A look at how government performed on Budget 2022 promises

In less than a month, finance minister Nirmala Sitharaman will rise in parliament to present the Union Budget. In the eleven months since the last Budget was presented, the government has made headway on some of last year's proposals but is struggling on a few others.

At the time of Budget 2022, India was coming out of strict restrictions imposed due to the pandemic, so the Budget focused on getting India’s growth engines back online. However, what no one anticipated was Russia’s invasion of Ukraine less than a month later or the spillover effects this would have globally.

India has done quite well on some of the targets, for instance, the fiscal deficit. Budget 2022 had set a fiscal deficit target of 6.4 percent and as things stand today, the government looks to be on track to achieve the level.

A big reason for this is tax buoyancy. Budget 2022 had estimated direct tax collections of Rs 14.20 lakh crore for FY23, which was higher than the target for FY22 of Rs 14.10 lakh crore. After adjusting for refunds, the net direct tax collections this fiscal year so far stand at Rs 11.35 lakh crore or 80 percent of the target. With three months left in the fiscal year, the target could be surpassed too.

Indirect tax collections have also offered strong support. GST collections have averaged above Rs 1.4 lakh crore per month, which puts the government on a comfortable footing. Including December collections, GST mop-up stands at Rs 13.4 lakh crore in FY23, with the festive season turning in nearly 20 percent higher mop-up than a year ago.

The government also seems set to deliver its promise of an aggressive Rs 7.50 lakh crore in capital expenditure. Some of its other hits include the introduction of a sovereign digital currency for which the Reserve Bank of India (RBI) has launched pilots, forward movement on PLI schemes for 14 sectors, and spectrum auctions for the rollout of 5G services have helped the government.

However, there are still a few areas where the government is in danger of missing its Budget targets. The biggest by far is economic growth. With inflation prompting a string of aggressive rate hikes and global tremors finding their way to India, the big headline number of 9.2 percent growth is no longer realistic. The most recent RBI projection says India is poised to grow at 6.8 percent in FY23.

Another miss is the replacement of the Special Economic Zones (SEZ) Act with new legislation that would enable states to become partners, but the DESH (The Development of Enterprises and Services Hub) bill remains stuck in inter-ministerial discussions.

The government also had trouble containing the expenditure, especially the high outflows on account of its free food scheme, fertiliser subsidies and a larger import bill. Spending on all of these three has exceeded the budget estimates. The government has tried to control this by merging PM Garib Kalyan Anna Yojana (PMGKAY) with the National Food Security Act (NFSA) to bring down the food subsidy bill.

Another area where the government has not managed to meet its estimates is divestment. Against a target of Rs 65,000 crore, the government has managed to divest only Rs 31,106 crore. The government has also not been able to introduce the Banking Amendments Law bill, which would enable the privatisation of banks, so the promise to privatise at least two public sector banks this year has not been kept.

The government has also not made much headway in converging the old and new direct tax regimes.