Budget for rejuvenation

March 30, 2022 3:31 pm

New opportunities to reform the economy for next 25 years, budget focuses on tech, infra development and productivity enhancement addressing MSME and small businesses.

This year, the Union Budget has been one of recovery and stabilisation from the impact of pandemic. The growth-oriented and capital expenditure-driven budget addresses needs to boost infrastructure. There will be challenges; however, 2022 will be a year of improved opportunity such as, infrastructure investment, material availability improving. Many major announcements in the union budget have something for every sector. Budget envisions laying the foundation to steer the economy over the Amrit Kaal (roadmap for next 25 years). Sectors that stand to benefit are banking, infrastructure and manufacturing. It also includes the digitalisation of rupee and passports; launch of a gateway for the National Digital Health Ecosystem and many more. 

Budgeting for Growth 

This Budget provides many opportunities for growth for the technology industry. The battery swapping policy is a positive measure for the EV sector and will help facilitate economies of scale in battery production while also boosting lending to the clean energy segment. The EV penetration in public transport and creating mobility zones will spur demand for electric vehicles. In a way, budget 2022 has rightly focused on infrastructure development to steer the economy. Mentioning 4 priorities, Finance Minister Mrs. Nirmala Sitharaman stated that PM GatiShakti; Inclusive Development; Productivity enhancement & investment, Sunrise opportunities, Energy transition and Climate action; and financing of investments are the 4 priorities of this futuristic and holistic budget. 

Focus on MSME sector 

The Government of India has announced a series of measures under Atma Nirbhar Bharat to support the economy, especially the MSME sector. The Government has set up the Technology Development Fund (TDF) to encourage participation of public/ private industries especially MSMEs, through provision of grants, so as to create an eco-system for enhancing cutting edge technology capability for defence applications. The Ministry of MSME has also been implementing a special scheme viz. ‘Promotion of MSMEs in North Eastern Region and Sikkim’ which focuses on improving the condition of MSME Sector in North Eastern States including Assam. 

ECLGS scheme for MSMEs 

The extension of ECLGS scheme till March 2023 is a welcome move for MSMEs. The tax concession period has been extended by one more year, which is a very positive move. A tax rate of 15 percent has been decided for the newly incorporated manufacturing unit which will further boost manufacturing activities. 

The extension and widening the scope of ECLGS (Emergency Credit Line Guarantee Scheme) will significantly benefit SME-focused lenders, in addition to supporting MSMEs as the total guarantee amount under the scheme has also been increased to Rs 5 lakh crore from Rs 4.5 lakh crore earlier. Exemption is being rationalised on implements and tools for agri-sectors which are manufactured in India, also customs duty exemption given to steel scrap last year is extended for another year to provide relief to MSME. 

Self-reliance in defence manufacturing 

In order to make India a global defence manufacturing hub, the government has taken several policy initiatives under Make in India programme and brought reforms to promote self-reliance in defence manufacturing. Government has established two Defence Industrial Corridors, one each in Uttar Pradesh and Tamil Nadu to attract investments of Rs 10,000 Cr in each corridor by year 2024-25. So far, investment of approx. Rs. 3,750 crore in both the corridors by public and private sector companies have been made. 

The private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organisations through the SPV model. These initiatives are aimed at encouraging indigenous design & development, innovation and manufacture of defence equipment in the country. 

EV ecosystem and battery swapping policy 

EV, a new ecosystem, on the verge of a huge upheaval, is already causing immense competition for the current automobile industry. Moreover, the announcements to formalise interoperability standards, push EV penetration in public transport and create special mobility zones will also spur demand for electric vehicles. 

To meet constraints of space in urban areas for setting up charging stations at scale and announced the proposal of bringing out Battery Swapping Policy and interoperability standards. “The private sector will be encouraged to have new opportunities to reform the economy for the next 25 years, budget focuses on tech, infra development and productivity enhancement addressing MSME and small businesses. BUDGET The only function of economic forecasting is to make astrology look respectable. — John Kenneth Galbraith Budget for rejuvenation BUDGET March 2022 n OEM Update 21 develop sustainable and innovative business models for ‘Battery or Energy as a Service.” She also said that this will improve efficiency in the EV ecosystem. 

The battery swapping policy is a positive measure for the EV sector and will help facilitate economies of scale in battery production while also boosting lending to the clean energy segment. The inclusion of energy storage in the harmonised list of infrastructure will facilitate access to cheaper funding for EV battery makers. 

Production-Linked Incentive scheme 

The PLI scheme would be a key factor in the growth. Since the Government of India introduced the PLI Scheme for various sectors and industries in the country, it has become one major source of appreciation for various industries to grow and help the economic boost. According to the World Bank, the PLI Scheme would likely assist India’s economy to develop at 8.7 percent in the following financial year 2022-23, outpacing emerging market rivals such as China. 

5G PLI 

5G technology in particular, can enable growth and offer job opportunities. The required spectrum auctions will be conducted in 2022 to facilitate rollout of 5G mobile services within 2022- 23 by private telecom providers. A scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the PLI Scheme. As part of the Ease of doing business (EoDB), she also proposed a scheme for design-led manufacturing to be launched to build a strong ecosystem for 5G as part of the PLI Scheme. 

Indian Banking sector 

The banking industry is about to undergo a major transformation, necessitating organisations with exceptional technology, analytics, and design skills. Dinesh Khara, chairman, State Bank of India, said, “The Budget continues to strike a balance between the challenges posed by the recurring Covid-19 waves and the need to contain the economic damage due to pandemic. On the banking and finance side the announcements are significant.” 

In 2022, 100 percent of 1.5 lakh post offices will come on the core banking system enabling financial inclusion and access to accounts through 11 net banking, mobile banking, ATMs, and also provide online transfer of funds between post office accounts and bank accounts. The government has proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks. As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be issued for mobilising resources for green infrastructure to help in reducing the carbon intensity of the economy.

Sunrise Opportunities and incentives for Start-ups

 In view of the Covid pandemic, the budget provides for extending the period of incorporation of the eligible start-up by one more year, that is, up to 31.03.2023 for providing such tax incentive. The budget proposes to extend the last date for commencement of manufacturing or production by one year i.e. to 31st March, 2024. Government contribution to be provided for R&D in Sunrise Opportunities like Artificial Intelligence, Geospatial Systems and Drones, Semiconductor and its ecosystem, Space Economy, Genomics and Pharmaceuticals, Green Energy, and Clean Mobility Systems that have immense potential to assist sustainable development at scale and modernise the country. 

Final note 

This futuristic budget will provide impetus for growth as the country’s resilience is getting reflected in the recovery of the economy. Budget 2022 has encouraging initiatives that will propel aspiring entrepreneurs and boost small businesses. This Budget seeks to lay the foundation and give a Blueprint to steer the economy over the Amrit Kaal of the next 25 years “from India @75 to India @100.” India’s economic growth in the current year is estimated to be 9.2 per cent, highest among all large economies. Digitisation of the economy will provide long term finance for such segments of economy where risks involved are beyond comprehension.

 The introduction of digital rupee by using block chain technology starting 2022-23, focus on 5G, drone technology, and clean energy are all enablers to build a sustainable, digital, and inclusive India. In summary, Budget 2022 has laid a strong foundation for sustainable growth making India a competitive manufacturing destination for the World. Industry experts expect the budget will ensure more investment and infrastructure growth to aid the economy of India in future. The strategy is to prepare for and maximize the opportunity of the coming year.