On Tuesday, Finance Minister Nirmala Sitharaman said in the Lok Sabha that the Union Budget 2022-23 would establish the groundwork for India’s economic growth and progress for the next 25 years.
It is worth noting that for the following reasons, the Union Budget 2022 arrived at a critical moment for the public and policymakers:
- Approaching elections in five states
- The imminent omicron danger
- The nascent economic recovery
- Crucial figures such as the budget deficit, tax revenue, and spending outlook
According to Economic Survey 2022, the government of Prime Minister Narendra Modi hopes to lead the globe in economic growth this year as a result of the post-pandemic recovery.
Here’s how industry leaders, market leaders, and startup founders have reacted to the budget.
Have you missed Union Budget 2022 Highlights? Don’t worry; we have got you covered. Here’s Union Budget 2022: Summary, Key Developments, and Things You Need to Know.
Union 2022 Budget Reactions
Digital Rupee and Virtual Assets
“The RBI will create central digital money based on blockchain in 2022 and 2023. It is envisaged that the taxes of such currency would be clarified, as there are aspects of classification (capital asset or otherwise), taxation rate, and transparency obligations to be addressed.”
“Virtual digital asset income will be taxed at a rate of 30%. Other than the cost of acquisition, no deductions will be allowed. TDS on sale will be used to record transaction details. In the hands of the recipient, a VDA gift will be taxed,” said Deloitte India Partner Tapati Ghose (1).
“Virtual assets are now taxed consistently. So, at the very least, we know what to expect this year as tax filers. Individuals may have desired lower LTCG taxes and the ability to carry losses from equity or property forward. But it’s a beginning,” said Adhil Shetty, the CEO of BankBazaar.com (2).
“The tax regime establishment for digital assets is a crucial step toward mainstreaming this asset class. It reflects the government’s growing recognition of digital currencies as part of the economic framework,” said Abhay Sharma, Partner at Shardul Amarchand Mangaldas & Co (3).
“The union government’s announcement of a 30% tax on cryptocurrency is a progressive measure. It opens the window for more individuals to use ground-breaking blockchain technology. The plan to establish an RBI-backed CBDC by 2023 is a fantastic choice that reflects the government’s forward-thinking strategy,” said Nikhil Sethi, Founder and Managing Director of Zuvomo (4).
Taxation and Holiday
“The government has extended the startup tax vacation and the concessional tax for industrial startups By a year. While this was expected, it does not meet the primary requirement of entrepreneurs for a five-year tax vacation, as necessary. The budget’s announcement to create an AVGC (animation, visual effects, gaming, and comics) promotion task group to plan and grow domestic capacity for serving domestic and worldwide markets is one of the more optimistic features,” said Ankit Kedia, Founder, and Lead Investor at Capital A (5).
“Surcharges on long-term capital gains on listed shares and equity funds are capped at 15%, but surcharges on other LTCG still depend on overall income. The FM has now proposed a limit on all LTCG,” said Balwant Jain, a tax and investment expert (6).
“The deadline for qualifying companies to incorporate to claim the income tax holiday incentive has been extended by one year, until March 31, 2023, which is a positive step for the sector. As a result of the extension, more eligible startups will be incorporated in the coming fiscal year. Furthermore, capping the surcharge on long-term capital gains on the sale of unlisted equity shares (from a graded surcharge of up to 37% to 15%) reduces the effective long-term capital gains tax rate in the hands of investors, founders, and founding team members from 28.49% to 23.92%,” said Gaurav Chadha, Business Tax Partner, EY India (7).
“In light of the Covid-19 pandemic, the extension of tax advantages to companies for another year, till 2023, is a welcome decision.” The government’s focus on boosting digitization, promoting digital and financial inclusion, and proposing a slew of other efforts to make conducting business easier will be significant growth drivers in the country,” said Appalla Saikiran, Founder and CEO of SCOPE (8).
5G and Telecommunication
“The telecommunications and related sectors would benefit from continued focus on the necessity of mobile connection and broadband for economic development, particularly in rural India. PLI’s inclusion of design-led projects for 5G and other technologies is a great first step. While it has been announced that Bharatnet optical fiber cable contracts will be implemented through PPP, an expeditious strategy is required to avoid delays, given the PPP model’s varied history in other infrastructure sectors,” said Jaideep Ghosh COO of Shardul Amarchand Mangaldas & Co (9).
“Deep technology is a concept that has reached its apogee. So far, we’ve concentrated solely on the application layer, which has brought solutions to problems and opportunities for business. The strategic depth will be provided through a concentration on deep technology. I hope the government continues to expand and extend this,” said PN Sudarshan, Partner and TMT Industry Leader at Deloitte India (10).
“Although one of the principal focal areas of this year’s Budget was tech-enabled development, no important announcements on technology proliferation and promotion in the media or media-tech segments of the country were made. The Communication-Oriented Service Sectors were also largely ignored in the Budget, which surprised us,” said Shalu Jha, Co-founder and Director of PRandit Solution (11).
She added, “however, the FM’s statement that existing tax benefits for businesses will be extended for another year is a good measure that will provide much-needed relief to startups suffering from the pandemic. I’m particularly pleased to see that the digital economy continues to be rewarded and encouraged in this year’s Budget proposals.”
“We see Budget 2022 as a forward-thinking, growth-oriented budget with a number of good implications for industry and infrastructure. The government’s plan has encouraged us to boost economic growth by investing in infrastructure,” said Amrit Acharya, Co-founder, and CEO of Zetwerk (12).
“The 35% increase in CAPEX, which is the greatest budgeted allocation for infrastructure ever, would not only encourage industrial production but also stimulate investments, enhance utilization rates, and promote the construction of an integrated manufacturing environment,” added Acharya.
“It’s encouraging to see India evolving into a technology-driven economy, and the Union Budget 2022-23 demonstrates this even further. We are pleased that the budget plans emphasize the growth of India’s startup ecosystem and the promotion of technology adoption across industries. At a larger scale, a focus on sunrise industries and supporting policies for AI, geospatial systems and drones, genomics and pharmaceuticals, and other technologies can aid sustainable development,” said Rajan Kumar, Founder, and CEO of Entropik Tech (13).
“The digital economy will undoubtedly be accelerated by budget spending in R&D to advance technical breakthroughs. Furthermore, extending the tax vacation for another year will be extremely beneficial to new businesses and provide a much-needed boost,” he explained.
“Over the upcoming six years, the Indian government has set aside Rs 64,180 million to develop healthcare services and infrastructure. As the healthcare sector recovers from the pandemic’s effects, this funding will give the country’s healthcare infrastructure much-needed respite and assistance. The ‘National Digital Health Ecosystem’ launch is another positive step toward ensuring inclusion, universal access, transparency, and improved governance in the healthcare industry,” said Saurabh Kochhar, the Founder and CEO of Meddo Health (14).
“The Union Budget has prioritized infrastructure and the Make in India initiative. However, in terms of the health and wellness industry, the Budget fell short of expectations. Although the FM has made some encouraging announcements, including the launch of the National Digital Mental Health Program and the National Tele-Medicine program, it is clear that the government is committed to addressing the mounting mental health challenges of our country’s pandemic-wounded people. Additional incentives or tax breaks for wellness and holistic healing allowing firms or startups may be required in the future” said Shivam Singhee, Co-founder and CEO of Awshad (15).
“Amid the coronavirus pandemic, several entrepreneurs have stepped up to solve India’s growing mental health problems. Globally, people suffering from depression and anxiety disorders have increased by roughly 25%, with a 35 percent increase in India alone. The National Mental Health Program and Health and Wellness Centers alone would not have been able to reach every person in crisis at any given time. Everyone attempting to assist with the problem was concerned about the ease of access. The government has recognized this, which has responded by introducing a Telemental health service. The budget, which emphasizes the need to focus on mental and emotional wellness, speaks about our nation’s progressive approach,” said Co-Founder of LISSUN, Tarun Gupta (16).
“The lack of information and availability was the most significant barrier to providing excellent health care. A person living in a tier 2 city may be unaware of a potential medical institution to help him with his current problem. This particular gap will be closed in one fell swoop with the launch of the open platform for the National Digital Health Ecosystem. As stated in the budget, the platform would consist of digital registries of health practitioners and health institutions for information access and availability,” said Dr. Preet Thankur, Co-founder of GlamyoHealth (17).
“The Union Budget 2022 emphasized the importance of educational institutions adopting a progressive and inclusive approach across elementary, secondary, and higher education. Announcements such as the e-vidya plan and the ‘One Class One TV Channel’ broaden students’ learning horizons and encourage inclusivity by promoting regional languages equally. Adopting technology and digitization will aid a student’s evolution into a global citizen. The establishment of the Digital DESH e-portal and a focus on reskilling and upskilling will improve vocational learning and job preparedness,” said Rajiv Bansal, the Director of Operations of Global Indian Internal School (18).
“The Union Budget has brought in beneficial initiatives in the sphere of education, which will provide the industry a boost, especially in the backdrop of the pandemic. Focusing on digitization, bridging the rural-urban divide, and making online education accessible to all pupils are positive steps. The Budget places a strong emphasis on upskilling and digital learning, which is commendable. The announcement of one class, one channel, and an increase to 200 channels under e-vidya would allow online education to reach a large number of students in areas where it is still not widely available,” said Shweta Sastri, the Managing Director of Canadian International School in Bangalore (19).
“The Indian government has highlighted the need to develop digital infrastructure. The government has recognized the need for a nationwide eVidya initiative and a digital university, particularly in the education sector. It also provides new-age tech businesses opportunities to engage and contribute to the government’s strong digital infrastructure efforts. New enterprises have been using technology such as AI, machine learning, and data analytics and have shown promising results that could help fund national education projects,” said Sarvagya Mishra, Co-founder and Director of SuperBot (20).
Agriculture, Sustainability, and Climate Action
“The budget for the fiscal year 2022-23 has laid the groundwork for a greener, cleaner future for our economy. Sovereign Green Bonds will undoubtedly reduce the economy’s carbon intensity by mobilizing funding for green infrastructure. It would have been the frosting on the cake if the budget allocation in the renewable energy sector had been closely tied to local livelihood generation. A welcome move is the announcement of the Vibrant Village Program, which includes decentralized renewable energy resources for settlements on the northern border. The traditional textile sector does not have much of a future. On the other hand, the budget encourages textile exports by exempting numerous decorations, which may indirectly benefit genuine exporters working with traditional crafts,” said Abhishek Pathak, Founder and CEO of Greenwear (21).
“The Central Government’s ongoing push for electric vehicles and climate action is commendable, and the same sentiment was echoed in this year’s Union Budget. The government’s willingness to accommodate new-age business models such as battery swapping is a positive step. The effort to support battery-as-a-service and energy-as-a-service business models will give rising indigenous entrepreneurs in these fields even more traction. Simultaneously, the financial decoupling of batteries can speed up adoption regardless of switching. It would be amazing to see some great climate-focused lending lines emerge from blended finance in the future. Bringing electric vehicles and batteries into the priority loan sector was also expected this time. Still, it was not included in the Budget, which is disappointing,” said Dr. Akshay Singhal, Founder of Log9 Material (22).
“The launch of green bonds to raise financing for carbon footprint reduction could be a watershed moment for sustainability-focused enterprises.” The green bonds will help public-sector projects, supporting and growing ancillary private-sector enterprises that offer products and services to these projects. The proposed modifications to SEZ administration and reducing customs to solely risk-based checks will greatly improve the productivity and effectiveness of export-oriented units that create products and services for the global market. This fiscal year, opening 5G spectrum sales would result in a new mobile and IoT gadgets wave. It would lead to a new spike in demand from early adopters for 5G-ready products, also leading to a scale in demand for refurbished products in this market,” said Dipanjan Purkayastha, Co-founder and CEO of HyperXchange (23).
“The announcement of a battery swapping policy and a charging station set up a plan in the Budget only refueled the continuing push.” The battery switching strategy will make the battery a reality, intended to lower the vehicle’s operating costs. With the rising popularity of EVs, there is a need to expand the support infrastructure simultaneously. Internally, service startups, like new-age auto tech, are upskilling and reskilling to support the maintenance end. As part of the government’s ambition, we have already launched India’s first learning management system to bridge the gap between trained and semi-skilled workers across the country,” said Mridu Das, Co-founder, and CEO of Automovill (24).
“Any mismatch in production and post-sale requirements, such as the lack of charging infrastructure, would have stifled the eMobility mission’s ultimate goal. This budget will help not only automakers but also vehicle service providers,” added Das.
Although the real estate market was anticipating several quick demand-side pushes, certain big chances for the sector were overlooked. The push for infrastructure spending and sops for affordable housing, on the other hand, has kept the industry optimistic about positive improvements. While affordable housing remained a top goal for the administration, with a few more reforms, the government might have given a boost to the whole real estate sector, which drives the Indian economy and supports more than 250 related companies,” said Raman Sastri, the MD, and Chairman of Sterling Developers (25).
“The Budget struck a delicate balance between fiscal restraint and economic recovery. It focused on a tried-and-true technique of increasing capital expenditure to boost growth, intending to crowd private investment by increasing government spending. Although a greater budget deficit of 6.4 percent of GDP for FY23 than forecast may disappoint markets, it may be sensible to avoid extreme fiscal consolidation at this stage of the recovery. While increased market borrowings are likely to put downward pressure on bond yields, the inclusion of green bonds in the borrowing plan is a novel idea,” said Abheek Barua, Chief Economist and Executive VP at HDFC Bank (26).
“In terms of specific policy announcements,” he continued, “the trend toward self-reliance through protection for domestic manufacturers (change in custom and import levies) corresponds with Atmanirbhar Bharat’s long-term goal,” added Barua.
“The government’s focus on long-term growth assistance was emphasized in the Union Budget. The budget’s primary positives include a focus on expanding capital investment and future development drivers such as clean energy. The budgeted receipts and expenditures, as well as the fiscal deficit targets, are in line with our expectations,” said Suvodeep Rakshit, a Senior Economist at Kotak Institutional Equities (27).
“This is a budget that is both inclusive and progressive. The emphasis on the digitalization of education and updating college curricula will provide future human talent with the necessary tools. Both agri-based and service-based economies will benefit from advanced technology such as Kisan drones and battery swapping. The creation of a controlled digital currency is a step forward in the direction of utilizing blockchain and other exponential technologies,” said Nitesh Jain, Founder and CEO of BeSingular Academy (28).