New Delhi: Union Finance Minister Nirmala Sitharaman during a press conference at the National Media Centre, in New Delhi, Tuesday, Jan. 18, 2022. (PTI Photo)Budget 2022 Expectations Highlights: Amid concerns over the recent wave of the Omicron variant of the coronavirus (Covid-19) on India’s GDP growth, Finance Minister Nirmala Sitharaman is set to present her fourth Union Budget Tuesday, February 1, 2022.
The Budget session of Parliament is set to kick off on Monday, January 31, 2022, with President Ram Nath Kovind addressing both the houses. The session will be held in two parts – the first part of the session would conclude on February 11, 2022. After a month-long recess, part two of the session would begin on March 14, 2022, and conclude on April 8, 2022.
With just a few days left for the all-important event of the Indian financial calendar, various market experts, economists and financial experts have their eyes on the Budget session. We take a look at what India Inc and other experts in the market and economy expect from the upcoming Budget 2022 in our LIVE blog:
"Fintech has played a major role in promoting transparency, cashless economy and access to timely payments to underprivileged in remote corners of the country. It is one of the important ‘Shared Services’ that would help connect and promote digitization in Indian agriculture, Indian MSMEs and informal economy.
It is imperative to provide the conducive environment to both new and existing fintech companies/start ups , in terms of easing access to funding at concessional rates and lower taxation by providing ‘Infrastructure Status with special provisions’ for the new-age yet important nation building industry such as Fintech."
"While the core educational services are fully exempt from GST, the definition of educational services is limited to services provided by educational institutions to its students, faculty and staff. Our expectation is to review this and make this more inclusive for entities catering to educational services as well. The edtech companies should get support on the GST so that these solutions can be made more affordable and used by a much larger student base democratizing access to quality education. Furthermore, to support adoption of technology, we would expect the government to review special incentives/ schemes to enhance the ecosystem."
"A singular focus on augmenting offline MSMEs with online distribution could be a game-changing economic transformation opportunity, not just for the MSMEs, but also for India. We would like to see the government focus on policies that will create a level playing field for offline and online sellers with < INR 40 Lakh turnover. Harmonizing and simplifying GST compliance requirements for online sellers will enable millions of small businesses to leverage the potential of e-commerce and contribute to India’s growing digital economy. In addition to this, we hope the government incentivizes capital formation in the area of logistics and cold chains through policies and infrastructure development."
Considerations for MSMEs in India:
“MSMEs are the backbone of the Indian economy and have an important role to play in the country becoming self-reliant. Given 2 years of uncertainty and the on and off shutdowns, these businesses have faced issues with constrained cashflows, increasing input costs, and a continuous compliance burden. The government has taken several steps to help alleviate these concerns, and several more, with a primary focus on increasing access to lower cost capital, relaxing conditions under the GST Law related to availing Input Tax Credit, along with improvements to curb increases in input costs will go a long way in uplifting the sector that provides the most employment in the country.”
Considerations for Software Product Industry:
“India has the potential to create the next software product hotspot in the world. We have the talent and the will to achieve this dream. The digital India and Make in India movements of the Government have certainly paved the way for the industry, but further regulatory support will unlock the true potential of this industry.
The first thing is to recognise Software Products as a category in its own right where classifications under both the HSN and SAC codes. This classification will help in providing clarity and appropriate incentivisation for the industry. It is then important to recognise that software products are research and development led businesses that can have lengthy gestation periods to commercialisation, and therefore the Government should continue to incentivize the research and development credits.
Sales and distribution of software products with the current classifications are difficult and cashflow consuming, whereas the same cannot be said for other products in the country. Presently, the Income Tax rules do not distinguish products and services and so TDS at 10% is applicable on the sale of software versus TDS at 0.1% for goods. A correction here is imperative to spur growth for the domestic sale of software products, especially to smaller businesses across the country.
Finally, the government should treat this industry similar to a high skilled manufacturing company since many of the contours are similar and so a reduction in corporate tax rate to 15% can enable large investments into the sector creating highly skilled and highly paid jobs.”
"This is the opportune time to introduce PLI for the furniture and associated industries.
The real estate industry is going through an unprecedented boom globally post Covid and India is no exception. This has led to the demand for home interiors shooting up and the Indian furniture industry is in the middle of an unprecedented boom in the organised sector. This is projected to be close to $30Bn in FY22.
However, the manufacturing is still being done in other SE Asian countries as the overall costs are still much higher for manufacturing in India. Given that there is a global crisis in the supply-chain because of which costs are temporarily high, it is the appropriate time to give a significant boost to the large players in the furniture industry to manufacture in India. I would request for the Minister to consider a PLI for the furniture and associated hardware industries. This will ensure that we are able to divert most of the manufacturing requirements domestically thereby generating much needed employment, investments and help the industry break from the stranglehold from China and other countries."
"With respect to the aftermath of the COVID-19 pandemic, the Indian economy grew 8.4% in the 3rd quarter of 2021. While India is going through another wave of the pandemic, it is crucial to closely examine and redefine the wealth, investment, and tax reforms of the country. To keep the growth intact, tax policies on investments in global stocks and foreign direct investments should promptly be reviewed. While the tax revenue is of crucial importance to the recovery of the Indian economy, a balanced approach towards GST, property tax liability, and stamp duty will play a very important role in determining an average Indian’s ability to invest in the real estate sector. Starting from the remotest of areas in the country, a focus on investments in townships and infrastructure is equally important to help the Indian economy rise back to its full potential."
"2021 has been the year of the unicorns and also the time taken by startups to become a unicorn has also decreased. These unicorns have created employment and have contributed to creating a new commerce and economy. At present the tax rate for capital gain on unlisted shares are different vis a vis the listed shares resulting in higher tax outflow for startup founders and early stage investors. They could be rationalized at par with listed securities to bring parity, Also, with the new commerce, gig economy has been on the rise with jobs being created through e-commerce firms. Bringing these new kinds of jobs under the minimum wages ambit shall provide a good social security cover to this vulnerable set of gig workers like delivery boys etc."
"The Indian startup ecosystem skyrocketed in 2021 to become the third-largest globally with 78 unicorns, 8 IPOs and a 3x increase in total funding over last year to touch $39 billion. However, despite a stellar show, two challenges are predominant in the Indian startup space; (1) many unicorns in India lack a compelling revenue base and require an infusion of cash flow for survival (2) the need to accelerate their digital transformation with technology and platforms. Hence, in 2022, the government should look at assisting startups through policies and support mechanisms towards domestic capital participation, favourable investment climate in tier 2 and tier 3 cities, incentives to set up incubators in every state, tax exemptions in foreign direct investments, and a high focus on startup infrastructure development. This will also help in the globalisation of Indian startups as ~42% of them are planning to go global in 2022."
"GoGoA1 is appreciative of the steps taken by the government for the promotion of EV in India.
Challenges
In the current system of approvals, we have to take Transport Department permissions in every state of the country, which I feel is delaying the registration process of the EV bike conversion. Centralised permission will help in a faster EV conversion process and we can reach out to more consumers and companies.
Subsidies
The Indian Government has taken excellent steps in promoting new Electric vehicles with subsidies, infrastructures like charging stations, and policies. The Government is also promoting a vehicle scrapping policy of non-registration of petrol vehicles over 15years and diesel vehicles over 10years. Indian treat their vehicles as life partners and do not intend to sell them frequently. Delhi government has announced an EV conversion policy, for such vehicles which will enable these existing vehicles to still be on roads with more than 5-7 years added to its life. We expect subsidies, and policies which will benefit the retrofitting industry and the consumers alike in converting their existing vehicles into electric vehicles.
Reviewing GST for conversion kits
One of the key elements in the cost of the conversion kit is the 18% GST being paid. The new motorcycles are getting subsidies like implementing 5% GST, so they can sell the new products at a reduced rate. We are hoping for a similar simple reduction in the GST rates on EV conversion kits which will make them more affordable, and more people can convert their regular fuel motorcycles into EV motorcycles."
"The NBFC sector has witnessed liquidity crunch in the last few years. Therefore, boosting the liquidity flow to fintechs and smaller NBFCs focused on consumer credit would be key to reviving economic growth and putting the economy back on a double-digit growth rate trajectory. In a bid to ease lending, the government also could promote banks to specifically fund fintechs and smaller NBFCs which are furthering financial inclusion in the retail segment. Another welcome move could be the Extension of tax sops on MLDs which has the potential to increase the flow of capital to the fintech space. The government’s policies can also be helpful in promoting the flow of overseas capital by easing the requirements and thresholds for Indian debt instruments. Similar to credit guarantee schemes for Micro and Small Enterprises (MSEs), I'm hoping the Government would look at credit guarantee schemes to retail borrowers to boost retail demand."
"With the ongoing pandemic, there have been indications of recovery, but this must be sustained in 2022 to help revive our economy. This should be one of the main agendas of Budget 2022. We believe the government can offer support to help reduce import dependency and implement forward-thinking fiscal measures to boost domestic output. Further, the focus can also be on future challenges such as developing a competitive manufacturing sector and climate change.
Recently, the retail industry has been forced back into survival mode due to increase in cases of the new Omicron variant. Given the prospect for production to drop as a result of current and proposed curfews, the sector may expect relaxation in the production targets that were under the PLI scheme.
Many nations pledged for a sustainable future at the recently concluded United Nations Climate Change Conference (COP 26). The forthcoming Budget will be critical in shaping the tomorrow of India's energy path, with the country putting a target of 2070 to achieve net-zero carbon emissions. Furthermore, there might be emphasis on taking steps to boost production using emerging technologies and automation, which will not only boost both quantity and quality but also highlight the significance of switching to energy-efficient solutions. Under Modi ji’s visionary leadership, manufacturing sector has always received the much-required support for growth and we are very optimistic that this sector will continue to get the backing from the government led by our Prime Minister Narendra Modi Ji and provide the country's economy a much-needed boost through the upcoming budget."
"In the upcoming Union Budget 2022-23, we expect to see initiatives that would further strengthen the financial inclusion of MSMEs in India and encourage digitisation. We expect to see an extension on priority sector lending to NBFCs by banks extending credit to underserved and unserved MSME segments. To boost adoption of digital payments by the MSME sector, we would like to see the introduction of incentives such as tax breaks for merchants who adopt digital payments. For instance: A scheme under which a retailer with digital sales above 75% of all the sales, cash and digital, should incur a lower rate of income tax to accelerate/encourage digital payment adoption. This scheme would help in financial inclusion of small businesses under the formal tax system and help formalize the business transactions."
"The Budget 2022 should incentivise the MSME sector to adopt digital payments progressively. The digital payment ecosystem can unlock value for MSMEs by helping them expand customer base, improving cash flows through faster realization of funds, providing upsell opportunities, reducing costs and creating a digital footprint that would enable easy access to credit at cheaper rates. With the impact of the pandemic and the shift towards online purchases and adoption of digital payment modes by consumers, MSMEs need to be adequately equipped to cater to changing customer needs and behaviour while enabling them to thrive in an evolving digital landscape"
"Fin-tech companies and small NBFC's have high expectations from this year's Union Budget. I am hoping for the budget to dive deeper into the FinTech system and push the community for bridging the financial gap between the users and financial institutions. As part of our core belief, we want personal finance to be accessible for everyone from any part of the world as ‘digital finance’ is the new way of living post-COVID-19. Ahead of the budget, we are positive that along with slight relaxation on the taxes, liquidity support from bigger banks and the government will help keep the cash inflow for smaller NBFC’s. All these focus points will help us go the extra mile and elevate funding along with credit allocation to the end-user."
"Union Budget 2022-23 is highly crucial to align Indian economy’s growth trajectory. It is essential that the Hon'ble Finance Minister announces effective measures to enable speedy recovery and growth of the MSMEs, considering the sector’s significant contribution to the economy. It is encouraging to see Government’s support for the MSME sector in last 12-15 months and we believe the efforts will only become more prominent in the time to come.
In past few years, operationally nimble and technologically oriented NBFCs and Fintechs have deepened the credit penetration to the underserved regions of the country. Hence, in the upcoming budget, policymakers should provide due consideration to boost liquidity support to the NBFCs as well as encourage frameworks like co-lending, which will greatly boost the reach of financial institutions and progress in the financial inclusion imperative. EASE 4.0 talks about Co – Lending between Banks and NBFC as a means to increase the credit penetration, however the treatment of Tax Deduction at Source (TDS) treatment for NBFC and Banks are different and that is proving to be a major operational challenge to accelerate credit. It is expected that TDS rules would be harmonised between Banks and NBFCs."
"In the past year, digital brokerages offered investors easy and convenient access to a range of products and services. In a welcome development, SEBI announced a shorter settlement cycle, called T+1, as an incentive to the investor community.
Government may consider relieving traders of the securities transaction tax (STT). By doing so, new investors would be encouraged to start trading. There needs to be more participation in indexes or exchange-traded funds. By offering a lock-in and tax incentives on the lines of equity-linked tax savings schemes, the government can encourage long-term savings in Nifty or Sensex. A greater allocation by the government-owned provident funds and pension funds into equity markets could also help.
Given the enormous increase in medical expenses due to Covid-19, we urge the government to hike the standard deduction from the current Rs 50,000 to Rs 1,00,000. This will further lower the tax burden and put more money in the hands of the salaried class. The government should remove the concept of speculative income and restrict income classification arising from capital market transactions to business income, long-term capital gains and short-term capital gains. We hope that the Government considers tax exemption up to Rs 1,00,000 lakh on short-term capital gains tax as well as tax exemption on dividends up to Rs 50,000 for senior citizens.
The 2022 budget 2022 should help build momentum in the equity markets and every possible avenue must be considered by the government to make this happen."
"The upcoming Union Budget holds high significance, as the Indian economy takes strides towards its complete recovery and growth post the pandemic. This imperative will be greatly supported by enhanced financial inclusion and digitalization which makes it crucial that appropriate measures are announced in this regard. It is heartening to see the Government's recognition of fintechs’ ability to reach out to the unserved and underserved sections of the country, as evident from multiple initiatives in recent times. To further scale financial inclusion, it is essential that the government’s support is directed towards boosting digital infrastructure and innovation.
Additionally, policy and regulatory efforts should be aimed at creating a favorable investment environment. While ensuring an appropriate degree of regulation, easing the investments in unlisted private businesses, especially in non-metro cities is crucial for convenient capital flow to technology start-ups towards their healthy growth. In the same respect, reducing the entry limits for Alternative Investment Funds (AIFs) and syndicates, aligning with the Government's allocation to priority sectors, will ensure fund infusion to businesses."
'TDS has been a point of concern across the industry. Currently, a TDS of 10% assumes profitability of 40% which is generally not the case for corporations. With a major chunk of capital being held back in the form of TDS, maintaining big cash flow becomes a challenge. Small and Mid-Sized Enterprises (SMEs) find it challenging to secure loans as most of their money is blocked by the government in the form of TDS. In my experience, the TDS needs to be trimmed down to 7.5% for all whereas for SMEs it should be further reduced to 2.5%.
In addition to TDS, the government should also revise the GST on software services to 12%. This will improve the adoption of technology in the industry and urge more companies to move along with the times and digitize.” He further adds, “Amongst exporters too, the cash flow issue persists when it comes to GST refund. The current process of collecting and then refunding leads to massive cash flow issues in the industry. I believe that the government should revise the existing GST refund timeline and devise a mechanism to automatically refund the money within 45 days of a filed request. Moreover, fixing a date on the refunds can help companies align their business objectives accordingly.'
"We expect the government to bring the long-awaited National Logistics Policy (NLP) into action. The logistics industry is the backbone of the economy and the policy will help ease bottlenecks, and reduce costs. India’s logistics cost is approximately 14% of its GDP. The government must decrease the logistics cost to 8-10% of the GDP and bring it at par with other developing countries. The wide-ranging reforms in the NLP will act as a catalyst in making India a $5-trillion economy.
We want policy reforms that accelerate the pace of digitalisation to ensure sustainable growth in the future. We hope that the Union Budget will focus on increasing investments in modern technologies like AI, ML and Blockchain for greater transparency and cost management in the logistic industry.
We are expecting the government to fast track the new warehousing policy which focuses on the development of exclusive warehousing zones. 2022 also needs to expedite the creation of an online logistics marketplace that brings various stakeholders like LSPs, government agencies, rail, road and air cargo on a single platform."
"Following two years of economic uncertainty caused by the pandemic, and amidst the third COVID-19 wave, I am expecting that this year’s Union Budget will be a pragmatic one. There is an urgent need for the Government of India to continue its focus on infrastructure spending to boost the economy and increase employment opportunities. It will be great to see the Union Budget allocate funds toward incentivizing the use of emerging deep technologies like artificial intelligence, intelligent automation, blockchain, augmented / virtual reality etc., among businesses.
Today, businesses across verticals are generating large amounts of data, which when harnessed through the use of new age technologies can be better leveraged to solve challenges faced by citizens. Promoting digitization is the need of the hour, and while we have made significant progress in this area in the last few years, we still have a long way to go. At this juncture, incentives, tax benefits, and provisions for optimization of cloud services can greatly help in building a truly ‘Digital India’."
"With a revival in demand and consumption, we are looking forward to 2022 with hopes of sustaining a healthy growth trend while catering to the increasing online consumers. We’re investing in building capability for e-commerce and Direct-to-Consumer channels, since these are the key factors of future growth. Hopefully, 2022’s budget will focus on investments in rural infrastructure development, an extension of farm credit provisions, and job creation. With the pandemic, the cost of raw and packaging material has risen, resulting in many industries being forced to hike prices. We need help in tackling high inflation levels, as also in digitalisation of rural areas. Online is the way ahead and for industries to be able to leverage that opportunity, digitalization is key. Even after two lockdowns, the virus continues to present newer challenges every day. By setting up necessary medical facilities to deal with this ongoing situation, the government will take an important step in rekindling hope.
As we witnessed during the COVID-19 pandemic, the growth was brought about by channeling the unorganised players to mainstream business, with Offline to Online or O2O being the key theme. O2O will lead to transparency in payments, transactions, compliance with taxes, labour laws and larger employment opportunities for the youth. Specific to e-commerce and e-grocery, this budget will also be a great time for the government to rationalise GST rates, compliance processes, FDI policies, and ride the buoyancy revenue curves. The Government has always been generous towards our sector however, we hope that it extends additional support towards our industry in terms of investment, expansion, and transformation apart from the policies."
"With Budget 2022 just a couple of weeks away, the Indian Auto LPG industry very much expects the government to first, incentivize OEMs enough to quickly launch LPG variants, which would also encourage people to purchase auto LPG vehicles and thus provide immediate relief to the fast deteriorating air quality in India.
Second, the budget must also ensure that auto LPG fuel must be brought down to the GST slab of 5% from the current 18% which has been a deterrent factor for both the industry and the end-users. Three, at the same time, the government should immediately consider bringing down the LPG conversion kit under the GST tax slab of 5% away from the prohibitive 28%. In this context, they must also relax the type approval norms with a view to aligning with the European standards which would galvanize the retrofitment market.
At the same time, the government’s incentivizing the uptake of electric vehicles through crores and crores of subsidies must also be replicated for the auto LPG sector which deserves to be extended the same preferential treatment. It needs to be noted that auto LPG already has a substantive infrastructure in place, unlike electric vehicles which still require enormous supporting infrastructure including the charging infrastructure. In fact, Budget 2022 is just the right opportunity for the government to not only institute policy change but also to demonstrate clear intent for a fuel which has zero warming potential as compared to the carbon-based petrol and diesel."
"Cycling can be a great way to keep your fitness routine going while the world fights Omicron and prepares for new restrictions. It is not advisable to visit crowded and enclosed spaces such as the gym at this time when a new variant is spreading its claws. As a result, people will continue to choose activities such as walking and cycling. In the last two years, we've witnessed a cycling revolution, with many people taking up cycling for better health and fitness. Due to the pandemic, the Indian government has extended the deadline for implementing the Smart Cities Mission until June 2023. Now is the time to build a countrywide cycling infrastructure that is friendly to citizens. This could be part of the government's Smart Cities Mission's focus on mobility solutions. We need this cycling culture to grow and continue in our country, so we are looking forward to better cycling infrastructure in all major cities and towns, as this will encourage a new culture, namely, cycling to work in India, which will reduce problems such as pollution. Hero Cycles is dedicated to fostering a cycling culture in India and will do so in the years ahead."
"The upcoming Budget 2022 would be critical in restoring India's pandemic hit MSME and the manufacturing sector. It is projected that the core topic of Budget 2022 would continue to offer stimulus to the market for locally created goods to minimize import reliance and support the 'Make in India' effort.
To promote Make in India, the government must incentivize R&D by providing subsidies and fiscal stimulus to the private sector. The decrease of corporate taxes and the implementation of various PLI programmes in the Union Budget 2021 have boosted domestic manufacturing; nevertheless, the industry now requires an additional push with further Make in India plans and incentives for electronics manufacturers. PLI initiatives will be extended to attract greater private investment and engagement in the industry. The industrial business needs assistance in tax cuts and simpler legal procedures. Compliance should be simplified, and unnecessary legislation should be phased away. This will increase trust and confidence between the private sector and the government.
The forthcoming budget should prioritize employment too. Budget 2022 must focus on job creation via private and public sector engagement in areas with backward and forward economic integration. The budget should accelerate the implementation of the National Retail Trade Policy to streamline the licensing process, thereby making it seamless for growth. As export incentives have been reduced, trade policy must now encourage MSMEs to expand outside their boundaries. This would help India establish itself as a worldwide market leader. Reducing compliance and regulatory burden and providing financial incentives to large scale projects would also help bolster India's Industry 4.0 impetus."
"While each wave of the pandemic has brought forth its own set of challenges, we are hopeful and optimistic that the measures taken by the Government in the upcoming budget will help boost the economic recovery in 2022. Considering the slowdown caused by COVID outbreak in India in the past two years, it becomes crucial for the government to prioritize its reforms towards MSMEs and SMEs which have been one of the most impacted sectors and thus enable them to stay afloat in 2022-23. The MSMEs are responsible for the creation of more than half of the employment opportunities in the country. We believe that facilitating concession in GST rates from 18% to 12%, tax free export income and subsidized interest rates will aid the sector and also empower them to compete in international markets. Regarding RBI’s recent clarification on stamping NPA (non-performing assets) on their due date, we think that the government should take a more relaxed approach to enable SMEs to get back to business rather than tightening norms now.
Over the next couple of quarters, we envisage that as the economy starts to recover we will see demand revival. We expect the Government to continue to spend on Infra and as the Government spending on developing infrastructure picks up, we expect this will lead to pick up in CV demand in the upcoming quarters. We also seek maximum allocation of infrastructure funds assigned in the ‘Gati Shakti Initiative’ launched by the honorable Prime Minister which will enable NBFCs to achieve our ‘Make in India’ plans. This increase in government expenditure on infrastructure will lead to a surge in credit demand that will further enable NBFCs to flourish and impact the overall economy.
One of the other areas we are expecting in the FY23 Budget is initiatives around expansion in availability of CNG and CNG stations across the country. Although the government has envisioned a noble cause by introducing clean fuel norms that has seen interest from people shifting to Compressed Natural Gas (CNG), however the inability to establish the required number of stations are leaving the vehicle owners in the lurch. Increased investments towards easy accessibility of CNG and CNG stations will positively impact the demand for new vehicles."
"While we are cognizant of the challenges that the new covid variants are likely to pose, we are hopeful and optimistic that the measures taken by the Government in the upcoming budget will help give fillip to the nascent economic recovery in 2022. Gold Loan NBFCs tend to play a very integral role in supplementing the banking sector, and catering to the underbanked and underserved segment of the society. The reforms introduced by the Government and the RBI so far have majorly aided the revival of the economy and we believe that it will be important to continue offering this support/sops to the most impacted segments during the pandemic, which includes SMEs, MSME, self-employed, small traders, MFI sector along with supporting the housing segment. During the pandemic, gold loan NBFCs have played a crucial role in meeting credit requirements of the self-employed, MSMEs, women borrowers. Gold loan NBFCs do not get the benefit of priority sector lending (PSL) status, even when the loans are given to the priority sector borrowers. Gold loans are extensively used by farmers, micro-entrepreneurs and shopkeepers for seasonal requirements of working capital or other pressing requirements generally not catered to by the banking system. A large proportion of gold loans go to MSMEs for their short-term working capital requirements. Priority sector status will enable gold loan NBFCs to mobilise additional funds from Banks for on-lending to weaker sections.
We are also in tandem with the recent industry discussions with the honourable Finance Minister regarding setting up a dedicated refinance window for the NBFC sector and making banks’ lending to NBFCs under priority sector be given a ‘permanent’ status in the upcoming budget. An increase in the limits of total priority sector lending by banks would also help the overall sector as it will ensure liquidity support. Since the credit and gold loan demand in the country has also indicated revival signs, we expect recapitalisation of public sector banks to improve their lending capacity and alignment of single exposure limit for banks’ exposure to gold loan NBFCs with that of other NBFCs for greater liquidity flows for taking further exposure towards gold loan NBFCs."
"As a part of India’s growing EV industry, we hope that the Union Budget includes lowering of GST rates on raw materials, especially for the EV players. Support for R&D and indigenous technology development while lowering of GST on auto components should be on the top of FM’s agenda list. Allocating funds for the Clean Air Campaign, which could be brought under the Swachh Bharat Mission to create better awareness & improve adoption of electric mobility.
To further strengthen the EV market, the government should consider categorizing EVs in the priority lending sector. It will make EVs more affordable for the users & help in incentivising the whole transition.
Export concessions can also be looked at to support the Indian EV manufacturers like us, so that we can tap new markets, making India not just ‘Aatmanirbhar’ but a global powerhouse. The EV sector is growing, but it needs continuous support from the government via better policy curation, implementations so that maximum benefits can be passed on to the end users."
"With the Union Budget around the corner, people have already started stating their expectations from various segments. One such segment is the Discount Brokerage industry. I urge the government to reduce securities transaction tax (STT), stamp duty, and GST in the upcoming Budget.
I believe STT should be removed or at least reduced because initially it was introduced in the place of long-term capital gain tax but now, we have both LTCG and STT that is not fair for the Indian Investors.
The transaction cost in India is too high and LTCG and STT are seen as a sentiment dampener for the market, resulting in very few traders turning a profit. Stock market penetration is increasing in India and it is anticipated that the government will take policy measures to ensure that the Indian market becomes more investment-friendly in comparison to other emerging markets and reducing LTCG and STT could be a good step in that direction. It can enhance trading volumes immensely, resulting in a higher tax collection.
As a result of SEBI prohibiting brokers from providing intraday leverage to traders, higher impact costs have been incurred, and a reduction in STT can boost volume, thereby reducing the impact costs. When the cost of transacting in India decreases more, it will only encourage more foreign participants to invest in our economy and trade on our exchanges. Government should also rationalize the LTCG and STCG because a reasonable rate of income tax will encourage people to pay tax and do things in the right way."
"Online gaming is one of the fastest growing sectors with numerous investments, enormous employment opportunities and immense growth potential in terms of expansion and revenue. The industry was originally scheduled to become a $122.05 billion industry by 2025, but the pandemic has greatly accelerated and helped this sector to grow tremendously, much sooner than expected. The sector has the potential to transform the way the younger generation learns, consumes content, and gets entertained. We look forward to transparent and progressive regulations that clearly differentiate games of skill from those of chance.
In this budget, we welcome conducive Govt solutions that will help us overcome current industry challenges. We would also welcome clarification on data privacy and third parties to safeguard user privacy and avoid any breaches in the same. With a proper policy structure, legal framework, regulatory ecosystem and data privacy procedures, the online gaming sector can easily support the government's initiatives under the campaign Digital India, Make in India and contribute remarkably to the economy."
'The hospitality sector contributes 9% of India’s GDP and employs more than 4.5 crore people. Among the worst-hit industries, it plays an important role in the revival of the post-pandemic economy and hence needs special attention in the upcoming budget of 2022.
Since March 2020, India's travel and hospitality sector has emerged as a domestic-demand-driven economy and proper government funding will ensure further sustainable pickup in domestic travel demand. My top expectations from Budget 2022 for the hospitality sector are -
a) increased investment towards boosting the tourism infrastructure, and
b) provision of better accessibility and connectivity to remote and mini tourist locations for a large cross-section of the population.
Attention must also be given to providing tax breaks and interest-free subsidy options, thereby increasing investment in the sector. We must also focus on setting up more entrepreneurial cells and upskilling centres to build a skilled workforce that enhances customer experience, and supports the overall ecosystem, at large.
While the surge in Covid-19 cases has resulted in highly volatile consumer confidence towards travel - proactive and timely amendments will boost domestic operations, and help the industry bounce back sooner.'
"This year’s budget offers an opportunity to shrug off the impact of the third wave and push the economy towards higher growth. Throughout the last year, we’ve seen that more individuals are keen to take part in India’s capital market success. To enable them, digital infrastructure for financial services from banking and payments to credit, investment, and wealth management needs to reach the last mile. While the Reserve Bank of India has set the regulatory ball rolling for innovations like UPI and Account Aggregator, the Budget can encourage the uptake of these technologies in the financial sector through partnerships with digital service providers either by direct funding or tax incentives. The government has taken strides towards financial inclusion through the implementation of the JAM trinity concept. This in combination with regulatory support in the form of digital banking licenses, fintechs can play a major role in India's growth trajectory."
The countdown to Union Budget 2022 has begun. Finance Minister Nirmala Sitharaman will present the annual budget on February 1. Salaried individuals are waiting with bated breath to budget announcements to know if there will be policy changes that can help them save more. The budget for the financial year 2022-23 would be presented in the backdrop of the Covid-19 pandemic that has impacted the economy while accelerating the inflation rate.
Given the increasing inflation, I hope the government will consider these tax relief measures in the upcoming budget. Click here to read
"Watching the ed-tech sector gain steam in 2021 has been extremely rewarding, and to a substantial extent, we have the government to thank for facilitating the growing ed-tech movement. I hope the upcoming Union Budget helps ed-tech platforms like Lido scale further up. I know the new budget will be all about economic recovery, and empowering the common man, with a focus on job creation, credit growth, and infrastructure development. In education, I'm hoping for a bigger budget allocation so that more and more students can get the educational support they need, and for the integration of technology within traditional learning. A critical component that will play a role in the progress of ed-tech in 2022 is smartphone and Internet penetration, so I hope the Union budget announces programs to solidify Internet infrastructure and ensure last-mile connectivity in tier 2 and tier 3 cities. With so many startups now a part of the ed-tech segment, I am also hoping for a simplified loan approval process for MSMEs. We need robust data protection laws, and ramped up investments and partnerships within the ed-tech sector for further growth this year."
"According to us, our expectation from the budget is pretty simple i.e. We need to grow, and we need to expand. Small scale businesses should be offered interest-free loans, incentives and subsidies to survive, and manage their operations, besides lowering GST for cloud kitchens, home based food entrepreneurs and food tech startups. Since the food industry employs the highest number of employees after real estate, the taxation slabs and GST needs to be streamlined, and relaxed to help small and medium scale food entrepreneurs to grow and scale.
We need a major taxation reform on this front, and a comprehensive Govt sponsored program to enhance consumption, and make it easier for customers to order their foods online."
"Over the years we have seen that most Central governments maintain a good balance between social and economic objectives during the budget. So, I don't expect this year will be any different. In the last two budgets we have seen that the government is actively listening to the industry experts and addressing the gaps in policy and taxation. This budget should ideally further that exercise in bringing industry friendly policies that can bolster overall economic growth. I feel that the government is keen on expanding the "Make in India" initiative and we should hope that there would be some measures that can enable substantial increase in capital expenditure by the private sector. Infrastructure stays one of the core focus areas for the government and we should expect some announcements related to that along with some positive announcements for the farming sector. The tax collection during the last nine months have been quite robust and much ahead of the budget estimates for the current year. There is a good possibility that the government may have a fiscal deficit number which is lower than the budgeted and that could be a positive surprise."
"The Union Budget 2022 is expected to provide the much needed boost to growth and recovery of the economy. With the Natural Gas sector looking to be a major component in India’s energy economy and growth, the Government should have a strong focus to promote the domestic Natural Gas producers, which as a sector has seen limited progress.
GST has been a game changer for various sectors and one of the major and long standing demands of the Natural Gas sector is the inclusion of this sector in the GST gambit. Similarly the government has announced a system of Production Linked Incentive (PLI) schemes across 13 key sectors, including Renewables. The Natural Gas producers are committed to the cause of maximizing gas production in line with the vision of a National Gas based economy. Therefore, Natural Gas producers should also be included as a part of this incentive scheme, which will give them the required boost.
Decarbonizing the energy sector in India is also another aspect which is set to grow significantly in view of the COP 26 declaration of a 2070 timeframe. As energy transition processes are implemented by hydrocarbon producers, a comprehensive carbon trading policy and platform is very crucial, which will leapfrog the transition"
HelpAge India in its budgetary recommendations to the government, recommended a set of measures under three core areas of – income & social security, health & geriatric care and creating an enabling environment for elders.
Recommendations - Income & Social Security
Recommendations: Health & Geriatric care
New Recommendations: Creating an Enabling Environment
"The Union Budget for 2022 comes at a time when the Indian economy has been hit hard by the continuing pandemic. This year’s budget will likely focus on a roadmap to recovery for the economy through job creation, demand generation and driving economic growth.. Potential withdrawal of liquidity by global central banks, along with an increase in interest rates worldwide, could hit foreign investments into India in the near future. Against this backdrop, this year’s budget provisions will have to give out the right signals to both foreign investors and the Indian citizenry. Kick-starting growth in an era of global slowdown with limited fiscal flexibility are the biggest challenges that the Budget will seek to address. One however wishes that reformist image of the Govt does not get muted in this Budget for political reasons."
"2022 union budget has been expected to bring policies for startups to promote leadership and entrepreneurship in India. Newbie startups would expect new incentives and simplified compliances since the economy has been majorly impacted worldwide due to the pandemic. Fintech startups are looking for the finance ministry to bring innovative reforms, policies, and regulations to offer relief and tax sops to the overall startup ecosystem."
"On the backdrop of the third wave and the year of elections, we expect the government to present an upbeat budget with a major focus on growth of economy, continued privatisation (Air India & LIC), Growth to Digital, Startup, health and infrastructure. Residential Real estate has bounced and is playing significant role in bringing momentum to the economy. Government should consider capital gain exemptions to second and third investment in homes as it will support rental housing market to meet demand.
From commercial standpoint, we are expecting changes to De-notification of IT SEZ’s unit by unit to continue Government’s agenda from “ease of doing business point of view”. The input tax GST credit along with some relaxation for REITs will help commercial real estate to overcome the setbacks of the Pandemic. The cost of capital has always been high in India and any increase in inflation can be detrimental to business and recovering economy. Government proactively should bring strong measures to address that. Given the expanding tax base and high GST collections, it warrants reduction of GST on cement from current 28% to 12%. Distressed real estate fund for non-affordable real estate projects is the need of the hour as many projects remain unviable and caught in NCLT etc. It will help avoid escalations in real estate prices and bring much-needed employment overall."
"The government's done a splendid job of supporting the EV ecosystem in India till date. However, there are a few areas they can address to further spur growth.
Due to the inverted tax structure that currently exists (where EVs are taxed at 5% and battery packs alone at 18%). Several constraints are placed on new OEMs as well as the development of new models like Battery As A Service.
While the nodal and state level delegation of charging station deployment and policies around that make the process faster, infrastructure spending support for DISCOMS to support EV charging will accelerate deployment of charging stations across the country.
The government has rightly introduced the PLI scheme to foster domestic production of Li-ion cells but the time taken to set up a cell manufacturing ecosystem will take at least 3 to 5 years. In the interim, reducing the import duties on Li-ion cells would greatly benefit EV startups to make EVs affordable and spur consumer demand."
"India is undergoing a massive EV revolution – which will get a further boost in 2022 following the rapid growth of charging infrastructure and advanced EV models. We are optimistic that the government will announce new initiatives to encourage local EV manufacturing, facilitate easy finance, and create an innovative EV ecosystem.
With that said, we urge the government to reduce GST on EV purchases and rentals from 5% to 2%. A reduced GST would allow consumers to smoothly shift to EV. The Finance Ministry can also reduce taxes levied on loans taken to purchase an EV. GST reduction and tax benefits would play a crucial role in making EVs accessible to everyone. Additionally, the government can also subsidise electricity pricing for EV charging to further improvise the existing EV charging infrastructure."
"In response to the economic hardship created by Covid-19, several liquidity measures to support the MSMEs were announced. However while the headline schemes were attractive the fine print made it very difficult for the new age fintech NBFCs to take advantage of the schemes. Due to such constraints the expected benefits of these support schemes did not reach/ transmit to the bottom of the pyramid MSMEs mostly catered to by fintechs/ small NBFCs.? This budget must be in pursuit of better implementation of the schemes already in place. Further, the fiscal budget should announce measures to incentivize and strengthen support from SIDBI-like institutions and PSB’s towards lending to smaller NBFCs to ensure credit to SMEs at lower cost of capital."
"The 2022 budget is very critical for start-ups, considering that many have struggled to survive during the pandemic. Startups are looking forward to support from the government this year. The startup ecosystem's expectations are for some tax relaxations and startup-friendly measures for making it easier to incorporate a company, streamlining compliance mechanisms, and avenues for easier capital access for budding startups. Also, we are keen on hearing some initiatives to promote startups in tier 2 and tier 3 towns, making the whole ecosystem more inclusive."
"At a time when the nascent yet rapidly-growing crypto industry in India is tiding through a lot of uncertainty and volatility, the upcoming Union Budget should focus majorly on regulating the sector by classifying cryptocurrencies as an asset class for India and providing regulatory clarity in terms of tax applications for them. Furthermore, the roll-out of a comprehensive self-regulatory body or group for and of the cryptocurrency and blockchain sector players can also be considered by the government – which in turn is bound to give a boost to the realization of its vision of 'Digital India' without crypto being seen as a threat to existing financial and banking structure of our country.
Given the immense economic and job creation potential of blockchain technology and Web3, pushing a few future-ready proposals and incentives for R&D and product development around public blockchain-oriented use-cases such as NFTs, smart contracts, Defi etc. will also be welcome. Once the government steps in to implement a standardized regulatory framework for the crypto and blockchain sectors, I believe it will allow many more opportunities and use cases to be explored and unlocked at scale by India Inc. as well as startups and individuals exploring this segment."
"The market wants a Budget that should be reformist and pro-growth where last year’s Budget headed in the right direction, therefore, we need further momentum to reforms and growth in the upcoming Budget.
We hope that the government will maintain its fiscal expenditure high with a focus on infrastructure. Though there were several announcements for the infrastructure sector and that need to be continued, however, there is a need for some significant measures for the real estate and auto sector to create multiplier effects because these two sectors create jobs and growth in multiple sectors.
Government should increase the tax benefits for housing loans because it is almost at the same level for the last many years. There were many steps taken by the government in the last 1 year to boost the economy but there was no direct focus to boost consumption therefore the market will like to hear some significant announcements for salaried class.
The market will also like more clarity and pace in the government’s asset monetization and divestment program. The world is facing many supply-side issues and India can turn some challenges into opportunities therefore the government should focus on some areas in the upcoming Budget.
In terms of taxation related to the stock market, I believe STT should be removed or at least reduced because initially it was introduced in the place of long-term capital gain but now, we have both LTCG and STT that is not fair for the Indian Investors. Stock market penetration is increasing in India and it is anticipated that the government will take policy measures to ensure that the Indian market becomes more investment-friendly in comparison to other emerging markets where reducing LTCG and STT could be a good step in that direction. The transaction cost in India is too high and LTCG and STT are seen as a sentiment dampener for the market."
"The SME sector is the backbone of Indian economy. In the upcoming budget, we expect the government to make announcements that will empower small businesses thereby reviving the economy from the impact of the pandemic. In November 2021, the government announced the Special Credit Linked Capital Subsidy Scheme for the MSMEs (Micro Small and Medium Enterprises) in the services sector. This should be extended to SMEs whose turnover is less than Rs 5 crore as well as it will help them procure service equipment through institutional credit for advancement of their technology.
Government should also look at tax breaks for companies providing technology support to MSMEs. At a time when we are expecting the third wave of Covid to hit economic activity and businesses are facing difficult times, the government must take measures to meet the SME lending requirements. Subsidizing the cost of funds to NBFCs that focus on lending to small merchants for loans below Rs 20 lakhs is way to ensure easy access to credit. Besides, we expect the finance minister to increase credit guarantee for lending while also providing relief in terms of tax sops or subsidizing manpower cost for digital players to promote digital payments in tier 3 to 6 towns.
Lastly, this Budget should further look at propelling the country towards a digital future. While multiple initiatives have been undertaken to promote digital payments, the Government must look at given some form of incentive to small businesses to encourage the adoption of digital payments and further strengthen the payment infrastructure of the country, especially in smaller towns."