The countdown has begun for Nirmala Sitharaman’s fourth Budget on February 1 this year. All eyes are focused on union finance minister Nirmala Sitharaman’s annual budget 2022-23? Will she be able to put India on the path for economic revival, by increasing production, curbing inflation, and maintaining an eight per cent plus growth rate? Here’s what some of the industry CEOs expect from Finance Minister Nirmala Sitharaman’s budget on 1 February 2022:
Rishabh Khanna, Cognitive Scientist and Co-founder of Suraasa
The world has seen a change in the way we live. Education specifically has taken a new direction that has made technology-based learning, whether online or blended, indispensable for our education systems. Over 1 crore teachers of the country have pushed themselves to embed technology in their teaching systems and they need support in developing their capability on new-age teaching methods. I think that we should allocate a part of this education budget specifically to solve this need. After all, teachers are leaders in a classroom and our students can learn effectively only if teachers are able to interact with them on the same wavelength.
The education budget this year could define the way forward for us as a country and for the entire education system. We are looking forward to the union budget.
Sumit Garg, MD and Co-Founder of Luxury Ride
Given the covid-19 situation, the auto industry has made a paradigm shift towards online buying and selling of automobiles which was previously dominated by the offline market. The buying and selling of vehicles through online platforms have increased tremendously irrespective of the type of vehicle, be it a normal or luxury vehicle. Ahead of the budget session, I am hoping that the forthcoming Union Budget 2022 continues to promote the digitization of automobile sector laws, which will lead to increased vehicle sales, and also promote the faster transfer of ownership. Paving the way forward, I am hoping that our government will support cheaper taxes by giving some relaxation on the GST rate on used cars.
The reduction in GST will give the desired push to the industry and will ramp up the transition from an unorganised to an organised sector, which will bring more business under the GST umbrella and put an end to tax evasion. Also expecting some good announcements in favour of chip shortage, electric vehicles which will bring lucrative advantage to the Auto Industry.
Nirav Choksi, Co-founder & CEO, CredAble
2021 was a year of a record number of tech startup IPOs and unicorns in India.
We are optimistic that Budget 2022 will have a renewed focus on startups considering how India is now third in the unicorn race, replacing the UK. With the last budget allowing an exemption of capital gains for investment till March 31, 2022 — this year we are expecting incentives and policy measures that will relax the tax burdens on the sector, increase access to credit and create an investor-friendly ecosystem.
Last year we saw the Indian startup sector skyrocket with a 3x increase in the total funding. Even with rising unicorns, one of the biggest challenges that we see today is that the startup ecosystem as a whole lacks a compelling revenue base. There is an urgent need to infuse cash flow into the startup ecosystem. Additionally, tax exemptions in FDIs would be a welcomed move that will further aid in the globalization of these startups.
From the NBFCs point of view, there is a dire need to bring about stability in the sector. It’s important to take into consideration that NBFCs play a crucial role in promoting financial inclusion. Policies that will enable funding in the sector are expected to help NBFCs whether the current liquidity crunch.
In this regard, the priority sector lending of banks to NBFCs, which was previously mandated by the RBI; must be made available on an ongoing basis, subject to certain limitations. Further, issuing NCDs should be a less complex and more cost-effective procedure.
Ram Kewalramani, Co-founder & Managing Director, CredAble
The upcoming budget is expected to provide a massive impetus to the economy. Economic revival should top the charts as the number one priority for the government. Calibrated spending and need-based capital expenditure should be a part of the agenda. Businesses, in general, believe that Budget 2022 will be crucial in defining the way forward for the economy.
It would be good to have the budget focused on credit growth and employment generation. In light of the impending third wave, fiscal policy should continue to be supportive of economic growth. The forthcoming budget is expected to be one that’s directed towards growth and revenue generation.
This year, the nation is expected to step out of a very high fiscal deficit, in this regard we are hopeful that compromises on capital expenditure will not be made. With ambitious plans to develop the infrastructure, a higher allocation of capital expenditure is expected in this sector. The government is also expected to bring about significant reforms in the disinvestment or asset monetization programs. Measures to stimulate spending and consumption are much-needed for the recovery of the economy. Raising the budgetary allocation for the healthcare sector is a must, to help the country withstand any future crisis. The government should also look into reducing the tax compliances burden on businesses and simplifying the tax laws.
With strong plans of redistribution, we expect to see many support mechanisms and incentives provided to the poor and the low-wage workforce.
Nitin Sharma, CPTO & MD – SME Business CredAble
Given the staggering effect of COVID-19 on the economy, there’s a lot riding on Budget 2022 to revive the MSME sector from the severe slowdown caused by the 2nd and the 3rd waves of the pandemic. Increasing the collateral-free loan limit, simplifying taxation and steps towards quick digital adoption and automation in financial operations to strengthen the MSMEs’ local and global supply chains, should be the primary areas of focus.
In addition, the govt. should look at increasing the banks’ PSL lending quota to MSMEs which currently is under 10%. The other key angle that needs to be looked at is the last mile coverage for lending. To cover the geographical depth, banks should lend to smaller NBFCs depending on their past performance. These NBFCs have better reach when it comes to small businesses and empowering them will ensure broadening the overall credit coverage of MSMEs.
The government should also help MSMEs procure cheaper raw materials and human resources through subsidized programmes. With the MSME sector being heavily strapped for capital, there has been an uptick in the overall demand for credit. The government needs to introduce specific schemes to infuse more liquidity into the system and further ease the disbursement of funds to MSMEs. Last year, we saw the Finance Minister double the budgetary allocation for MSMEs with INR 15,700 crores. Similarly, this year too — providing adequate financial support to MSMEs along with reforms around import substitutes will help in boosting domestic manufacturing.
An easy GST framework would be a huge relief for MSMEs. This sector has its hopes pinned on the budget this year, for GST rationalisation — especially with the prices of raw materials in the manufacturing industry. Lastly, to position India as a leader in the global marketplace, trade policies and digitization initiatives must be introduced to help MSMEs move beyond domestic borders.
Sidharth Agarwal, Director, Spectrum Talent Management
As part of the Covid-19 recovery plan, the government introduced the Atmanirbhar Bharat Rojgar Yojana (ABRY) to address job losses and boost formal employment. The Staffing Industry is the largest sector to provide formal employment, thus with the Union Budget 2022, Government should recognise employment generation as “merit services”, under the Central Goods and Services Tax Act and should reduce its Tax Slab. In addition, there has also been a significant increase in Work from Home which has led to an increase in expenses to set up a home working space for which the upcoming budget should provide a tax break.
From 2015 to 2019, the Ministry organized nine tripartite discussions in which all the Central Trade Unions, Employers’ Associations and representatives of State Governments were invited to give their opinions/suggestions on labour reforms. Thus the much-anticipated new Labour Code is supposed to boost business continuity and job creation across industries, specifically the manufacturing sector, MSME & startups. However, in a labour surplus country like India, the contractual relationships also have profound effects on worker interests and we expect the Union Budget to introduce a proper implementation strategy with timelines. We further expect the Budget to also roll out the social security & wage code to all fifty crores unorganized workforce
