Several commentators have lauded the recently presented Budget 2022-23 as a ‘growth budget’, on account of the large allocations made for capital expenditure on public infrastructure. On the other hand, concerns have been expressed about the Budget’s potential to create jobs for the masses, allay inflation worries, and strengthen social sectors such as health and education. Should we be optimistic or cautious? In this edition of I4I Conversations, Ashok Kotwal (Editor-in-Chief, Ideas for India) speaks with Pronab Sen (IGC India) to dissect the various policies and proposals in the Budget, and deliberate on the outlook for the Indian Economy.

Dr Sen explains that the rhetoric around the Budget is mixing up accounting and economic classifications in the context of the announcement of 35% increase in public capex, why we cannot think of infrastructure as a homogenous activity in terms of the intensity of employment generation, how the support for MSMEs may be cherry-picking the units that have survived and the need for measures such as Mudra loans that can revive activity in the sector, the performance-linked incentive scheme mainly being for the corporate sector and any ‘trickle-down’ depending on backward linkages with the MSMEs where the bulk of jobs are actually created, the government’s protectionism stance and possible impact on foreign investment, shifting responsibilities from the Centre to the states for not just public service delivery but also financing of ‘state subjects’ such as agriculture, health and education, India’s K-shaped recovery and the corporate and informal sector relationship becoming more unbalanced, why the latest decision of the Monetary Policy Committee of the Reserve Bank of India is surprising, and the unstated roll-back of both fiscal and monetary policies.

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Also available as a video.

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