Disappointment as middle class left in the lurch, as always, by the Union Budget 2022.
BizNewsConnect presents a cross section of post-Budget reactions
Harish Singla, Country Sales Manager Foreverliving India Product: While the budget provides a much-needed long term push in funds allocation for the infrastructure but all this can come true depending on the implementation which has always been the stumbling block. Taxing the digital currency is the right step as it goes to prove that India is in alignment with evolving financial markets. Unfortunately, the budget fails to address the aspirations of the middle class with no respite in taxes and not much focus on the health care sector in the long term.
Mohammad Athar, Partner and Leader - Industrial Development, PwC India: The Government’s focus on sustainable and alternative mobility for hilly terrains is a welcome move. The Parvat Mala announcement with 8 ropeway projects in 2022–23 will not only diffuse transport linked congestion in hilly areas but also enable growth of tourism in these locations. Our ability to bring global capabilities in operating and developing ropeway systems will be critical for the success of the programme in the short term and help build capabilities within the country in the long term.
Paresh Kanungo, Founder & CEO, Alpha Investments & Financial Services: We welcome the FM's point on blockchain as we believe that the blockchain and the technology surrounding crypto is going to be the next big thing in the market that will take its shape and form in the coming few years. We believe it's time to introduce crypto as an asset class by brokers and expect people to appreciate the Cabinet's efforts to grow towards a stronger tech-savvy India.
We believe that people should be happy about the taxation of crypto because it means that the government now recognizes crypto as an asset and will continue to work towards integrating it with the modern financial landscape building a more sophisticated and efficient system.
Prabhu Gandhikumar Co-founder TABP Snacks and Beverages: The Indian beverage industry is going through a very tough time. The peak season for the industry, which is summer, has been lost due to Covid19 for the past two years. The commodity cycle is also at its peak which has affected our gross margins significantly. In October, the GST on added fruit carbonated drinks was also increased from 12% to 40% effectively. The beverage industry is a big employment generator in India. When the nascent beverage industry has to compete with MNC giants we need government support.
Akash Gehani, COO & Co-founder, Instamojo: “It is heartening to see that the Union Budget 2022 focused on addressing the long-standing challenge of access to credit for MSMEs, along with enabling skilling of the MSME sector. The extension of the Emergency Credit Line Guarantee Scheme (ECLGS) comes as a relief to several MSMEs who faced testing times post the pandemic which made them financially fragile. With better access to credit, there is hope for the revival of existing businesses, and the creation of new businesses. The ECLGS has by far provided credit for lakhs of MSMEs preventing the sector from moving into the NPA (non-performing loan) category.
Today, with digitization defining the business landscape, digital literacy for small businesses and entrepreneurs is the need of the hour. The introduction of an integrated platform to offer skilling, access to credit, and enhanced entrepreneurial opportunities is a much needed requirement for the sustenance and growth of the sector. This way, MSMEs can upskill to be at par with industry requirements, have free access to online resources and infrastructure, and in the long run help in the further establishment and wider reach of these businesses digitally. Additionally, the government’s plan to rollout the 5 year growth program for MSMEs will further strengthen these newly rolled out initiatives.
Cdr Syed Qais Hayat (R), President Strategy & Operations, ARTPARK (AI & Robotics Technology Park): 68% of defence procurement budget in 2022-23 is to be earmarked for domestic equipment. This is up from 58% in last fiscal. This will provide further impetus to greater participation of domestic industry in Defence Capital acquisitions. This is in line with the government's approach to not import capital assets in all cases where the domestic industry can create products and solutions. Therefore, import of Capital assets for Defence will be resorted mainly in those cases which necessitate urgent procurements (generally self-defence) and in-house development of matching technology is unlikely in near to mid-term. This means the Ministry of Defence, its Departments and Services will have a larger than ever onus to carry out a thorough environment scan of in-house capabilities in defence production to identify, support and induct technologies, equipment and platforms to be able to justify any capital imports." said
Raghavendra Goud Vaggu, General Manager of Cytiva South Asia: As per the FM Nirmala Sitharaman’s Union Budget, India’s GDP is estimated to grow at about 9.27%. That means as a nation, we are primed to withstand many challenges brought about by the COVID-19 pandemic due to our higher penetration of vaccinations. All we need to do is maintain this strong position our economy finds itself in.
Since we are still in the midst of the Omicron wave, the FM observes that the speed of our prompt and all-encompassing vaccination campaign has helped greatly. She’s also confident that with ‘Sabka Prayaas’, we'll continue on a strong growth path. During Amrit Kaal, our government aims to achieve the vision for India@100 that was unveiled by the Prime Minister Narendra Modi during his Independence Day Address. '
Padmaja Ruparel, Co-founder of Indian Angel Network: Fund under co-investment model through NABARD will increase Agri /rural startups. A huge push to a latent but critical market. Focus on battery swap could potentially make India one of the largest EV markets”
Ashley Menezes, Partner and COO, ChrysCapital and Head – Regulatory Affairs, IVCA: The setting up of an expert committee to address the regulatory and other friction issues being faced by the PE industry is a most welcome and much-needed step announced by the Honourable Finance Minister. This indicates that the Government recognizes the contribution and role of the PE industry, both historically as well as for the future. This will provide a platform to address key issues faced and we look forward to having a constructive discussion with this committee.
Parity of taxation between listed and unlisted long term capital gains has been a long-standing ask of the PE industry, and while the base rate remains unchanged, the surcharge has been capped at 15% for unlisted long term capital gains. This, hopefully, is the first step towards achieving parity.
Srinivas Ganadinni, Founder and CEO, The Tea Planet: We heartily welcome the revamp of Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) with fund infusion. Union Budget's announcement of expanding the emergency credit line guarantee scheme for MSMEs is good news for us. The addition of Rs 2 Lakh Crore will help the micro and small businesses to grow their ventures and meet their respective goals.
Richard Pattle, Co-founder and CEO True Beacon Global: As a foreign entrepreneur working in India and co-founder of one of the first funds in GIFT City - True Beacon Global - I am delighted with the focus of Narendra Modi's government to develop the SEZ. This will further develop the ecosystem into a world-class fintech hub. Along with my co-founder, Nikhil Kamath, we are confident this announcement by the FM will further accelerate the international investor trust and attract further capital one of the fastest growing economies in the world.
Dr. Saurabh Gadgil, Chairman and Managing Director, PNG Jewellers: The budget has put a lot of emphasis on increasing exports across sectors and the same goes for Gems and Jewellery. India is a dominant player in the gems and jewellery sector in the world and through the stimulus offered in this budget, we are bound to increase our share. Simplified regulation for ecommerce exports in gems and jewellery sector is a welcome move too. Duty reduction to 5% in cut/polished diamonds and gemstones is a good move too. Increase in capital expenditure by 4.1% is a boost to the economy. Overall, this budget is growth oriented and will lead to growth in our GDP.
Awal Madaan, CEO and Founder, AwalEnglish.com: In my opinion, the budget has addressed various pain-points of the education sector, which is a key sector in skilling the workforce and pushing up economic growth.
The decision of giving equal broadband access to both rural and urban areas has won my heart because it will help millions of students study and compete with the world. Moreover, it will save a substantial amount of travel time for the students, which gets wasted in getting the right education from institutes in the nearby cities and towns. My thumbs-up to the government's concrete plans to introduce 5G connectivity, as it will strengthen the digital infrastructure of the country, which in turn will support the education sector. This visionary government has taken another positive step by focusing on the emerging careers with its plans for boosting the industries like animation, audio-visual, artificial intelligence and gaming in the financial year 2022-23. On the whole, this year’s budget will certainly be a driver of growth and a game-changer for the education sector.
Achin Bhattacharyya, Founder and CEO Notebook: Expansion of the "One class, one TV channel" programme of PM eVIDYA from 12 to 200 TV channels is a welcome step as encouraging supplementary education in regional languages is the need of the hour as language cannot act as a barrier to receiving a quality education, especially for first-generation learners. Encouraging PPP projects which will help in a centralised build-up of quality content in regional languages and ensure their easy access through mass mediums will help the country reap the demographic dividend in the years to come.
Ankit Kumar, Tech Investor EV (Electric vehicle) & Drone: Initially, there were doubts in the minds of investors about the intentions of the Government in terms of the EV industry, but the announcements made in the 2022 budget have definitely quelled the doubts. The Government made it amply clear that EV manufacturing is the next big thing in its vision.
This was very encouraging for the EV industry and shows how serious the government is in pushing for faster adoption of electric vehicles in the country.
Government announcement toward promoting a shift to use of public transport in urban areas will encourage investors towards investment in the EV sector. This will be complemented by clean tech and governance solutions, special mobility those with zero fossil fuel policy, and EV Vehicles.
The Finance minister also announced that the Government will come out with battery swapping technology to develop special zones for electric vehicles. Integration of Private companies for the development will also boost investment in the sector.
These announcements will promote the sales of electric vehicles in the country and formulation of interoperability standards will improve the efficiency of EV business.
Shiva Kabra, Jt. Managing Director, Control Print Limited: The budget impetus on growth with GDP growth of 9.2% for FY 2022-23 will accelerate the Coding&Marking (C&M) industry. Increased budget for "Har ghar nal ka jal" scheme will increase the demand for pipes resulting in C&M growth MSME support for resilience will encourage formalization of work culture and better compliances in this sector resulting in capacity expansion and use of C&M equipment
Atmanirbhar Bharat, Make in India, PPP focus and increased government spend on Capex to 7.5 lakh crores will result in creating demand cycle and drivers for growth for domestic production and assist C&M traction.
Professor Tarun Jain, Associate Professor in Economics, Indian Institute of Management Ahmedabad: The Finance Minister has mentioned supplementary teaching through additional TV channels (PM eVidya) to make up the education loss of the last two years. This is minuscule given the tremendous learning loss that our children have experienced. Significant investments in improving school quality are critical for ensuring that our demographic dividends are actually realized.
Shams Tabrej, Ezeepay founder and CEO: Witnessing the digitalization in India, we think it is a sound decision by the Finance Minister to work towards a digital ecosystem. The plan of this fiscal year hints towards encouraging digital courses by setting up more Digital Universities and making people more digitally educated. Also, the inclusion of digital banks in rural areas, bank ATMs in post offices, and digital payments will help make banking in rural areas better. This year, the government has shown promising improvement in rural banking and tech literacy. This would lead to a better banking experience in rural areas and make the country's digital come true. Furthermore, the government plans to set up a fintech hub at Gandhinagar Gujarat International Finance Tec-City (GIFT) International Financial Services Centre (IFSC) — popularly known as the GIFT City — to offer a platform for fintech startups to expand globally. With all these initiatives, we can improve the banking experience for our customers.
Aniruddha Sen, Co-Founder at Kenko Health: The rolling out of the Open Platform for the National Digital Health Ecosystem is a noble step. It will go a long way in digitising our data about healthcare providers and extending universal access to health facilities on a digital platform. Also, the announcement of the National Tele Mental Health Program is a progressive step towards recognising the mental health burdens that face our country in the wake of the pandemic. Besides these direct measures, the extension of household tap-water access is another big win when it comes to universal access to health and the hygiene necessities."
Sameer Aggarwal, Founder and CEO, RevFin: The policy on battery swapping will help in wide scale adoption of batteries as a service. This will reduce upfront ownership costs of electric vehicles and link that cost to vehicle running. Since the cost of running electric vehicles is cheaper, the overall running cost with battery service will work out to be more economical than usage of ICE based vehicles. This is a very welcome announcement in the union budget. This will also create opportunities for several new startups.
Zero emission zones in cities will help bring prominence to electric vehicles as well as provide incentive to purchase electric vehicles to be able to use those zones.
The introduction of ‘Digital Rupee’ using blockchain technology sends a strong message that India is at the forefront of technology adoption. A digital currency will bring in transparency to transactions and will enable accounting of all money, thereby reducing use of black money and cash-based transactions. Issuance of the currency by RBI will result in a structured approach with controlled regulation. It is unclear at this stage if private digital currencies will be allowed to operate and compete with the rupee in India.
Swapnik Jakkampudi, Co-Founder, Skye Air Mobility (Drone delivery tech firm): The FM announced a very progressive budget keeping a horizon and outlook of 3-4 years. The budget has covered multiple avenues for drone industry to rise, the focus on promoting Agricultural Drones and NABARD fund to support startups will result in ensuring that the Drone Industry reach a new milestone. The development of 100 new cargo terminals in the next 3 years will also add to the growth of Drones enabled to use for cargo deliveries within the terminals and terminals to delivery locations. The budget has been a very guiding force towards our Hon’ble PM’s vision for making India a Global Drone Hub by 2030.
Sundara Rajan TK, Partner at DVS Advisors LLP: The clarity on tax of digital assets is long overdue and was expected to be provided this year. The announcement of tax @ 30% on digital asset, coupled with the government launching its own digital currency, is an indication that the government intends to discourage the same and would intend that only the HNIs make such investments and that the government shall not permit cryptos as currency. The caping of surcharge at 15% is welcome and though no separate relief was given to HNIs, this would also be favourable to such HNIs with high capital gains income. On the litigation front, the announcement that appeals shall not be made in case of similar issues of law pending before the High Court and Supreme Court is an important step in reducing the litigation.
Abhinav Soomaney, CEO, Cryptotax Pvt Ltd: Upcoming digital rupee cryptocurrency will surely reduce huge capital expenditure for govt of printing currencies. However, will the government restrict the circulation supply? If not then that can threaten the stability of the country’s financial system.
Blockchain is a reliable data source, but if the blockchain is hacked, hackers can steal a huge amount of rupee coins that can easily damage the country’s economy which isn’t the case with physical currency.
Virtual currencies are to be taxed at a flat rate of 30%, that being said, any profits generated via the trade of cryptocurrencies would be taxed at 30%, including gifts and transfer of virtual assets from one wallet to another owned by different individuals.
Investors trading with cryptocurrencies now need to report gains or losses which cannot be offset against any other sort of income. The government has set a fixed 30% rate to ensure all investors pay a percentage of their gains to the government in the form of taxes.
Most commonly used cryptocurrency tax calculation methods include; highest in first out method, last in first out method, and highest in first out method.
Out of the above mentioned tax calculation methods, the HIFO approach is most beneficial for investors who would like to use their highest cost basis coins and apply that towards coins sold. This would reduce the taxable gain amount significantly and give some relief to investors.
Dr Payal Kanodia, Trustee, M3M Foundation: The announcements made in the Union Budget by the Finance Minister Nirmala Sitharaman have covered all the aspects crucial to make resources available and accessible to the last person standing in the line, benefitting the people of the community. The Saksham Angwanwadi and Poshan 2.0 program will not only provide benefits to 2 lakh Anganwadis but will also ensure development of each section of the society for a healthy and prosperous India. This will strengthen the core of early childhood education which is the need of the hour in the pandemic. We also welcome the steps announced to upskill India's youth and the National Skill Quality Framework will play a pivotal role in making the workforce industry-ready and equip them with necessary training for the future. Online learning has transformed the education sector in India and announcements such as 200 TV channels for school children, expanding the reach of PM e-vidya and online portal for skilling will definitely lay the foundation of the future of learning that is digital."- Dr Payal Kanodia, Trustee, M3M Foundation
Mohit Nirula, CEO, Columbia Pacific Communities: The Union Budget for 2022 announced by Finance Minister Ms. Nirmala Sitharaman would prima facie disappoint many. As a creator of and service provider to senior living communities, we are disappointed that none of the initiatives announced bring succour to the demographic we serve – senior citizens.
There were no announcements about making homes in senior living communities more affordable or any rationalisation of the high 18% GST levied even as the collection for January 2022 touched a record high.
That said, over the past many decades, we have gotten used to what can best be described as “tinkering” of the direct and indirect tax structure, or impex subsidies, which are industry specific. But while these measures were welcomed on news channels and by the sentiment-driven stock market, they make no real impact in the long run.
This budget, on the other hand, coming as it does at the end of two years of the economy being severely affected by COVID – 19 has taken a more strategic view of the economy with increased investment in infrastructure. The government, while juggling with its own fiscal responsibilities has maintained its focus on all-inclusive welfare initiatives. Hopefully this approach will stimulate the economy by massaging both the demand and supply side of the equation.
As with any budget, the devil is in the details, the fine print and most importantly the implementation. So for now let’s wait and watch.
Teja Chekuri, Managing Partner, Ironhill India: It is heartening to hear that India's growth estimated to be at 9.2%, highest among all large economies. We are now in a strong position to withstand challenges as the Hon. Finance minister states. While it is a growth-oriented budget, there is no big bang announcement for any sector including hospitality. This sector is still recovering and has some way to go. Although the credit guarantee scheme does provide some assurance of keeping the MSME hospitality sector afloat, we had hoped for tax breaks and a more holistic support system to enable growth for this specific industry.
Dharmishtha Goenka, Founder of Praakritik: Glad to see the government of India recognising and making Natural and Organic farming as an important part. Where Kisan drone, digitalisation of land and allied technology will help in better yield and more conversions from traditional to chemical free and organic farming, the inclusions of a NABARD based capital finance option will help young startups like us to grow. In addition to this the national logistics and supply chain program GATI SHAKTI, will help us reach consumers faster with fresh produce. Year 2023 will be the year for clean eating and this vision of our Hon. PM to take this globally.
Dr. Akhil Shahani, Managing Director, Thadomal Shahani Centre for Management, Shahani group and CEO, Ask.Careers: "Considering the experience of e-learning in the pandemic, it is good that the government is seriously looking at integrating online technology to make our education system more inclusive for the less-resourced segments of the population. However, it is important to realise that online technology is no substitute for good quality brick & mortar schools & colleges, as many students have fallen behind over the last 2 years of the lockdown. So, it would have been important for the government to have focussed on efforts to train more teachers & support the building of more institutions. Another good initiative is the increased focus on skilling and upskilling to improve employability among our youth. Along with the new skill-oriented National Higher Qualification Framework being issued by the UGC, I see better integration between the academic & vocational streams of education. Allowing foreign university campuses to set up in Gujarat's GIFT city will hopefully be an interesting pilot initiative that could encourage foreign universities to expand into other Indian states. A couple of initiatives that were not addressed was the reduction of GST rates for Edtech services & allowing private for-profit investment into India's schools & colleges, which could have greatly helped expand quality education across India."
Shweta Sastri, Managing Director, Canadian International School, Bangalore: The union budget has ushered in positive measures in the field of education which will give a boost to the sector especially in context of the pandemic. A robust education system is a necessity for any growing nation and this is all the more important when the country is aiming to normalize education. The focus on digitization, bridging the rural-urban gap, making online education available to all children are all measures that are welcome. Two years of education regression for school going children meant that we needed to double-up efforts to bridge education gaps. The budget 2022 for the education sector rightly focuses on upskilling and digital learning. The announcement of one class one channel and expansion to 200 channels under e-vidya will enable the reach of online education to a vast body of students where online education is still not widespread. The push to regional education is welcome as this will once again enable people in the rural areas to access quality education in their languages. Another welcome decision on digital university is that it will expand the reach of education to the masses as it will follow a hub and spoke model and emphasize the role of ICT in digital education. The focus on skill training by ITIs will also enable students to be employable in the future. The budget has addressed structural issues in the education landscape and has ensured that all children get access to education. The budget has also well-coincided with the opening of schools as it is important to reverse the learning loss among students. Education clearly is one of the most important investments a country can make in its people and their future. The government must act to meet the needs of an aspiring generation which is looking to the future with great hope. Overall, it has given a boost to the education sector that will result in the nation’s progress.
Utkarsh Sinha managing director Bexley advisors: One nation One registration has the potential for being phenomenal for ease of doing business in India: it could declutter what is an unnecessary mammoth process and help a lot of ideas get off the ground. If this is extended into one filing annually for all companies, that would transformative for our country
Allocating 25% of the defence budget for industry and startups has the potential to create the kind of ecosystem in India that DRDO and ARPA created in Silicon Valley: defence spending is the best catalyst for sparking technological innovation
The green bond is a welcome step in the right direction: if the capital raised is deployed towards fundamental clean-up and investment in green tech, India can catch up to the Chinese lead in clean tech and be a global leader
The clarity on cryptocurrencies is welcome, bringing their regulation closer to that of commodities and capital appreciation, and away from the currency. The digital rupee is also something we look forward to learning about in detail: in essence, the rupee is already digital, so it will be interesting to see what will change with the introduction of an official digital rupee.
Yeshwanth Raj Parasmal, Co-founder, 21K School: The Finance Minister has unveiled a Budget that aims to bridge the economic gap between India and Bharat. The proposed policies are an inspiring start in what will hopefully provide stimuli for continued growth, leading us closer towards our goal of achieving sustained acceleration.
I welcome the focus on digital aspects of education and creating greater access for students with structured, high-quality content. The announcement of Digital University is most welcome and in line with the trend of online schools across the country.
But, it misses the opportunity to leapfrog with more significant innovation and investment for improved access, equity and affordability. The structural flaws of the education sector and problems on the ground could have been addressed. Exciting times are ahead for Digital Education.”
Srinivas Ganadinni, Founder and CEO, The Tea Planet: We heartily welcome the revamp of Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) with fund infusion. Union Budget's announcement of expanding the emergency credit line guarantee scheme for MSMEs is a good news for us. The addition of Rs 2 Lakh Crore will help the micro & small businesses to grow their ventures and meet their respective goals."
Vikas Singhania, CEO, TradeSmart: The EV sector received a boost with cities being encouraged to introduce zero-fossil fuel policies and urban residents encouraged to increase ridership on public transport and use of electric mobility. The private sector has been encouraged to build business models for battery-as-a-service. To encourage use of EVs, battery swapping and charging infrastructure will be scaled up and interoperability standards formulated. The steps will go a long way in promoting EV sales in the country."
Investors were relieved that the Finance Minister Nirmala Sitharaman has not announced any increase in taxes especially on long-term capital gains tax on equity investments in her Budget speech. The FM has capped the LTCG on equity at 15 percent, which should be beneficial for shareholders of unlisted companies. No new taxes have been imposed on corporate India too. Capping LTCG on unlisted companies is good for HNIs and also for venture capitalists."
Legalising cryptocurrencies the finance minister has imposed a 30% tax on cryptocurrencies and NFTs brings it at par with those charged on speculative income. Thought on higher side, traders can now trade in these assets without fear of government intervention. The Budget has removed the legal uncertainty on Crypto Currency trading. People can trade in Crypto but they will have to pay tax. It is to be checked in fine prints, that if corporates trade in crypto then, the corporate tax is applicable or 30% or whichever is higher."
Overall, a short and sweet budget by the finance minister with no tweaks on taxes but a lot of measures to promote overall economic activity. The budgetary capex has been increased by 19% while at the same time providing impetus to EVs, solar power and renewable energy, agriculture, blending of fuels, startups, the introduction of digital currency, giving legitimacy to cryptocurrencies and green bonds all point towards the government sticking to the growth path."
Dr. Sangita Dasgupta, Associate Professor, Schools of Management, BML Munjal University (BMU): A decline in the contribution of the agriculture sector to the GDP has been picked up by the service sector and not the manufacturing sector. It is an imbalance in the Indian Economy. Infrastructure has been the Achilles heel for the manufacturing sector. The present government is trying to develop the infrastructure to give a much-needed boost to the manufacturing sector. Finance Minister Nirmala Sitharaman in her fourth budget talked about PM Gatishakti Master Plan which will be driven by seven engines of growth. Rs. 100 lakh crore project aims at developing holistic infrastructure resulting in inclusive development energy transmission, enhancement of productivity, and financing of investment. The master plan will provide the platform for National Infrastructure Pipeline. It will make Indian goods competitive due to an improved supply chain and reduction in logistic costs.
Md Sajid Khan, Head of International Development, ACCA: ACCA applauds the government for measures announced in the budget related to providing supplementary education in regional languages for class 1-12 students, by expanding PM eVIDYA program to over 200 TV Channels and the launch of the Digital DESH e-portal for skilling, upskilling & reskilling the youth of India. These together with the development of the digital university for world-class quality education will set a clear path for India to create an advanced digital learning infrastructure and also reach far in educating learners who lack access to the internet and other resources.”