Union Budget 2022-23 to aid India retain position as fastest growing major economy in 2022

“The budget 2022-23 focuses on four major pillars, which include infrastructural push, inclusive economic development, transition towards greener economy, and capital creation. With an increase in the capital expenditure by 35.4% in 2022-23 budget, GlobalData forecasts Indian economy to grow by 7.9% in 2022.

“A big push to manufacturing sector under the scheme of ‘PM Gati Shakti’ with focus on public investments to modernize infrastructure via multi-modal approach will provide impetus to overall economic growth. GlobalData estimates extension of tax benefits for startups and incentives to attract investments to help industry sector grow by 9.8% in 2022 in nominal terms.

“With regards to agriculture sector, the budget focussed on enhancing minimum support price, encourage tech usage, introduce chemical free farming, kisan drones among others to increase overall productivity and make agri-sector self-sufficient in the coming years. GlobalData forecasts agriculture sector to grow by 10.8% in 2022 in nominal terms compared to 9.7% in 2021. The government’s decision to bring 100% of post offices under the core banking system will generate greater accessibility to credit in rural areas for farmer, senior citizen, and small startups.

“To foster better usage of green technologies, the government envisages encouraging private sector to invest in sustainable and innovative business models for battery and energy as a service. To aid development of EV markets, the budget introduced a battery swapping policy.

“In technology spectrum, the announcement of rollout of 5G as part of production linked incentives (PLI) scheme will provide impetus to the growth and affordability of broadband and mobile communication in rural and remote areas. GlobalData forecasts Internet users and broadband subscribers to grow at an average annual rate of 6.9% and 9.1%, respectively, over 2022-25.

"The introduction of digital currency, however, at the cost of higher taxation on digital assets is expected to bring in accountability. Meanwhile, higher tax on digital assets is expected to increase the government revenue.

“Overall, the budget is inclined towards infrastructure development, financial inclusion, R&D investments to ease supply-chain disruptions and sops to big corporates to attract FDI. However, it fails to address the much-needed tax relief for salaried class, which could have boosted the consumption demand at micro-level. Given the rise in Omicron cases, gig economy is still displaced and attracted no incentives from the government this year.”