part-II of the scheme covered all other States who were assigned a total amount of Rs 7,500 crore. This kitty was divided amongst them in proportion to their share of Central Taxes as per the interim award of the 15th Finance Commission for the year 2020-21. Under Part –III of the scheme Rs. 2000 crore was set aside to provide an incentive to those States who complete the reforms stipulated by the Ministry of Finance in at least three out of the four identified citizen-centric areas.

Scheme for Special Assistance to State for Capital Expenditure, Version – 2.0

The second version of the scheme also has three Parts. Part-1 focuses on the North Eastern and Hill States. The former, except Assam were allocated Rs 200 crore each while outlay for Assam, Himachal Pradesh, and Uttarakhand was Rs 400 crore each. The rest of the States got Rs 7,400 crore, divided amongst them in proportion to their share of Central Taxes as per the award of the 15lh Finance Commission. Part-III of the scheme focuses on providing incentives to States for privatisation/disinvestment of the State Public Sector Enterprises (SPSEs) and monetisation of government assets.

Stimulating Reforms in States

The Schemes for Special Assistance to States for Capital Expenditure 2020­21 and 2021-22 have not only focussed on enhancing the capacity of states to increase capital expenditure but have also stimulated reforms in the States.

Reforms in Identified Citizen-Centric Areas

In view of the serious negative impact of Covid-19 on resources of the States, and seeing the requirement of States for additional resources to fight the pandemic and maintain the standard of service delivery to the public, the Ministry of Finance had decided to provide an additional borrowing limit of up to 2 per cent of Gross State Domestic Product (GSDP) to the States in the year 2020-21. Detailed guidelines in this regard were issued by the Department of Expenditure on 17 May 2020. However, to ensure long-term debt sustainability, and to increase future GSDP growth, future revenue augmentation, and reduce unproductive future expenditure, half of the additional borrowing was linked to the States completing reforms in four citizen-centric areas. The areas identified for reforms were implementation of One Nation One-Ration Card System, Ease of Doing Business reforms; Urban Local Body/Utility reforms; and Power Sector reforms. One Nation-One Ration Card system was aimed at enabling people, especially migrant workers to draw their quota of food grains under the National Food Security Act from any fair price shop in the country. Ease of Doing Business reforms was aimed at promoting a business-friendly climate in the country to enable faster future growth of the economy. Reforms to strengthen local bodies were aimed at augmenting the financial resources of urban local bodies to enable them to provide good civic infrastructure and services to people. Power sector reforms targeted reduction of Aggregate Technical and Commercial (AT&C) losses, reduction in the gap between Average Cost of Supply and Average Revenue Realized (ACS-ARR gap), and introduction of Direct Benefit Transfer to farmers in lieu of free electricity. It was decided to give a further push to these reforms by providing incentives of upto Rs 2,000 crore under the Scheme for Special Assistance to States for Capital Expenditure, 2020-21 for carrying out reforms in at least three out of the four identified citizen-centric areas by 31 December 2020,

Disinvestment and Monetisation

In the financial year 2021-22, the Scheme for Special Assistance to States for Capital Expenditure focussed on improving efficiency and mobilising financial resources by States through privatisation/disinvestment of State Public Sector Enterprises SPSEs and monetisation/recycling of States assets. An amount of Rs 5,000 crore was up for grab by the States on a “First-come First-served” basis. In the case of disinvestment of a minority stake in SPSEs, financial incentive equivalent to 5 0% of the amount realised from disinvestment was available. However, in the case of strategic disinvestment of SPSEs, the States are entitled to get additional allocation equivalent to 100% of the amount realised. Strategic disinvestment means the sale of 50% or more Government shareholding in SPSEs along with the transfer of management control. Asset monetisation/recycling of government assets was another focus area. Monetisation of assets unlocks their value, eliminates their holding cost, and enables scarce public funds to be deployed to new projects. The incentive for State Governments to monetise assets was additional allocation under the scheme equivalent to 33 per cent of the realised value of assets. It was also stipulated that the amount realised due to asset monetisation/recycling by the State will be utilised only for capital expenditure.

Performance of the Scheme

The Scheme for Special Assistance to States for Capital Expenditure has been a success. In the Financial Year 2020-21, against a total allocation of Rs 12 000 crore, approvals were granted to States for capital projects costing Rs 11912/- crore and an amount of Rs 11,830 crore was released to the States. In the financial year 2021-22, against the Budget Estimate of Rs 10,000 crore, capital projects costing Rs 9,115 crore were approved till 3 February 2022' and a total amount of Rs 5,301 crore was released to the States. This provided a major relief to the States to achieve progress in a large number of capital projects which would have otherwise stopped due to financial constraints. State-wise allocation and release of funds under the Scheme is depicted in Table-1. The Scheme has been successful not only in boosting capital investment and completion of capital projects, it has also stimulated reforms. The first version of the scheme led to reforms in various citizen- centric areas as depicted in Table-2. While 17 States completed One Nation-One Ration Card reforms, 20 States completed Ease of Doing Business reforms. Local Body Reforms were completed by 11 States and Power Sector Reforms were partially or fully completed by 17 States. Completion of the reform process by the States was certified by the Ministries concerned. Twenty-three States carried out reforms in at least one of the four identified areas. Two States, Kerala and Uttarakhand completed reforms in all the four identified areas. Eleven states (Andhra Pradesh, Goa, Madhya Pradesh, Punjab, Rajasthan, Tripura, Himachal Pradesh, Karnataka, Manipur, Odisha, and Telangana) completed reforms in three or more areas. The Scheme for Special Assistance to States for Capital Expenditure, 2021-22 also enticed States to take up the stipulated reforms. An amount of Rs 518.17 crores was approved under this part of the Scheme for disinvestment of SPSEs and monetisation of assets by Madhya Pradesh. It is expected that with a massive allocation 0] Rs 1 lakh crore, the third and drastically improved version of the Scheme for Special Assistance to States for Capital Expenditure 2022-23, will not only spur capita investment and economic growth but will also accelerate the movement of States on the reform path outlined by the Finance Minister in her budget speech.

Global Perspective

India is the world's sixth-largest economy: It often also boasts of being the fastest-growing large economy: However; given its per capita income level of about USD 2000 a year; it is still considered a low middle-income country. Hence, economic growth remains an utmost priority for the country. The measures announced in the Budget and the direction in which they steer the nation should help India become much more competitive globally. The Union Budget for 2022-23 is focused on strengthening the economic foundations of the country to help it attain India’s growth potential. It provides continuity in terms of adhering to the policy pathway that has been laid out in the last few years. This pathway consists of an accelerated build up of infrastructure, improvement in logistics to ensure competitiveness in Indian manufacturing, and leapfrogging development by leveraging digital opportunities. All these priorities have been taken into account through both the fiscal support as well as the broader policy framework in the Budget. The overarching ambition seems to be to set the country on a virtuous path of enhanced competitiveness, and the public sector facilitating growth in the private sector both through the provision of public goods such as infrastructure and an enabling framework, leading to a higher, real, and nominal GDP growth and buoyant tax revenues. It seems to be the expectation that these actions would generate a sufficient growth dividend and resources to make the fiscal measures undertaken in the Budget viable. India’s Union Budget for 2022 has sought to balance two different imperatives. First, it has been prepared against a challenging backdrop wherein the Covid-19 has shaken the global economy like never before for almost two years now, and the third wave of infections, which was more contagious than the other waves before it, even if less virulent, continues to cause disruptions. This means that the Covid-related challenges could not have been ignored as the vulnerable populations needed to be supported. For India, particularly, consumption is still 3 per cent below the level seen in 2019-20 and specific sectors have not yet revived fully. The contact-intensive trade, hotel, transport, and communication sector is still nearly 10 per cent below the level seen in 2019-20 (Figure 1). On the other hand, most of the demand- side and supply-side components have rebounded and crossed the 2019-20 levels (Figures 1 and 2). For instance, exports and government consumption are almost 11 per cent above the level achieved in 2019-20. A second imperative is to put the economy firmly back on a sustained growth path of 7 per cent and subsequently a higher level. Despite it being one of the fastest-growing large economies, India’s growth had slowed down even prior to Covid, to 4 per cent in 2019-20, and in general, it has been unable to break out of a 7 per cent average growth rate in recent years (Figure 3). The Budget has given a large push to the manufacturing sector through its focus on public investments to modernise infrastructure by adopting a multi-modal approach. Further, in order to utilise inter-ministerial synergies in infrastructure projects, the Government has launched the ‘PM GatiShakti Master Plan’. The Budget has also announced other measures in this area, including an additional allocation of Rs 19,500 crore for Production Linked Incentives (PLI) for solar manufacturing, digital integration of post offices with the core banking system to further deepen the financial inclusion process, extension of the Emergency Credit Linked Guarantee Scheme (ECLGS) to Micro, Small and Medium Enterprises (MSME) by one year, and provision of an additional cover of Rs 50,000 crore to hospitality and related enterprises. Further, the creation of a Digital Ecosystem for Skilling and Livelihood (DESH-Stack e-portal) has been flagged in the Budget to promote skill development. The Budget has also balanced the need to revive the economy against the prevalent fiscal constraints, primarily by focusing on the quality of spending. The fiscal deficit of the federal government and the State governments was already elevated before Covid (Figures 4 and 5), and has increased further during the pandemic. Keeping the twin objectives of a broad-based recovery from the pandemic and fiscal consolidation in mind, the government has revised its fiscal deficit from 6.8 per cent budgeted to 6.9 per cent for the current fiscal year and made a small reduction to 6.4 per cent for the next fiscal, with a gradual reduction thereafter to 4.5 per cent by the fiscal year 2026 (Figure 4). The Budget has created incentives for State governments to increase capital expenditure by allowing a higher fiscal deficit of 4 per cent of the Gross State Domestic Product (GSDP) instead of the 3 per cent mandated by the Fiscal Responsibility and Budget Management Act (FRBM). It has also provided assistance to States to fund capex by keeping a provision for disbursing long-term interest-free loans. Overall, the Budget has incorporated fiscal rectitude. It has budgeted for only a modest increase in the nominal expenditure of the Government (a proposed increase of only 4.5 per cent in 2022-23 over the Revised Estimate for 2021-22); a flat revenue expenditure; and a sharp increase in capital expenditure (Figures 6 and 7), reflecting an increase of 24 per cent over the Revised Estimate for 2021-22. Politically tricky subsidies are slated to decline significantly, while the revenue projections seem highly conservative, i.e., a 9.5 per cent increase in tax revenue and a 14 per cent decline in non-tax revenue. In the years ahead, the following three issues will need further articulation as a part of the broader policy framework of the country. First, though a sharp fiscal consolidation is not warranted at this time, it would be useful to envision the fiscal roadmap that the Government would adhere to in the medium term. Even if the Government’s tolerance and the philosophy around the fiscal paradigm may have shifted, as some of the recent Economic Surveys have hinted, it would have been helpful to provide some details of this roadmap in the Budget. Even as India’s economic fundamentals are strong, its debt situation paints a mixed picture when compared to other countries. The general government debt and deficit as shares of GDP are high by international standards. The country’s debt-to-GDP ratio in the last decade (Averaging 68 per cent) and fiscal deficit to GDP ratio (averaging around 7 per cent) were high among comparators. Tax revenues as a share of GDP have been stagnant or have risen only slowly. The tax effort so measured has been below the corresponding average figures of other countries at similar income levels; direct tax collection has been particularly low. Recurrent expenditure (committed, non discretionary, or revenue expenditure) accounts for a majority of the general government expenditure, while capital spending on infrastructure is only about 3.5 per cent of GDP in the past.’ Covid-19 has further widened the budget deficit and increased the debt. Even though the government debt is held mainly at home and denominated in rupees, its level ought to be brought down in due course. Second, in order to foster growth at rates much higher than in the past, we need the vision to integrate India into global value chains. The global market is collectively 30 times the size of the Indian economy. Albeit India has grown, on average, at 7 per cent a year in the last decade, based on the strength of its domestic markets, when the global trade volumes were highly subdued. However, to take the economy to the next level by achieving a growth rate of 8-10 per cent or higher would depend crucially on the ability and opportunity to tap into global markets. While India has done well this fiscal year in leveraging the pyoyancy seen in global markets, it is still an incremental change compared to what is feasible. We currently account or only 1.5 per cent of the goods supplied to the global market and 3.5 per cent of the global market for services. The aim should be to head forward, doubling these market shares. A 2005 report by the United Nations Conference on Trade and Development (UNCTAD), drawing from the successful experiences of the Asian economies, suggests that both foreign market access and the domestic supply capacity matter for attaining faster exports growth Countries that have exported successfully have more diverse and differentiated portfolios of goods on offer while indulging in intra-firm and intra-industry trade. The domestic capacity, in turn, is determined by the transport infrastructure, macroeconomic and institutional environments, and the FDI received. The other factors that matter include businesses having the flexibility and the means to adjust businesses having the flexibility and the means to adjust capacity and reallocate resources as required by the global demand dynamics, a competitive exchange rate, and the availability of working capital, which is determined by the pace of tax refunds, easier credit flows, and a competitive exchange rate. The aim should be to head forward, doubling these market shares. The measures announced in the Budget and the direction in which they steer the nation should help India become much more competitive globally.

Demographic Dividend

Youth has a potential and power to change the world for the better. Harnessing the potential of youth for burgeoning economic opportunities is the role of key stakeholders. At the same time, instilling values of integrity and humility is significant in this journey. Youth is often associated with innovative spirit, entrepreneurship, technological prowess, and sports that bring laurels to the nation. Unleashing their latent potential and innovativeness can bring the desired change and prosperity for all. Indian youth is known for resilience and innovation. India has the largest youth population in the world; it becomes a dire need to focus on their development in this 75 th year of India's independence. It is imperative to create an ecosystem to make them partners in growth and development of nation. India’s 1.38 billion people with a median age of 28 are one of the youngest populations in the world. China and the US that are much more developed and economically stable, are growing older faster than India. Currently, our country is home to a fifth of the world’s youth population advantage. We are in the midst of a demographic dividend. United Nations Population Fund defines this phase as economic growth that results from a shift in population’s age structure— the phase when the working age population is more than the number of dependents. Our young population is a valuable asset to economic growth; they will play a critical role in achieving the ambitious target to become a global powerhouse and achieve the target of USD 5 trillion economy by 2024-25. India does not have a lot of time. We have only 20 years left for reaping the advantage of demographic dividend.

Enabling Entrepreneurial Potential

The national income of any country increases if the workforce is educated and has employable skills. Access to the internet and social media has created a digitally savvy population. Our youth are digital natives with high literacy rate. Our nation has opportunities for job creation with a novel entrepreneurial culture. Disruptive technologies have developed start-up ecosystem that is providing services in areas like healthcare, education, e- commerce, agribusiness and many more. Fuelled by aspirations and quality of life, our youth is at the forefront of new age technologies such as artificial intelligence, machine learning, data science and Industry 4.0. Our youth is a rising consumer class; companies are making products and services with pricing models targeted towards them. Digital payments, e- wallets, low interest loans and credit facilities further fuel the entrepreneurial aspirations of young population. As their spending power is increasing, the market is set to grow, resulting in higher economic activity. Our young population is also an attractive proposition for investments, locally as well as globally. India has become an investment hub for its entrepreneurial young population. Many private and public sector interventions are imparting skills to the country’s youth. National Skill Development Mission is a game changer that is empowering youth with employable skill sets across multiple sectors and also improving productivity and efficiency. The Government of India initiatives such as Startup India, Digital India and Pradhan Mantri MUDRA Yojana (PMMY) have further enabled entrepreneurship and increased employment opportunities. Inclusive growth can only be realised if there is a focus on women empowerment. The Government’s stress on the importance of Nari Shakti is one of the key pillars of inclusive growth. This will also make inroads to grow and strengthen the women-led enterprises.

Budgetary Outlay

The Budget 2022-23 provides impetus for growth as it lays a blueprint for the Amrit Kaal, which is futuristic and inclusive, and it holds a promising future ahead for education, up- skilling and employment. The Budget has profoundly increased the outlay for the education sector by 11.86%, which signals the intentions towards uplifting and empowering the youth. The budgetary outlay will have positive cascading effect on our youth, women and fanners. The GatiShakti is a progressive model for economic growth and sustainable development, this will result in productivity enhancement and investments. This model is driven by seven engines, viz. roads, railways, airports, ports, mass transport, waterways and logistics infrastructure. This will spur economic growth by furthering the efforts of the public and private sector, leading to enormous job and entrepreneurial opportunities for the youth. This is a big push for public investment for infrastructure, readying India for a 100% educated population. In the post-Covid era, education has taken a new track, which is technology-based blended learning. The budget opens vistas to make educational tools available and accessible, thus aiming at inclusive education opportunities. There is a proposal of developing high quality e- content in all spoken languages which will be delivered via internet, mobile phone, TV and radio through digital teachers. This will democratise access to education and empower youth in rural areas with access to education, facilitating continuous learning. The motive is to make education more accessible and affordable, furthering entrepreneurship and skill development of burgeoning youth population. Another significant highlight of the budget is permitting foreign universities and institutions under GIFT IFSC (International Financial Services Centre) to offer courses on Fintech and STEM (Science, Technology, Engineering and Mathematics). This move is projected to bring foreign institutions to India, who are exploring to have synergies with Indian Institutions, but were not able to do so in the past due to regulatory challenges. This step will have a huge multiplier effect on the country’s economic growth. PM’s Development Initiative for North East (PM-DevINE) with allocation of Rs 1,500 crore for development initiatives in the North Eastern Region (NER) will enable livelihood activities of youth in NER. Start-ups’ The Budget 2022-23 has provided significant stimulus to the start-up and digital ecosystem that is driving innovation. There is an increased thrust on artificial intelligence, geospatial systems, drones, semiconductor ecosystem, genomics, green energy, clean mobility systems and pharmaceuticals. This will be the engine of economic and social growth for the youth-led New India. Apart from creating employment opportunities for youth, this will also make industry efficient and competitive. For unleashing the power of youth, the Government’s commitment to technology and innovation is laudable. Futuristic technology such as the introduction of digital currency, rollout of 5G, e-passports using embedded chips are steps to make our nation futuristic and modern. The launch of Digital Ecosystem for Skilling and Livelihood— DESH- Stack e-portal will motivate young population to learn and sharpen their skill sets apart from creating entrepreneurial opportunities. This will enable them to skill, re-skill and up-skill through online training. With the quest promote critical thinking skills and instil creative thinking 750 virtual labs in science and mathematics along with 75 skilling e-labs for simulated learning will also be set up The extension of PM eVIDYA programme from 12 to 200 TV channels will improve learning outcomes of young students. The major challenge of our youth is the lack of employability skills, this needs to be in sync with the changing industrial demands. The launch of digital university will increase the reach of quality education even in remote areas with the public universities and institutions working in hub and spoke format. The Budget also recommended the creation of an AVGC (Animation, Visual effects, Gaming and Comics) task force that will suggest ways to realise potential of this sector and build domestic capacity serving national as well as global demands. This will act as a stimulus to our tech savvy young population for gaining skills in this field. Youth Entrepreneurship India has a strong start-up ecosystem. As on 7 February 2022, there were 63,103 start-ups registered by Department for Promotion of Industry and Internal Trade (DPIIT). Indian youth are the torchbearers for creating world class start-ups. The unicorns waved in 2021-22 despite Covid-19, showing the strength of our youth. More than 50 unicorns were formed during the pandemic. With proactive policies for start-ups as announced in the Budget, India has the potential to drive innovation and entrepreneurial temper to create numerous employment opportunities. The Budget lays down decent initiatives on the tax front, with extension of tax benefits for one more year and promoting Ease of Doing Business. Meeting working capital requirements during initial years of operations is tough for start-ups. Thus, tax exemption extended by one more year is a strategic move to support young entrepreneurs. This will also be additional support to the start-ups to reboot from the hardships faced during the pandemic. Ease of Doing Business 2.0 will boost entrepreneurs and foster entrepreneurship significantly. The productivity-linked incentive scheme in 14 sectors with the potential to create 60 lakh new jobs will be a fountainhead for Indian youth which is a much-needed requirement for the growth of these sectors. The Budget outcomes will support young entrepreneurs who are brimming with innovative and creative ideas. The surge in the young working population presents unique possibilities for India’s future with respect to socio-economic growth. If given right opportunity at right time, our nation will be able to harness the potential of youth. Undoubtedly, the Government is rolling out best possible policies and schemes for holistic development of the youth, but more can be done in the upcoming years. Innovative and radical systems need to be developed in the field of education and skill development so that the youth grows academically and cognitively to gain competency for running our nation as future leaders. Swami Vivekananda said, “Arise, awake and stop not till the goal is achieved.” This is a wakeup call for all the stakeholders to create an enabling ecosystem paving way for ample of opportunities for our youth to innovate, create and transcend the shores of their power for economic and social well-being of our country.

Employment and Human Resource

The pandemic has accelerated the adoption of technology, demanded constant innovation, and has changed work environments. Modern technologies like AI, Big Data, IoT, Block Chain, 3D Printing and Design, AR/VR, Robotics, Data Sciences, Quantum Computing, and Cyber Security are a few transforming existing businesses. This has led to the creation of jobs that did not exist in the past and would create numerous unforeseen job roles in times to come. Now, more than ever, existing and new workforce would have to be more agile, adaptable, and would need to constantly upskill their knowledge and skills. The concept of education has transformed from university degrees to life-long learning. Even before the pandemic, in many G20 countries, the composition of employment had started shifting towards jobs that required high level cognitive and socio emotional skills or were characterised by non standardised tasks, while jobs with a high routine content were being automated or off shored to varying degrees. The trend is expected to continue post Covid as well. As Power FICCI Future Skills Report 2020, the five key skills required in the post Covid era for the manufacturing sector are ‘Data Literacy’, ‘Digital and Coding’, ‘Critical thinking’, ‘Creativity and innovation’, and’ Technology knowhow’. The dynamic needs of the industry have been recognised in this Budget and initiatives are being taken to strengthen our potential workforce with 21st-century skills. The Union Budget 2022-23 announced skilling programmes and partnerships with the industry to be reoriented to promote continuous skilling avenues, sustainability, and employability. It also highlights the alignment of the National Skill Qualifications Framework (NSQF) with dynamic industry needs. This is a vital step towards enhancing employability that remains sustainable over a period of time. Some of the new-age skills where the efforts are bound to be focused on are geospatial technologies, drones (UAV/UAS/RPAS) pilot, clean mobility, green energy, genomics, etc., as it aligns with the industry needs. These sunrise sectors will offer tremendous employment opportunities to the skilled workforce in relevant areas. NSQF was developed before the pandemic, and it is an opportune time to upgrade it as per the industry’s requirements. Industry participation may extend beyond designing curriculum and giving their inputs on the National Occupational Standards of the NSQF. This can include preparing the trainers - with the industry experience by partnering with training institutions to run periodic training capacity enhancement programmes, especially in trades and technology of relevance and interest to the employer. The youth will also get opportunities to skill themselves in Industry 4.0 relevant skills and find the right employment opportunities. The need of the hour is to understand the big picture with regards to the evolution of technology and what the megatrends could mean for the ‘world of work’. With the rapidly changing industry environment, learners today need to be equipped with employability skills that are transferable across a broad range of job opportunities and help them modify their approach to solving business problems in dynamic industry environments. Learners should plan for an automated world and acquire the right skills beyond mere technical competence. Emotional intelligence, learning agility, creativity, relationship building, and leadership skills will be much in demand in the times to come to keep pace with the disruption impacting all spheres of our lives. Employment It is estimated that 62 per cent of India’s population falls in the working-age group and roughly 10 million new job seekers are added each year. The country’s current labour force participation rate is around 49 per cent, meaning at only about half the people of working age engage in paid work. To keep up with the growing global pace, India needs to create atleast 90 million non-farm jobs between 2020 and 2030. Technology is making rapid strides, decreasing the dependence on manual labour. However, the employment landscape’ is also witnessing a growing dearth of skilled workforce. Technology and automation will result in a massive reclassification and rebalancing of work. Those workers who perform tasks that cannot be automated will be highly valued, and that means creativity, innovation, imagination, and design skills will figure high up on the employers’ priority agenda. While automation and smart machines are said to replace over 20 million jobs globally by 2030, it is estimated that more than 133 million new jobs will be created as early as 2022. An important phenomenon witnessed amidst pandemic is the increase in demand for remote work that will have a significant long-term impact on the labour market. Globally, one is witnessing four times the number of jobs that offer remote work since March 2020. This trend is also seen from job seekers: the volume of job searches using the “Remote” filter on Linkedln has increased 60% since the beginning of March 2020. The advent of remote work and an increasingly virtual world seems to have reduced barriers for people to connect and build their networks. With the rise of remote work, one of the most exciting trends that one is going to see is a democratisation of opportunity and movement of skills all around the globe. Companies may be able to source diverse talent more easily, especially from groups that are underrepresented in their area, or for skills that are locally less available, through remote- work options. The ‘Digital India’ initiative announced in 2015 was a big move to push forward the agenda of getting the workforce ‘digitally’ skilled and through information technology, empowering citizens, bridging the rural-urban divide, thus improving the government services. As a next step in this direction, the Union Budget 2022-23, has proposed the launch of the Digital Ecosystem for skilling and Livelihood – the DESH- Stack-e-portal. This portal shall aim to empower citizens to skill, reskill or upskill through online training. It will also provide API based trusted skill credentials, payment, and discovery layers to find relevant jobs and entrepreneurial opportunities. Harnessing the digital revolution could be the key to reducing India’s skill gap and actualising the government’s vision of a high growth, high-productivity, and middle income nation. The interlinking of Udyam (a self declaration portal for entrepreneurs created by MSME), e- SHRAM (a centralised databased of unorganised workers created by MoLE), NCS (a portal to connect job seekers, job providers, skill providers, career counsellors created by MoLE), and ASEEM (a portal to facilitate the supply of skilled workforce with the market demand created by MSDE) has come at an opportune time. They will now perform as portals with live, organic data based, providing G2C, B2C and B2B services. These service will relate to credit facilitation, skilling and recruitment to formalise the economy further and enhance entrepreneurial opportunities for all. Human Resource Development Human resource acts as the driving force in the growth of a nation. The skill sets, competencies, knowledge, and attitude are some of the key attributes that help find affordable solutions to complex socio-economic problems. According to the ‘OECD Future of Education and Skills Project 2030’, “We need to replace old education standards with an educational framework that combines knowledge with the 21st century skills of creativity, critical thinking communication and collaboration.” This won’t be achieved by simply moving classes from the chalkboard to the virtual mode, but by radically transforming the way we teach a learn science and technology skills, from one-way content dissemination and memorisation to personalised, sett- directed learning. India’s vision of becoming a USD 5 trillion economy is intricately linked with developing the human capital and managing it most efficiently. The urban human resource, through its effective contribution to industrial growth, would play a pivotal role in ensuring the quantum leap in our GDP. It is estimated that by 2047 when India celebrates 100 years of its independence, nearly half of its population will live in urban areas. To facilitate this transition, we have to face twin challenges; (i) orderly planning of our cities, and (ii) developing our human resources to harness the demographic dividend by engaging our youth towards societal, economic growth. Though literacy rate is higher in urban India (close to 88%), however formal vocational /technical training amongst youth (15-59 years) and working age population (15-59 years) is found to be low as shown in the graph. There is a need to involve employers in the delivery of education and designing the education, Skilling Employment, and Entrepreneurship (ESEE) ecosystem. This approach needs to be applied to the entire life cycle of the learners, right from the elementary stage to the higher education level and going up till the employment stage. We have to enhance our ESEE system further so that our youth are equipped with a multi-disciplinary approach to pave the socio economic progress of the cities as well as the upcoming rural settlements. The National Education Policy (NEP) 2020 has highlighted to create an enabling framework that helps in doing away with “rote learning” and facilitates acculturation of an enquiry based project led ecosystem of education that no only enhances the learning outcomes but also helps in rendering a more rounded and holistic development of individuals. The NEP while highlighting the need for a multidisciplinary approach, also focused on the significance of liberal arts education that helps in developing all capacities of human beings in an integrated manner, viz. intellectual, aesthetic, social, physical, emotional and moral. In the current situation, there are a few fundamental questions before the education community with regards to human resource development. How can we make students more resilient? How can we prepare them for jobs that have not yet been created? How can we equip them to thrive man interconnected world where they need to understand and appreciate different perspectives and worldviews, interact respectfully with others, and take responsible action towards sustainability and collective well-being? The future, by definition is unpredictable, but by being attuned to some of the trends now sweeping across the world- we can learn- and help students learn- to adapt to, thrive in, and even shape whatever the future holds.

Green Economy

The Finance Minister in her Budget -2022-23 speech, stressed that climate change was being one of the highest external negativities facing the country and the Government was committed to a strategy of low carbon footprint. Implementation of clean air policy was undertaken considering the challenge posed due to growing air pollution reported in the large cities. This year’s budget announcements underlined the importance accorded to sustainability and decarbonisation goals by the Government. Implementation of clean air policy was undertaken considering the challenge posed due to growing air pollution reported in the large cities. This would enable emission levels under check through an effective monitoring mechanism in place. However, despite three years into the launch of NCAP in 2019, analysis of pollution levels show there has been a marginal decrease in pollution levels in targeted cities. It also shows an insufficient expenditure of funds by the States to ensure air pollution reduction. The institutions engaged in regulatory functioning both at the Central Govt and States level need to be strengthened in maintaining environmental regulation standards in large cities / urban centres. To a large extent, an effective regulation system will reduce pollution at various levels.

Budgetary Allocation

Apart from estimates of expenditure and revenue, the annual budget exercise provides directions to the economic policy measures and articulates major initiatives of the incumbent government. In 2022-23, the Ministry of Environment, Forests and Climate Change (MoEFCC) has been allocated Rs 3030 crore, which is an annual increase of 5.6% over the budget allocation in 2021-22. In 2021-22, the Ministry was allocated Rs 2869 crore, which is decreased by Rs 349 crore (12%) at the revised estimates stage. This includes a reduction in the budget towards (i) Environment, Forestry, and Wildlife (reduced by Rs 96 crore), (ii) Establishment Expenditure of the Centre (reduced by Rs 71.5 crore), and (iii) Control of Pollution (reduced by Rs 80 crore), among others. This may be due to a change in the spending priorities of the government over the year considering the pandemic situation. For Climate Change Action Plan, an outlay of Rs 30 crore has been made, which is the same as in the current fiscal whereas Rs 460 crore was allotted to Control of Pollution as against Rs 470 crore in the last budget. The Scheme-Control of Pollution has been conceptualised to provide financial assistance to Pollution control Boards/Committees and financing to National Clean Air Programme (NCAP). There is no mention of budget allocation earmarked for NCAP in the expenditure budget. However, the budget allocation for ‘Hazardous Substances Management’ reduced to Rs 4.5 crore from already a meagre Rs 6 crore while R&D for conservation and development scheme also reduced to Rs 4.75 crore. Allocation for the Central Pollution Control Board (CPCB), responsible for tackling pollution around the country, remained static at Rs 100 crore. The allocation for National Mission for a Green India, a Centrally Sponsored Scheme (CSS), has been raised from Rs 290 crore (in this fiscal) to Rs 361 crore. In the wildlife arena, the government-initiated projects — Project Tiger and Project Elephant saw some changes with the former getting reduced by Rs 30 crore and the other being reduced by Rs 1 crore. The allocation in this fiscal of Rs 250 crore for Project Tiger, an initiative for conserving the wildcat (reduced to Rs 220 crore) is enhanced to Rs 300 crore in 2022-23. Allocation of Rs 33 crore for Project Elephant has been made (in 2021-22), which was launched to conserve jumbos across the country, is raised to Rs 35 crore. The budget allocation for the National Tiger Conservation Authority (NTCA), a statutory body under the Ministry of MoEFCC responsible for tiger census and conservation of wild cats, is Rs 10 crore which remains the same as in the current fiscal. The allocation for the National Coastal Mission has been made Rs 195 crore in the year 2022-23 compared to Rs 200 crore in the current fiscal. Under the National Coastal Mission, MoEFCC is responsible to ensure livelihood security of coastal communities including fisher folks to conserve, protect the coastal stretches, and to promote sustainable development based on scientific principles.

Policy Initiatives

The Finance Minister allocated Rs 1950 crore for Production Link Initiative for the manufacture of high- efficiency modules with primary to fully integrated manufacturing units from polysilicon to solar PV modules. Calling the green economy a ‘sunrise economy;, she said ‘the circular economy transition will help productivity enhancement and job creation.’ She announced that the Government would introduce a policy for battery swapping. This would give a boost to the domestic EV industry especially on the public transport front as it would provide an affordable solution to the issue of charging anxiety. Having more EVs on the roads is an important part of the Government s plan to reduce carbon emissions from transport. It is pointed out that infrastructure is needed to make EVs mainstream and improve their use case especially in the public transport and goods delivery segments. The FM further announced that unblended fuel shall attract an additional differential excise duty of Rs 2 per litre. Petrol not blended with ethanol will be costlier from October 2022. The blending of fuel is a priority of the Govt. The average blending ratio for petrol sold by State- run companies is currently 8% and is targeted to rise to 20% by 2025. However, it is observed that ethanol availability is not uniform and States far away from production centres are likely to have lower average blending ratios. Other initiatives in the Budget announced include: 5% to 7% biomass pellets will be co-fired in thermal power plants resulting in C02 savings of 38 MMT annually. This will also help avoid stubble burning in the northern States. Additionally, energy efficiency and savings measures will be promoted. This will be done in large commercial buildings through the business model; four pilot projects for coal gasification and conversion of coal into chemicals will be established, and agro forestry and private forestry will be implemented. Financial support will be provided to farmers belonging to Scheduled Castes and Scheduled Tribes who want to take up agroforestry under the scheme. It may be stated that the circular economy transition is expected to help in productivity enhancement in a sustainable manner. The action plans for ten sectors such as electronic waste, end of life vehicles, used oil waste, and toxic and hazardous industrial waste are in pipeline. Further, pushing for a circular economy and expanded producer responsibility for ten sectors will provide opportunities for sustainability start-ups and ultimately help reduce India s carbon footprint. Experts, by and large, have welcomed the FM’s announcements on the transition to a low carbon economy. However, according to Centre for Science and Environment (CSE)’s assessment, coal gasification actually produces more carbon dioxide than a conventional coal-powered thermal power plant. Also, coal gasification plants are costlier than conventional power plants. Taking up R&D, recruitment of professionals having domain knowledge, and provisioning of infrastructure is necessary where budget provisions need to be stepped up. (For instance, the budgetary allocations for CPCB have stagnated at Rs 100 crore for the last 4 years. CPCB is assigned the task of monitoring air and water quality and also checking polluting industrial or commercial units besides supporting SPCBs which carry out monitoring, permitting, and enforcing functions at the state levels). Closing down of coal-fired power plants not meeting prescribed standards was earlier announced by the FM, but Budget 2022-2023 didn’t mention anything on the closure of inefficient fossil fuel plants. India pledged in Paris to generate 40% of India’s power capacity from non-fossil fuel sources and create an additional ‘carbon sink of 2.5-3 billion tonnes of carbon dioxide equivalent by 2030. According to Central Electricity Authority (CEA), as of 31 December 2021, the share of non- fossil sources in the installed capacity of electricity generation was 40.20%. The report of IFSR 2021, points out that forest cover has been increasing in India. However, the country has lost more than 1600 sq km of natural forests in this period. But some of the loss has been compensated by an improvement of the health in some of the protected areas and reserve forests while a large part of the increase is due to more areas coming from under the plantations which experts argue are no substitute for natural forests when it comes to providing critical ecological services. The reported loss of 1000 sq km of natural forests in the north-eastern States should cause concern. GIM has to be aggressively and effectively implemented throughout the States with quality planting materials. The research activities into restoring biodiversity, conserving landscapes, and preserving the natural balance biodiversity pan India will have to be encouraged.

Modern and Profitable Agriculture

In India, agriculture is the foremost sector that remained positive and robust amid an unprecedented crisis of the pandemic. It maintained a seamless supply chain of essential food item across the country and also successfully met the increased global food demands. Backed by good monsoon and timely interventions by the Government, the agriculture sector registered a growth of 3.6 per cent in 2020-21, which improved to 3.9 per cent in 2021.22. As the largest employer of workforce, this sector contributed a sizeable 18.8 per cent in (2021-22) in Gross value Added (GVA) of the country. Simultaneous buoyant growth is allied sectors, namely animal husbandry, dairying and fisheries also helped the agriculture sector perform well. Post-pandemic, agriculture has emerged as the lead player in the recovery process of the national economy. In the Union Budget (2022-23), the agriculture sector has been given a major boost to make it more profitable, sustainable, and modern with the welfare of farmers at the core. Presenting the Budget, the Finance Minister underlined the importance of agriculture by announcing a series of new provisions under the broad category of ‘Inclusive Development.’

Stepping up Allocations

The budget allocation for the Ministry of Agriculture and Farmers Welfare has been raised by 4.5 per cent to Rs 1,32,513 crore for 2022-23 fiscal. If we look into budget allocation for major schemes, Rashtriya Krishi Vikas Yojana (RKVY) got the steepest hike to Rs 10,433 crore (2022-23) from previous Rs 2,000 crore (2021-22, RE). The Government has reintroduced Krishi Unnati Yojana (KUY) this year with a different set of 10 schemes and a budgetary allocation of Rs 7,183 crore. About 26 per cent of these funds are for the development horticulture sector, whereas 21 per cent of KUY funds are allocated to palm, edible oil, and oilseeds. The ambitious welfare Scheme PM-KISAN continues with an allocation of Rs 6,75,000 crore, whereas PM-Fasal Bima Yojana (PMFBY) has been allocated Rs 15,500 crore. The Government has renewed its thrust on providing better prices to farmers for their produce by allocating 1,500 crore for Market Intervention Scheme. Recognizing the pivotal role of allied sectors in doubling farmer’s income, the Government has increased budget allocation for the Ministry of Fisheries, Animal Husbandry and Dairying by 44 per cent. In the total allocation of Rs. 6407.31 crore, the budget for livestock has been increased by 40 per cent and for central sector schemes have been increased by 48 per cent. An increase of 20 per cent in the budget for Rashtriya Gokul Mission and National Programme for Dairy Development will increase the productivity of the indigenous bovine population and quality milk production, benefitting more than eight crore dairy farmers. Almost 60 per cent enhancement in fund allocation for Livestock Health and Disease Control will ensure healthier livestock and healthier India. Food processing is another sunrise sector holding promise to increase farmers income substantially. Hence, the Finance Minister announced the provision of a comprehensive package to help farmers select suitable varieties of fruits and vegetables and to use appropriate production and harvesting techniques. The Budget also proposed an allocation of Rs. 2941.99 crore, which is 2.25 times or 126 per cent higher than last year. The Government has earlier released the draft National Food Processing Policy to increase investment in this sector and promote international competitiveness. In Budget proposals, the Government has reiterated its commitment to continue with the MSP (Minimum Support Price) scheme for procurement to crops. The Finance Minister announced ‘the procurement of wheat in rabi (2021-22) and the estimated procurement of paddy in kharif (2021-22) will cover 1208 lakh metric tonnes of wheat and paddy from 163 lakh farmers. Rs. 2.37 lakh crore will be the direct payment of MSP value to their accounts’, she added. Through MSP operations the Government ensures remunerative prices to farmers by procuring produce directly from growers at a predetermined price. Since 2018- 19, the Government to keeping MSP at the level of one and half times the cost of production. Currently, MSP’s are fixed and announced for 22 mandated crops that include 14 kharif crops, 6 rabi crops and two commercial crops. The Food Corporation of India (FCI) and designated state agencies procure food grains from farmers and manage storage and distribution for supply to more than 80 crore beneficiaries at a highly subsidized rate. Such agencies also maintain buffer stocks of food grains for dealing with exigencies. In the Budget proposals, the Government has also raised the farm credit target to Rs. 18 lakh crore for 2022-23 from Rs. 16.50 lakh crore during the last fiscal. Under Atmanirbhar Bharat Abhiyaan, 2.70 crore eligible farmers have already been issued Kisan Credit Cards (KCC) to avail concessional credit, and in addition, over 14 lakh fresh KCCs have been sanctioned for animal husbandry and dairying farmers.

Towards High-tech Revolution

Aiming high–tech revolution to increase efficiency and productivity, the Finance Minister announced a slew of measures for promoting technology usage in farming systems. Regarding the use of drones (UAV–Unmanned Aerial Vehicle), she said, ‘use of ‘Kishan Drones’ will be promoted for crop assessment, digitization of land records, spraying of insecticides, and nutrients.’ Various studies and experiences have shown that agriculture drones empower farmers to adapt to the specific environment and make judicious choices accordingly. The field data so gathered helps regulate crop health, crop treatment, crop scouting irrigation, soil analysis, and crop damage assessments. The ultimate outcome of drone usage translates into higher crop yields with minimization of time, labour and expenses. The Government’s ‘DigitalSky Platform’ is facilitating use of drones in various sectors, including agriculture, by providing single window online clearances for the operation of drones. Recently, the Ministry of Agriculture and Farmers Welfare has issued funding guidelines to make drone technology affordable by assisting in the purchase, hiring and demonstration of agriculture drones. Under a Centrally sponsored Scheme, there is a provision for granting upto 100 per cent or Rs. 10 lakh as funding for the purchase of drones by ICAR (Indian Council of Agricultural Research) institutions, KVKs (Krishi Vigyan Kendras), and State Agricultural Universities. The scheme also provisions 75 per cent funding for drone purchase to FPOs (Farmer Producer Organizations); and 40 per cent or upto Rs. 4 lakhs for specified Custom Hiring Centres. Considering constraints in the proliferation of technologies at the ground level, the Government has proposed to launch a new scheme in PPP mode under which farmers will be provided with digital and hi-tech services. At the implementation level, public sector research and extension institutions will be engaged along with private agri tech players and stakeholders of the agricultural value chain. Further, to promote start-up ecosystem in agriculture, a fund with blended capital will be facilitated through NABARD under the co-investment model. This is to finance start-ups for agriculture and rural enterprises relevant for the farm produce value chain. Elaborating on the role of start ups, the Finance Minister said that, ‘the activities for these start-ups will include, inter alia, support for FPOs, machinery for farmers on rental basis at farm level, and technology including IT based support.‘ This will strengthen the ongoing start-up development programmes of the Government being implemented through Ministries of Agriculture, Fisheries, Animal Husbandry and Dairying; and Science and Technology. Along with technology push, the Government is also keen to develop competent human resources to meet the future needs of technology driven agriculture. As per the Budget Statement, ‘states will be encouraged to revise syllabi of agricultural universities to meet the needs of natural, zero budget and organic agriculture, modern day agriculture, value addition and management.’ Meanwhile, ICAR has taken the lead by initiating the process to develop a curriculum to include zero-budget natural farming in the syllabus at both undergraduate and post graduate levels. The Agriculture Skill Council of India is also helping transform Indian agriculture through developing the skills of country manpower in frontier and emerging areas of agriculture and allied sectors. The Government is promoting natural farming for quite some time now to make agriculture free from chemical fertilizers and pesticides usage. In the budget proposal, the Finance Minister made a big announcement, ‘chemical – free natural farming will be promoted throughout the country, with a focus on farmers’ lands in km wide corridors along river Ganga at the first stage.’ Natural farming systems restore soil fertility and soil organic matter which makes agricultural production sustainable, climate friendly and cost effective. The Government is supporting and promoting natural farming through a dedicated scheme of ‘Bhartiya Prakritik Krishi Paddhati Programme’ (BPKP) which calls for eco-friendly processes in farms. The scheme also provides financial assistance of Rs. 1,22,00 per hectare for three years for cluster formation, capacity building, and continuous handholding by trained personnel, certification, and residue analysis. Contrary to record production of food grains (305.65 million tonnes, 4 th advance estimates for 2020-21), vegetable oil production in the country is lagging behind in its consumption. The situation has necessitated the import of edible oils to meet increasing domestic demand. It’s an area of major concern for the Government due to heavy import bills. ‘To reduce our dependence on import of oilseeds, a rationalized and comprehensive scheme to increase domestic production of oilseeds will be implemented/ announced Finance Minister in the budget proposals. However, the Government is already on a mission to increase the production and productivity of oilseeds since 2018-19. The National Food Security Mission- Oilseeds is supporting oilseeds growers across the country through critical interventions such as production and distribution to foundation and certified seeds, and distribution of seed mini-kits to the latest high-yielding varieties. Further, a National Mission on Edible Oils- Oil Palm was launched in August 2021 aiming for enhancement in the area of oil palm through price incentives. Oil Palm is a high potential crop that produces 10 to 46 times more oil per hectare compared to other oilseeds crops. The newly proposed comprehensive scheme is likely to make a paradigm shift in oilseed production in the country. Despite best efforts, the share of net irrigated area accounts only for about 49 percent of the net sown area in the country. Considering the potential of river-linking projects in the augmentation of irrigated areas, the Finance Minister said, ‘implementation of the Ken- Betwa Link Project, at an estimated cost of Rs. 41,605 crore will be taken up, ‘Its aim is to provide irrigation benefits to 9.08 lakh hectares of agricultural land. It will also provide drinking water supply for 62 lakh people in addition to 103 MW of hydro and 27 MW of solar projects. She added that allocations of Rs. 4,300 crore in RE 2021-22 and Rs. 1-100 crore in 2022-23 have been made for this project. She further announced that the draft DPRs of fiver rivers links (Damanganga-Pinjal, Par-Tapi-Narmada, Godavari-Krishna, Krishna – Pennar and Pennar-Cauvery) have been finalised. The centre will provide support for implementation after the consensus among beneficiary states. Agriculture and allied sectors are one of the main pillars of the national economy with far- reaching impacts on various other economic sectors. Budget proposals would go a long way in ensuring that agriculture continues to contribute significantly to India’s growth story. The present Budget is a right step in realising the ultimate goal of ‘Atmanirbhar Bharat’ with higher agricultural growth and enhanced income for farmers.

International Year of Millets - 2023

Millets, popularly called coarse grains, are a collective group of small-seeded annual grasses that are mainly grown as food crops. These high-nutritive value crops are rich in proteins, fibres, vitamins, minerals, and many important micronutrients. Cultivated in over 130 countries, millets are climate-resilient nutri-cereals suitable for harsh weather conditions and can flourish in resource-poor situations. Despite these virtues, millets remained in oblivion due to many socio-economic and cultural factors. But, due to the recent spurt in health-awareness worldwide, the demand for millets and millet-based food/snack products is rising globally. This is an excellent business opportunity in India with the potential to raise farmers’ income at low investments. To place millets on world-map, the Government of India moved a resolution in UN General Assembly to declare 2023 as the International Year of Millets. Supported by 70 countries, the proposal got unanimous approval from all the 193 members of the UN General Assembly in April 2021. The resolution is intended to increase public awareness of the health benefits of millets and their suitability for cultivation under tough conditions. In the above context, the Finance Minister in the recent budget proposal announced that ‘support will be provided for post-harvest value addition enhancing domestic consumption, and for branding millet products nationally and internationally. In India, a variety of millets (sorghum, pearl millet, finger millet,' and small millets) are grown mainly under rainfed / dryland conditions and struggle with issues of lower productivity. The ICAR-Indian Institute of Millets Research at Hyderabad is the key R&D institution of the Government of India addressing critical issues in production and product development technologies. Apart from developing high-yielding varieties and an improved package of practices, the Institute is pursuing the mission to create markets for the long-term economic sustainability of millet production systems. Studies indicate their significant role in the conservation of biodiversity, human and animal nutrition, industrial uses, and therapeutic diets in the form of functional foods. These nutri-cereals can usher in food, feed, fodder, nutritional and livelihood security to all in dry land ecosystems. The announcement of a comprehensive scheme to boost branding, value addition, and processing of millets will go a long way in enhancing local consumption and exports to meet the global demand. ‘Vocal for Local’ can change the fortune of millions of small farmers engaged in millet production.