India Inc. is rubbing its hands in glee at the bevy of goodies the Union Budget has thrown their way. Increased capital expenditure, a host of infrastructure projects—ranging from affordable housing to urban planning scheme—and an added vigour in digitisation have all thrilled corporates at the prospect of continuity in reforms that the pandemic seems to have afforded the government.
Sanjiv Mehta, chairman and managing director of the country's biggest consumer company Hindustan UniLever and president of the industry chamber FICCI, called the budget “pleasing”, while Pradeep Multani, president of the PHD Chamber of Commerce and Industry, called it “pragmatic” and “promising”.
Finance Minister Nirmala Sitharaman, who tabled the budget in Parliament on Tuesday afternoon, billed it as a blueprint not just for financial year 2022-23 but for the next 25 years leading up to the centennial of Indian independence. Holistically, the budget continues with the structural reforms and massive capital expenditure initiated by the government in the wake of the pandemic in 2020, accentuating on reforms on the supply side that could lead to long-term growth rather than quick fixes aimed at immediate issues.
This had led to massive public investment in reformative policies aimed at pushing productivity and entrepreneurship, with a specific focus on domestic manufacturing. While the Union budget last year pushed the agenda with a massive injection of capital for infra projects envisioned on a 'trickle down' effect, this year's budget carries forward on the same tracks, investing big in infra, transport, urban planning and digitisation. And, most importantly, on taxes that go easy on the corporate wallet.
“There has been broad consistency in policy and tax rates, and [industry is] also pleased with the boldness of the budget, which is conscious [of the fact that] it will take some time for private consumption and private capital expenditure to pick up,” said HUL's Mehta. “Increasing capex by 35 per cent is absolutely the right thing to do and it will help in the multiplier effect [that] will help us grow. This augurs well for the country.”
Effective capital expenditure of the government is estimated at an effective Rs 10.68 lakh crore (7.5 lakh crore coming from the Central exchequer) in 2022-23, with schemes like Gati Shakti, extension of emergency credit line to small-scale hotels and restaurants and startups being invited to research and develop for the defence sector. Infra expense, including the new proposal to build a highway network for the hill regions, will involve participation from not just private sector, but state governments as well.
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“With infrastructure development as a key focus area, with Rs 7.5 lakh crore of capital investment, 68 per cent of capital buy in defence sector under 'Make in India' will catapult the growth of capital goods,” said Ravi Raghavan, co-chairman of the CII National Committee on Capital Goods & Engineering. “Budget 22-'23 is undoubtedly a booster budget!” he said.
While the opposition has lambasted the budget as having nothing for the middle classes, Indian industry is in high spirits over the focus on roads, railways, airports, mass transport, waterways and logistics infrastructure, which throws up oodles of business options over the coming months from the government and its e-marketplace.