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Industry Reacts to Union Budget 2022: Few Misses and Several Hits

Union Budget 2022 has been announced today, and the reactions from the industry have been largely positive and grateful

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Supriya Rai
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Union Budget 2022 Reactions

Union Budget 2022 has been announced today, and the reactions from the industry have been largely positive and grateful

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Union Budget 2022 has been presented in the Parliament by Nirmala Sitharaman, Union Minister of Finance, Government of India. While a detailed analysis on the measures announced will take some time, initial reactions from the industry has been largely positive. While some opinions state that a lot more could be done to help the industry, decisions like extending tax incentives, ECLGS policy benefits and boosting start-ups through agriculture, and farming are being largely appreciated.

Hits of the Union Budget 2022

CP Gurnani, MD and CEO, Tech Mahindra, said: “The budget truly echoes India’s vision towards inclusive development and building a truly ‘Atmanirbhar Bharat’ by providing a blueprint for the economy over ‘Amrit Kal’ from India at 75 to India at 100. FM’s key announcements on blockchain and setting up e-passports with futuristic technologies are a step in the right direction to help India emerge as a global technology leader. The focus on innovation and R&D (Research and Development) with an emphasis on strengthening talent capacity through STEM (Science, Technology, Engineering, Mathematics) universities and skilling courses in IIT’s will enable India to become a global hub for skilled talent. Overall, Budget 2022 promises to provide the much-needed impetus to sustain India’s economic and digital growth.”

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The PLI schemes mentioned to boost the manufacturing sector in India is also being largely appreciated. “The industry has been completely galvanized under the pioneering initiative of PLI scheme, with Hon'ble FM today stating that it has potential to create 60 Lakh new jobs and additional production of 30 lakh crores. This is also a clarion call to the industry to work much harder in the years to come to make it a reality.  On a macro level, the scheme around design-led manufacturing as part of the PLI scheme would fasten the development of the ecosystem, and also changes in customs duty will drive greater domestic value addition in Electronics manufacturing in the country, which has grown rapidly in the last few years,” said Gururaj, MD, Optiemus Electronics Ltd.

Furthermore, mentions to digital India and new age technologies such as artificial intelligence, and geospatial technologies have also been welcomed by the industry. “Union Budget 2022 has announced the PM Gati Shakti program as one of the priority areas of the government. Seven engines of the PM Gati Shakti initiative are roads, railways, airports, ports, mass transport, waterways and logistics infra. As the Indian economy moves towards strengthening these initiatives, geospatial technology will gain more prominence in the process. As shared by the Hon’ble Finance Minister, the Gati Shakti program would involve huge investments in construction of about 25,000 Kms of highways, multimodal transport, and modernization of land records. These are welcome steps, and GIS and other geospatial technologies will facilitate efficient implementation of these schemes. With the launch of Jal Jeevan Mission (Urban), the government is aiming at universal water supply in all 4,378 Urban Local Bodies with 2.86 crores household tap connections, as well as liquid waste management in 500 AMRUT cities. GIS based water distribution network planning, execution and operations will go a long way in bringing these plans to fruition more quickly and efficiently,” said Agendra Kumar, managing director, Esri India.

However, what is probably being appreciated the most is the importance that has ben given in the Union Budget 2022 to skilling and job creation. “The education ecosystem in India has been quickly transforming, particularly in the last two years of the worldwide pandemic. The Government proposed many initiatives in this year's budget to improve the nation's digital infrastructure so that experienced educators can comprehend new tools and approaches and offer students access to world-class quality education", said Ratnesh Jha, CEO, India and South East Asia, The Burlington Group of Companies

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"The budget has strategically allocated funds to initiatives, like the launch of the Digital DESH e-portal that will encourage skill development and promote an innovative culture by introducing high-quality e-content in all spoken languages. It will be developed for delivery via the internet, mobile phones, television, radio, and digital teachers. Giving another impetus to the pandemic-affected education sector, the PM eVIDYA scheme's 'one class, one TV channel' program will be expanded from 12 television channels to a total of 200 channels to supply radio and DTH channels to students who do not have an internet connection to decrease the widening gap in accessing education. Also, these initiatives mentioned above, proposed in the Budget, 2022, will generate more employment opportunities for individuals", Jha added.

The FinTech sector has also a lot to cheer about with the announcement on setting up 75 digital banking units. “India’s fintech system was a silver lining in the difficult times of lockdown and the pandemic. The nation has been bullish with digital payments, and the current budget has further fueled the same by announcing 75 digital banking units in 75 districts. Inclusion of 1.5 lakh post offices under banking system with digital infrastructure enablement will promote financial inclusion, and accelerate shifting micro economy in the mainstream banking system. Gradually, all the efforts will strengthen credit access, and payments in the MSME system will certainly reflect in the nation's economic growth at large,” said Dr Navneet Gupta, founder and CEO at YPay.

Along similar lines, Ritesh Jain, co-founder, Felxiloans.com, said: “For the Fintech sector, digitization initiatives and subsidization of MDR will continue to help customers adapt to digital transactions. However, this will also continue the overhang of providing these services viably by the service providers. Central Bank digital currency (CBDC) will give a big push to digital money, and in the future, many use cases will be built on top of CBDC. Announcements for the launch of 75 digital banking units and bringing Indian Post under the banking stack will bring a big push to digitization in the banking sector.”

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Misses of Union Budget 2022

Nitin Potdar, Partner, J Sagar Associates (JSA) was of the view that the National Education Policy 2020 should have been addressed in the Union Budget 2022. “Loss of 2 years of regular education seem to be covered by Open Digital University, which would collaborate with existing universities along with 200 New TV channels for education sounds very promising.  We only hope that this gets implemented in record time and does not get lost in Govt  red tape.  But no specific funding of Road Map for implementation of New Education Policy 2020 is a big disappointment of the education sector,” he said.

Apart from this, the crypto industry is hoping for more clarity on the 30 percent tax being announced on virtual digital assets. “Government has brought in 30% tax on cryptos income, where no deduction for any expenses except cost of acquisition shall be allowed. Gift of virtual assets shall also be taxed for the recipient. This clears the air on taxes for cryptos, however, there are several types of incomes people earn from cryptos and hopefully more clarity will be available in the Budget documents,” said Archit Gupta, founder and CEO, Clear.

Also, another interesting development is that there has been no rise in the stock market after the budget announcements. "No explicit rise in the stock market post-budget announcement is a clear indicator that the business community isn’t really excited. There is not much for startups except for the upsurge in Tax Incentives concerning three to four years old incorporations. Overall the government is eyeing stability post the third Covid wave, which is demonstrated less aggressive in Budget 2022," said Siddhartha Vanvani, founder and CEO, Digidarts.

Arjun Gupta, founder, Courseplay is of the view that Union Budget 2022 saw many missed expectations for SMEs and Start-ups. "As one of the fastest growing contributors to GDP, the SaaS sector should be promoted more by the central government. Share allocation process for start-ups to be simplified. Low cost tech education in Tier 3 and smaller towns is a huge must, as supply of skilled tech workers is at an all time low compared to demand. Getting government contracts for tech start-ups is still very complicated and should be made easier. Labour Law reforms for tech companies would be appreciated too. The govt needs to stand behind Indian SaaS companies to make India the no. 1 SaaS exporter in the world. Hopefully we will see some of this in next year's budget," he said.

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