By Vidit Aatrey
Resilience, inclusive growth, and technology-enabled development – the Budget 2022 by finance minister Nirmala Sitharaman aims to create an enabling framework to achieve these three benchmarks. While the Budget delivers on many fronts, achieving this completely would require a concentrated effort spanning multiple years and further reforms.
Recovering from a pandemic, the economy is insulated, but not isolated from global developments. Against this backdrop, the government’s focus on stepping up the capital expenditure to Rs 7.5 lakh crore during the next fiscal will prime the wheels of the economy and have a multiplier effect. It will help in percolating the benefits to the real engines of our economic growth – the micro small and medium enterprises.
A thrust on infrastructure development through the PM Gati Shakti will enable better connectivity between the centres of industrial growth and remote parts of the country. As the pressure on the urban core increases, a seamless logistical and mobility framework will decentralise growth and contribute to the holistic development of India’s non-metros.
Benefits for MSMEs and start-ups: The rise of fintech, e-commerce, SaaS and other new-age businesses over the last two years has solidified India’s position as a digital powerhouse.
The government’s intent to continue supporting the new-age tech ecosystem through forward-looking initiatives such as the introduction of a blockchain-powered digital rupee, extending tax benefits for start-ups by one more year, and reduction of overlapping compliances will promote the entrepreneurial spirit of India.
The finance minister has also focused on empowering India’s small businesses. At a time when the MSME sector grapples with the credit crunch and supply chain financing issues, extending the Emergency Credit Guarantee Scheme (ECLGS) up to March next year will help more than 130 million MSMEs in regaining their economic momentum. Adding to this is the revamp of the Credit Guarantee Trust which will enhance the ability of banks in extending loans to the businesses through an additional credit of Rs 2 lakh crore.
Next, the government must also make efforts to simplify the GST system, rationalise rates and bring parity between offline and online sellers with respect to mandatory GST registration. A singular focus on augmenting offline MSME businesses with online distribution by harmonising GST laws could be a game-changing economic transformation opportunity for India’s small businesses. While the Budget hasn’t addressed this, the industry will anticipate an action on this by the finance minister in the future.
Manufacturing: The government’s announcement on duty concessions to promote the manufacturing of electronics and mobile phones through this Budget will help create an ecosystem of Indian manufacturing in these critical sectors and move us away from the dependence on imports. Coupled with Atmanirbhar Bharat and the PLI scheme, the move towards becoming the manufacturing hub of the world is not too distant.
The Budget 2022 is a fine balancing act between fiscal prudence, going digital and supporting India’s burgeoning economic growth. The foundation has been laid and as we move forward, a mix of government support, India Inc’s innate energy and a thrust on going digital will make India a $5-trillion economy for sure.
The author is Founder & CEO, Meesho