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Budget 2022 | Delicate balance between near-term goals, blueprint for future: Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank

The creation of new infrastructure, focus on affordable housing, welfare and development of MSMEs and the farm economy are all welcome steps.

The capex planned by the government, if executed well, will also benefit the banking sector.
The capex planned by the government, if executed well, will also benefit the banking sector.

By Chandra Shekhar Ghosh

Budget 2022-23 has has attempted to strike a delicate balance between near-term priorities and long-term objectives by seeking to provide immediate comfort to the vulnerable impacted by the Covid-19 pandemic, and preparing a blueprint for India’s future at the same time.

The substantial increase of 35% in the budgetary outlay for capital expenditure to Rs 7.5 lakh crore in FY23 could have a multiplier effect on all segments of society and lead to job creation at scale, allowing India to leverage its young demographic dividend.

The creation of new infrastructure, focus on affordable housing, welfare and development of micro, small & medium enterprises (MSMEs) and the farm economy are all welcome steps. The new roads, ports, airports and railway network that will come up will connect India to Bharat and allow for the creation of new economic hubs, apart from the existing metros, and Tier-I and II cities.

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The capex planned by the government, if executed well, will also benefit the banking sector. It can spawn an entire ecosystem of new large, medium and small enterprises and create employment for millions of Indians. This should result in higher credit demand from all classes of borrowers — large corporates, MSMEs as well as retail customers.

In the near term, the government has tried to empathise with the challenges that micro and small enterprises — especially in contact-intensive sectors like tourism and hospitality — continue to face. Extension of the Emergency Credit Line Guarantee Scheme (ECLGS) scheme till March 2023 and the increase of Rs 50,000 crore in the overall outlay for the scheme will provide relief to this sector. The infusion of Rs 2 lakh crore under the Credit Guarantee Trust for Micro and Small Enterprises will also have a similar effect. It will help channel the flow of credit to MSMEs, while providing comfort to bankers to lend to this sector.

The economy and the banking sector could also benefit from the additional outlay of Rs 48,000 crore for the PM Awas Yojana. The boost that the affordable housing segment might receive from this announcement should lead to greater demand for housing finance, and should also spur consumption for other products and services, given the strong backward and forward linkages to this sector.

Timely and effective execution of this year’s Budget proposals, while keeping the fiscal deficit in check, will be key to sustaining the economic growth momentum India has seen in recent times.

The writer is MD & CEO, Bandhan Bank. Views are personal.

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