Union Budget 2022: What does it have for the Industry?

Sudhakar Singh, Editor

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Being called a non-populist budget at a time when there are several upcoming state assembly elections, the Union Budget for financial year 2022-23 aims at boosting the economic growth, expecting its returns to percolate down to the bottom of the pyramid.

Setting the stage for what it calls ‘Amrit Kaal’ of 25 years (from 75 years of independence to 100 years of independence i.e 2047), Government has shaped the goal with three facets: 1) Focus on growth and all inclusive welfare, 2) Promoting technology enabled development, energy transition and climate action, and 3) Virtuous cycle starting from private investment, crowded in by public capital investment.

Finance minister Nirmala Sitaraman classified the government’s priorities in four categories: 1) PM GatiShakti, 2) Productivity Enhancement and Investment, Sunrise Opportunities, Energy Transition and Climate Action, 3) Inclusive Development and 4) Financing of Investments. For the PM GatiShakti scheme, she said, “Rs 20,000 crore will be mobilized through innovative ways of financing to complement the public resources.”

The plan consists of seven engines namely roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure. When it comes to productivity enhancement, the budget has emphasized trust based governance and integration of central and state level systems through IT bridges, among several other initiatives.

Given the increased focus on infusing capital, the budget seems to be an attempt to induce growth by galvanizing economic activity. Let us look at some of the important propositions which the budget entails for the industry.

Modern infrastructure and logistics synergy

Through the master plan of PM GatiShakti, the union budget seeks to effectuate world class modern infrastructure and logistics synergy. It sets out to formulate a Master Plan for expressways with a goal of completing 25000 km national highways in 2022-23. The budget also makes way for a Unified Logistics Interface Platform allowing data exchange among all mode operators. It proposes Open Source Mobility Stack for seamless travel of passengers and four Multimodal Logistics parks through PPP.

To bring about logistics synergy, the government has decided to integrate Postal and Railways Network facilitating parcel movement. Moreover, ‘One Station One Product’ model has been announced through which railways will develop new products and efficient logistic services for small farmers and SMEs. The budget has also given consideration to multimodal connectivity between mass urban transport and railway stations along with capacity building for infrastructure projects.

Sustainable and technology driven agriculture

With the intent of moving towards a greener future, the union budget seeks to promote chemical free natural farming starting with farmers’ lands close to river Ganga.

Promotion of post harvest value addition, consumption and branding of millet products is also in the offing. On the technology side, it plans to enable the delivery of Digital and Hi-Tech services to farmers in PPP mode. Usage of Kisan Drones to aid farmers and launching of fund with blended capital to finance agriculture start ups also feature high in the government’s priorities. In addition, it aims to implement Ken Betwa Link Project which would benefit 9.1 lakh hectare farm land and provide drinking water to 62 lakh people while generating 130 MW power.

Productivity Enhancement

Calling its productivity enhancement strategy as Ease of Doing Business 2.0, the government has introduced several changes to make it easier for businesses to run. It has decided to expand the scope of PARIVESH Portal to provide information to the applicants. PARIVESH is a workflow app developed for online submission and monitoring of proposals seeking various clearances from government authorities. The government has decided to accord a Unique Land Parcel Identification Number for IT based management of land records.

In addition, it plans to establish C-PACE to facilitate voluntary winding up of companies and introduce end to end online e-Bill System and utilize surety bonds in government procurement. The government is also going to set up an AVCG (Animation, Visual Effects, Gaming and Comic) task force to promote the E-sports industry. Among other announcements, the government vows to support 5G under PLI scheme and open up defence R&D for industry, startups and academia.

As for the reaction from the industry, India Inc has welcomed the union budget and called it futuristic and growth driven. Here is what some of the industry experts had to say about the budget.

Shohab Rais, Chief Operating Officer, Indian Chemical Business, Tata Chemicals says, “The government this year is very clear on its move towards enabling energy transition through provisions for boosting domestic manufacturing of solar power equipment and batteries, in line with India's larger global commitment of tackling climate change. The government’s major allocation is towards focusing on the growth of grid-connected energy storage and supporting incentives for green bonds. The budget is very well thought through in terms of enhancing domestic value addition by reducing customs duty on certain critical chemicals namely methanol, acetic acid, and heavy feedstocks for petroleum refining, while duty is being raised on sodium cyanide for which adequate domestic capacity exists. Also, PM Gatishakti and specifically, focus on waterways, ports, roads, and railways, coupled with the proposed unified logistics’ interface platform will help improve supply chain efficiency and reduce logistics’ costs across sectors”.

Rajesh Bhatia, Group President (Finance & Accounts) & CFO at UFlex Ltd says, “The 2022 budget echoes India’s mission to becoming Atmanirbhar Bharat which is encouraging for organizations like ours that have always been at the forefront to highlight Indian talent and generate growth for the economy from international markets through our businesses and manufacturing plants abroad. The measures that will be undertaken hereon will be beneficial for our economy in the long term, and will also help growth of the manufacturing sector in India. By incentivizing exports, India is enabling expansion in the export sector and promoting locally produced and sourced components which is a positive step forward.”

Anshul Singhal, Managing Director, Welspun One Logistics Parks says, “The Union budget presented by the Honourable Finance Minister highlighted a vision of a brighter and more digitally advanced country. The focus on multimodal connectivity through the PM Gati Shakti program between mass transport and railway stations, 100 New Cargo Terminals to be developed in the next 3 Years, expansion of highways and railway development projects give us more confidence to invest in the sector and build Logistic Parks. The aim to expand the National Highways network by 15% in the next financial cycle along with targeting 25,000 km of National Highways construction is a great push for the infra sector. Gati Shakti will help lay the foundation for big private investments in infrastructure development. A completely paperless, end-to-end online e-Bill System will help enable the suppliers and contractors to submit digitally signed bills, reduce costs and track their status from anywhere. A unified logistics interface platform will enable efficient movement of goods reducing costs and time. Additionally, it will enable the government to create a blueprint for 'Amrit Kaal' for the next 25 years - from India at 75 to India at 100. Overall, from a sectorial point of view, the next cycle looks even more promising not only for the Indian infrastructure but also for sectorial investments.”