Corporate sector hails Union Budget 2022 as 'growth-oriented'

Abheek Barua, Chief Economist, HDFC Bank commenting on Budget 2022-23 said the 2022-23 Budget finely balanced fiscal retreat with supporting economic recovery.

The Budget focussed on a familiar strategy of driving capital expenditure to drive growth, with the intention of crowding in private investment through higher public spending, he said.

He warned that the markets could be disappointed with a higher fiscal deficit of 6.4 percent of GDP for FY23 than expected, it is perhaps prudent to not undertake aggressive fiscal consolidation at this nascent stage of recovery.

Almost all economists had pegged fiscal deficit at 6-6.25 percent and called for immediate measures for fiscal consolidation but the fiscal deficit of 6.4 percent of GDP has surpassed the expectations.

While elevated market borrowings are likely to pressurise bond yields, inclusion of green bonds in the borrowing plan are an interesting innovation.

Money raised from investors through green bonds is used to finance environment-friendly projects, such as renewable energy and green buildings.

"In terms of specific policy announcements, the move towards self-reliance through protection for domestic manufacturers (change in custom and import duties) aligns with the long-term goal of Atmanirbhar Bharat," he said.

Moreover, there is an effort to weave in short term capital spending with the long term 25-year investment plan for India. Specific moves on education and mental health issues are critical and well-recognised in the Budget.

On the launch of Central Bank Digital Currency using blockchain and other technologies by RBI starting 2022-23, he said the move is likely to have an impact on banks, but the implications of the same will have to be thought through further.

Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank said, "The Union Budget for 2022-23 seeks to support the recent economic growth momentum India has seen, and help it sustain over the long-term."

The substantial rise in planned capital expenditure for creation of infrastructure, focus on affordable housing, welfare & development of MSMEs, and the farm economy will prepare India for the next phase of growth.

"This can lead to creation of millions of new jobs, helping India leverage its young demographic dividend. The new business opportunities and enterprises that will come up due to these projects will also benefit the banking sector," he noted.

The extension in timeline and increased outlay towards Emergency Credit Line Guarantee Scheme (ECLGS) and additional infusion of funds in the Credit Guarantee Trust for Micro and Small Enterprises will provide relief to MSMEs, especially those engaged in contact-intensive sectors, who have been adversely impacted due to the pandemic, he said.

The significant additional allocation towards PM Awas Yojana will boost demand for affordable housing, and in turn demand for housing finance, he underscored.

It was also heartening to hear about the Prime Minister’s Development Initiative for the North East Region find special mention in the Budget, in line with the capex projects planned for the rest of the country, he said.

Siddhartha Sanyal, Chief Economist and Head of Research, Bandhan Bank said the Budget attempted to balance the needs of large and small industries and various segments of the population in the budget.

The Budget aimed at near term boost to consumption, as well as creating the necessary physical and social infrastructure to support the country’s long-term growth ambitions, he said.

While the details of the plans related to government borrowing needs to be scrutinised closely, the Finance Minister was mindful of not allowing the deficit to balloon, he added.

He also welcomed the extension of the ECLGS scheme till March 2023, with a larger corpus of fund aimed at supporting MSMEs.

The CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) scheme to support small and micro enterprises should also provide much needed support for this segment, he opined.

Extending support for the affordable housing sector is heartening given the strong forward and backward linkages of this sector and its potential to generate employment at various levels, he added

"The focus on some of the long term priorities such as skill development, financial inclusion, social security, and clean energy in the budget remains noteworthy,” he said.

Dhiraj Relli, MD & CEO, HDFC Securities also hailed the Budget for being growth-inducing and does the heavy lifting by sharply increasing capital expenditure.

The focus on boosting manufacturing as well as an underlined emphasis on areas such as startups, modern mobility and clean energy, shows the FM has prioritised long-term growth, he noted.

"Individual taxpayers may feel a bit disappointed with the lack of direct tax cuts but this Budget lays the ground for a multi-year growth boom. The FY23 fiscal deficit has come in higher than expectations. Let’s hope the interest rates and inflation do not remain high for long,” he added.

Parag Satpute,  Managing Director, Bridgestone India, maker of auto and truck parts, said the PM Gati Shakti plan and the corresponding announcement of additional 25, 000 km of roads will spur growth in the mobility sector.

Hailing the Budget as a major milestone in India, Satpute described it "as forward looking that focuses on not only the economic health of the country but also takes into account physical and mental health."

"Government’s initiative on electric vehicles and the announcement on a battery swapping policy is a major boost to the nascent EV sector and will boost customer confidence in EVs," he said.

Anuj Puri, Chairman of real estate services company ANAROCK Group said the budget provided a broad-spectrum booster shot to the economy, with the FM emphasising the top priorities of the government - PM Gati Shakti for sustainable growth, inclusive development, productivity enhancement, and financing of investments.

The government also expanded the Capex target by 35.4 percent - from INR 5.54 lakh crore to INR 7.50 lakh crore - which may help boost overall spending towards economic growth, he said.

He opined that Sitharaman has manged to keep fiscal deficit well under control while providing emphasis on the need for proper urban planning, provides some relief to states.

Allocation of INR 48,000 Cr for PMAY Urban and Rural will push forward its ‘Housing for All’ initiative. Under PMAY, the government plans for 8 Mn houses in FY’23, he noted.

"To facilitate digital inclusion and aid fund transfer, 100% of 1.5 lakh post offices will come under the complete banking system. This will enable smooth and transparent real estate transactions in the rural areas and also encourage loan disbursal to the semi urban population," he said.

Further, increased focus on tier 2 and tier 3 cities for urban development, a high-level panel to be set up for urban planning and Data Centres given infrastructure status will give an impetus to this segment of the real estate sector.

Dhruvil Sanghvi, Founder & Chief Executive Officer, LogiNext, a technology and automation company that focuses on the transportation, home deliveries, omni-channel fulfillment and B2B distribution market said, “We welcome the move by the Government of India to boost logistics as a means towards ensuring economic growth.

The proposal to set up a Unified Logistics Interface Platform is a welcome move. Leveraging technology to complement the development of infrastructure will help bring in better efficiency, he said.

Furthermore, with real-time tracking, and inventory management as a part of the platform, this will go a long way in bringing India at par with global supply chain networks.

LogiNext has always been an advocate for digitisation of supply chains, and it is reassuring to see the Government work towards this.

The decision taken to extend the tax incentives provided to startups till March 31, 2023 is a reflection of the Government’s commitment towards ease of doing business in India, he added.

Vivek Lohia, Director, Jupiter Wagons and Chairman, National Council for Railways, ASSOCHAM, opined, "GatiShakti was the limelight of this year’s Union Budget, and rightly so, as it’s one of the integral pillars of growth for India. With strong government intervention along with private investments, the railway industry will largely benefit from this plan.

"We can expect the cargo handling capacity of railways to increase to 1600 MT by the year 2024-25, which will also accelerate the construction of two dedicated freight corridors. Furthermore, the government’s plan to set up 400 Vande Bharat trains and 100 Gati Shakti cargo terminals within the next 3 years along with building metro systems at scale, will add impetus to the development of the sector. We also applaud the "'One Station, One Product" plan which will enhance opportunities for the supply chain ecosystem."

Kamal Nandi, Business Head and Executive Vice President- Godrej Appliances, part of Godrej & Boyce, said, “The budget presented by the government aims to provide long run impetus for growth providing big technology push along with focus on infrastructure - digital access, road access, urban planning, which will help to boost consumption across multiple sectors including consumer appliances.

"Also, urban infrastructure development and completion of 80 Lac affordable houses under PM Awas Yojana in 22-23 will help entry level appliances over the next 2 – 3 years. An increase in the capital expenditure should also aid growth by driving up investments. Moreover, continued focus on PLI will help generate employment and boost indigenous manufacturing ecosystem."

Sameer Aggarwal, Founder and CEO, RevFin, an EV financing e-lending platform, said, "A 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."

Akhil Jain, Executive Director, MADAME, says, "The budget is growth-oriented with an impetus on capital expenditure to fuel economic growth and employment generation. Focus on technology-based development is encouraging and a step in the right direction. Orderly urban development is of critical importance.

"This will help realize the country's economic potential, including livelihood opportunities. This will facilitate tier 2 and 3 cities to take on the mantle for the overall growth of all sectors in the future. The garment industry should benefit from the increased demand due to higher disposable income in the hands of the population."

Nikhil Agrawal, Founder of Powerhouse 91 Some highlights affecting the startup ecosystem and eCommerce sector are quite encouraging. It was proposed to extend the startup tax holiday scheme to startups incorporated till March 31, 2023. This is particularly important since the number of new startups increased in 2021 for the first time in six years. As announced, ‘One Nation, One Registration’ will be established for anywhere registration to facilitate ease of living & doing business. This will give a boost to the upcoming startups.

PM Gati Shakti Master Plan for Expressways will help increase the infrastructure spending as well as boost logistics. This directly impacts the movement of goods on the road. Further, the government talked about the ‘Unified Logistics Interface Platform’ that would be in place for all mode operators. This will provide for efficient movement of goods through different modes, reducing logistics cost and time, assisting just-in-time inventory management, and eliminating tedious documentation. This will provide real-time information to all stakeholders, and improve international competitiveness.

In the defense sector, 68% capital procurement budget is earmarked for domestic procurement. This is a big step to shift defense manufacturing to India. Other than defense, the concessional rate of 15% has been extended by one year for newly incorporated manufacturing units which will give a boost to the Indian traders.