Budget 2022: Growth is a priority for Narendra Modi government in post-pandemic India

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In what was perhaps the briefest Budget presentations in recent years, the Union Minister of Finance Nirmala Sitharaman made it amply clear that 'growth' is a priority for the government in a post-pandemic India.

A significant increase in capital expenditure of over 35 percent to Rs 7.5 lakh crores is indicative of the fact that the government is stepping up to achieve its target of 8-8.5 percent GDP growth in FY’23. The Budget speech set the stage for long-term growth over 25 years with an all-inclusive focus on promoting digital and fintech economy, technology-led development, and positive climate action.

Supporting MSMEs and startups

The finance minister announced the extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023 along with an enhanced guarantee cover of Rs 50,000 crore (that takes the total limit to Rs 5 lakh crore) for micro and small enterprises (MSMEs) is a crucial move to help the backbone of the economy that in most cases had to bear the worst impact of the pandemic.

Further, recognising startups as “drivers” of the economy, the finance minister announced an extension on tax incentives for startups to four years from incorporation from the earlier three. With over 61,400 startups in India, today with 14,000 new start-ups added in FY’21, the extension of tax benefit is a welcome move.

India at 100

Very aptly, social welfare is a priority for the finance ministry along with growth in a nation that is on the track of economic recovery in the wake of a pandemic. The Budget, therefore, laid the foundation for 'Amrit Kaal' that envisages India at 100 from India at 75 today.

Expansion of highways in the country by 25,000 km, allocation of Rs 60,000 crore for tap water accessibility to 3.83 crore homes, and allocation of Rs 48,000 crore towards Pradhan Mantri Awaas Yojana (PMAY) with 80 lakh houses to be built in FY’23 under PMAY, bear testimony to the Government’s commitment to inclusive and sustainable development.

Clarion call for climate action

A product-linked incentive scheme (PLI) in 14 sectors for Atmanirbhar Bharat with an additional allocation of Rs 19,500 crore for PLI in solar PV module manufacturing reiterate climate consciousness. The finance minister through her Budget presentation underscored the need for mindful and deliberate utilisation of resources.

In this context, the push for environmental, social, and governance (ESG) investing is an interesting development to watch out for. The finance minister put forth the proposal of introducing sovereign green bonds. These have the potential of reducing India’s carbon intensity and improving ESG awareness in India.

Bridging digital divide

The government’s clear focus remains on digitisation and aims to bridge the digital divide. The government thus announced the use of Kisan drones for crop assessment and digitisation of land records. Moreover, digital upskilling remains a priority. The finance minister, therefore, announced the formation of a digital ecosystem for skilling and livelihood. Named the DESH e-stack portal, it will go a long way in upskilling and reskilling the youth of India.

Further, with the aim to establish 75 digital banking units in 75 Indian districts, the government continues to encourage its citizens to adopt the ease of banking that ensures safety and convenience.

Brand new digital currency

Lastly, but not least, the investor community is excited about the introduction of the digital rupee to be issued by the Reserve Bank of India. The proposed central bank digital currency (CBDC) powered by blockchain and other technologies will enable users to conduct both domestic and cross-border transactions.

The writer a PhD, is CEO and Co-Founder Agrim Housing Finance Pvt Ltd.

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Malcolm Athaide

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