Budget looks very pragmatic, conservative, growth-oriented for Indian economy

FPJ Web DeskUpdated: Saturday, February 05, 2022, 12:00 PM IST
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The finance minister reiterated government's commitment to the policy of stable and predictable tax regime | Photo by picjumbo.com from Pexels

The extension to Emergency Credit Line Guarantee Scheme (ECLGS) was expected and needed to ensure the growth and survival of MSME, and other industry sectors.

Experts weigh in:

Ram Iyer, Founder & CEO, Vayana Network, India's largest trade finance platform.

The finance minister reiterated government's commitment to the policy of stable and predictable tax regime. The announcements continued to build on the themes of the previous year, such as infrastructure, education, health, housing and ease of doing business. The substantial increase in capex is expected to have a multiplier effect and a tightrope to manage between growth and inflation.

The extension to Emergency Credit Line Guarantee Scheme (ECLGS) was expected and needed to ensure the growth and survival of MSMEs. Linking of various MSME portals, and initiatives announced towards skill development, credit and market access reflect Govt.’s commitment towards the growth of the critical sector.

Shiva Kabra, Joint. Managing Director, Control Print Limited

The Budget impetus on growth with GDP growth of 9.2 percent for FY 2022-23 will accelerate the Coding&Marking (C&M) industry. Increased budget for "Har ghar nal ka jal" scheme will increase the demand for pipes resulting in C&M growth. MSME support for resilience will encourage formalization of work culture and better compliances in this sector resulting in capacity expansion and use of C&M equipment. Atmanirbhar Bharat, Make in India, PPP focus and increased government spend on Capex to 7.5 lakh crores will result in creating demand cycle and drivers for growth for domestic production and assist C&M traction.

Harsh Shah, a co-founder of Fynd, omnichannel platform

Tax on virtual goods is indirectly good as it now brings digital currency under regulatory supervision, a very positive push for cryptocurrency and Web 3.0. This would incentivize startups to create more products & services in the blockchain ecosystem. High GST collection is also a good sign, it gives the govt appropriate resources to boost this long-term plan. The cap on surcharge on capital gains on any asset is a great thing especially for startup ESOP holders.

Sanjay Bhatia, CEO and Co-founder of Freightwalla.

Supply chain logistics being one of the focal points in the Budget hints towards the government's plan to boost the shipping and logistics industry. As anticipated, it encompassed multiple anchor points to initiate the Gati Shakti master plan, which would bring about a shift in India's logistics landscape. The program is a step in the right direction to strengthen our country's supply-chain ecosystem by integrating multiple logistics nodes and ensuring seamless multimodal connectivity and efficiency. Additionally, 100 cargo terminals will ease the burden on the existing ones. Besides, the development of multimodal logistics parks will reduce logistics costs thus improving distribution, storage and freight aggregation.

Amit Gupta, Co-founder and CEO, gogoBus

Taking up the ‘Holistic Infrastructure’ focused approach under PM Gati Shakti Master Plan is a welcome move. Finance Minister Nirmala Sitharaman has set the right context for the revival of the road-mobility industry, which got severely impacted due to the pandemic. In these difficult times, focusing on productivity, climate action, financing, and investments under this scheme is going to provide sustenance to this already struggling industry. Also, the focus of government for the enhancement of the National Highway network by another 15% is astoundingly motivating. Both these announcements are encouraging, especially for the shared road-mobility industry, which is sustainable and contributes positively towards the environment.

Viraj Vyas,Technical & Derivatives analyst, Ashika Stock Broking:

The Union Budget overall looks positive and is focussed on an economicrecovery mindset, with the pandemic and its repercussions as its premise. However, the Budget looks quite moderate, over what was anticipated. Nifty Index has been undergoing price and time correction since October 2021. While the Budget is usually a strong event, this year’s Budget was on a tepid note. The major theme seems positioned in favour of the infrastructure development in India. What particularly stood out was the gusto with which the intraday dip was bought into might signal a change in stance from market participants. Going forward, I would continue to be skeptical on the Index if 18,300-18,500 level is not taken out with a price intense move. Having said that, few pockets in the market look attractive like the Cement, Capital Goods and specialty chemicals space and I would continue to watch stocks in this space. Also, on a positive note, there has been no tax increase, which also comes as a relief.

Vivek Soni, Partner and National Leader – PE, EY.

Budget2022 announcement to set up an expert panel to examine ‘appropriate measures’ for scaling up investments by PE/ VC funds is a very welcome step. We expect this expert panel to further smoothen the process of fund deployment by the alternative investment industry across asset classes and aid in the growth of the Indian PE/VC industry, an important pillar to the Indian economy.

Paras Bothra, CIO, Ashika India Alpha Fund

This Union Budget has been a positive one with an emphasis on capex boost, which defines the government’s pro-growth stance. The markets are reacting favourably to the budget. If you look at the capital expenditures, that has been raised to 35.4 percemt to fund various infrastructure projects. That bodes well for a balanced and rapid recovery of the economy. The public investment will aid a very resilient India to come out of the pandemic distress. However, the focus on consumption is less emphatic as compared to the capex part of the economy. The fiscal deficit also remains a bit elevated, though it is going to be lower than last year. So, infrastructure, capital goods, manufacturing led companies who have been given investment too, along with the solar production-linked incentive (PLI) scheme, affordable housing amongst others are the areas where the Government has laid major emphasis.

Amit Jain, CEO and Co-Founder, Ashika Wealth Management

This Budget looks to be very pragmatic , conservative and growth-oriented for the Indian cconomy. Apparently, it looks like that government is trying to under commit and over deliver on both the economic and fiscal front. If I summarise the Budget 2022-23 theme, then I will say it is a “Green-tech “ budget with “ self-sufficiency” as the underlying theme. In my view , in this era of Deglobalisation & re-emerging Geo-political power game between Western World on one side & Russia, China on other side, India has to be a self-reliant Economy by 2040. This Budget takes a step further in that direction along with Long term directional move for the Green Energy Economy and making India a manufacturing hub in the medium to long term.

Ashutosh Mishra, Head of Research-Institutional Equity, Ashika Stock Broking

The Union Budget of 2022 is a very capital-intensive budget and bodes well towards the government’s vision of pushing infrastructure and manufacturing as two of the key sectors to be intensified. The greater emphasis on commitments for ‘Made in India’ is revenue generating as well as creating employment opportunities all over the country. With progressive measures being taken towards bolstering the digital transformation in the country, there will be positive effects in sectors of education, healthcare, fintech, banking, and upskilling. The fiscal deficit is estimated at 6.8 percent of GDP in FY22 (vs 9.5 percent in FY21). The government intends to narrow this to below 4.5 percent of GDP by FY26. With the setting up of a DFI with initial capital of Rs 200 billion to finance capex, and continuing the PLI schemes, the government is committing itself to a growth manifesto and a holistic budget that is futuristic and not just limited to a fiscal year.

Rasesh Seth, Founder, Nextyn, The Future of On-Demand Consulting

“With the rise in the number of unicorns in 2021, the Government, in their budget must consider the immense potential of the start-up community to help attain its goal of the single largest economy in the world. The Government must be committed to building a steady digital ecosystem capable of supporting this astronomical growth. They must also ensure seamless access to funding through government schemes and favourable taxation rates for start-ups at various stages of growth. The government must work on simplifying procedures for foreign investments, and launch schemes to attract International start-ups to investment and create employment in the country.

Niraali Parekh, Founder and Creative Director, Bokaap Design

The tech and design sector is eager to know what the upcoming Budget holds. I hope the government can ease access to resources, funds, and capital to startups and SMEs entrepreneurs in this space. For example, although COVID has boosted work in the tech space, businesses have curtailed their expenses in design services potentially compromising on quality. With a boost in the digital economy, UX/UI Design is more relevant than ever before. Experienced UX/UI talent in India is opting for remote jobs with American companies with higher-paying capacity or heavily funded startups. The incentives will bridge the gap between expectations and investment in branding and UX/UI services for small and medium-sized businesses. Eventually boosting studios to hire and retain the right talent and improve effectiveness without creating burnout.”

Debashis Roy, (Director) Infomatics Services Pvt. Ltd

"With the Union Budget 2022-23, GOI has taken positive steps in providing further impetus to Fintech & Digital Banking. With a goal of having 75 digital banking systems in 75 districts by scheduled commercial banks is a welcome move. Introduction of blockchain technology in the 'Digital Rupee' signals India's technological adoption in keeping pace with forward looking economies. Transparency in transactions and accounting of all fund movements are two prominent advantages of digital currencies, as they reduce cash transactions which in turn helps in countering black money. It is unclear yet whether private digital currencies will be allowed to compete with the rupee in India."

Infrastructure Sector - Pradeep Misra, CMD, Rudrabhishek Enterprises Limited

While keeping focus on growth, the Hon’ble FM has ensured that the budget is also inclusive in nature. It takes care of the specific sectors such as hospitality and education that have been deeply impacted by the pandemic. The special focus on PM Gati Shakti scheme will have a multiplier effect on the economy. The government’s target of expanding the road network by 25000 kms through an investment of INR 20000 crore in 2022-23 will strengthen the infrastructure at the grassroots levels. The announcement of Parvatmala scheme should fuel the development of eco-friendly tourism in the hilly, remote and ecologically fragile areas. The investment of INR 60000 crore for tap water connections scheme will be the boon for millions of Indians, especially among the economically weaker section. Additionally, the 400 Vande-Bharat trains will boost the land-transport. The crucial thing will be rolling out of projects on quicker pace and ensuring that the public private partnership programs are designed in a way that supports the companies involved in infrastructure sector, specifically the MSMEs.

It is good to see the continued emphasis on PMAY scheme as Rs. 48000 crores have been allocated with objective of completing 80 lakh houses for identified beneficiaries. The formation of high-level committee for urban capacity building and planning implementation is very welcome move. The increasing urbanization needs a very structured approach for cities’ sustainable growth over long time-frame.

The fiscal deficit pegged at 6.4% of GDP needs to be kept on watch. The government’s plan of disinvestment could have been elaborated further for clarity of industry. Also the special push much needed by the Real Estate industry as a whole is not addressed in the budget. We can expect follow-up announcements for greater push to the sector.

Ravi Saxena, MD and Co-Founder, Wonderchef

"The Union budget 2022 gives confidence to the business community as it focuses on building strategic strengths rather than taking short term and fiscally deviant populist measures. The FM has avoided giving in to the pressure of the upcoming assembly elections. Digital inclusiveness for citizens of all classes, increased capital expenditure on infrastructure, push for logistics betterment with continued development of railways and highways, boost to the EV industry with standardised norms for battery swapping, charging and leasing, and easing the compliance burdens are the measures that are essential for business growth in India. One station - One product is an incredibly powerful idea that seems to be getting lost in the din of seeking short-term tax sops. An equally powerful and progressive thought is the formation of National digital health ecosystem which recognises mental health as an area of focus for the first time. MSME’s will benefit from the ratings programme that’s being rolled out. It will give them better and more fair access to loans and other financial support. Personally is felt most excited by the commitment to invest 25 per cent defence R&D budget with start-ups and academic institutions. This has been a big gap forever in India and is bound to give further impetus to local defence sourcing.

Vishal Gupta, Co-Founder, Brands2Life

This digital budget is truly a strategic one which not only envisions strengthening the fundamentals of the country but also steers the economic growth mechanism through a lens of sustainability. The futuristic approach of the government can be attributed to the factors like emphasis on increasing Capital expenditure, Digital inclusiveness, Modernization of Infrastructure, Easing Compliances and Financial empowerment. This further fuels the confidence among the business fraternity to build an ecosystem that is Robust, Global and Progressive.

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