Budget 2022 & Beyond

What should one expect from, or even ask in a Union Budget ?

Pragmatically, what should one expect in a Union Budget, when the covid wave is still around despite nearly 2 years ? What should one hope for, when the fiscal space is constrained ?

What should one seek when Union Budget is not the only policy day that GoI uses, but has been proactive in announcing requisite relief; as well as develop stimulus plans as seen in past 2 years of covid impact.

The sure shot budgetary provision would include expenses for public healthcare, continued covid vaccination drive. It would also include additional care around expenses for all the public schemes for universal health insurance being budgeted for.

In addition, the budget exercise will have to factor a safety-net of stabilising the economy in case of any more severer impact of covid wave ; probably there could be another round(s) of fiscal stimulus of sorts, to hand-hold the economic sectors. For we have seen that the stimulus package did have beneficial outcome, as we recently saw in a SBI research report about the positive impact on the MSME sector.

Rationale & Reasoning
A practical expectation from the Union Budget for 2022-23 would be that of announcements of governmental front-loaded investments into infrastructure, and policies that can enhance entrepreneurship and fast-track job-creation.

The government would aim to increase inward fund flow as FDI into multiple high-growth sectors. While the current fiscal’s asset monetisation and disinvestments goals seem short of performance, hopefully this would move in high speed over next few months to more than cover up the shortfall so far.

I look at this upcoming budget as laying the foundation for a post-covid high-growth phase. This budget while may not give too many incentives to one and all, it would indicate governmental spends in infrastructure across :

  • Civic Infrastructure – Roads, Ports, j highways, railways upgradation, airports, waterways, water, sanitation, renewable energy
  • Social infrastructure – Healthcare, education, digital networks, entrepreneurship, women empowerment, senior-citizens care

Few Micro-expectations
As a nation hungry for inclusive-growth, as well being one of the largest consumer markets globally, we need to balance the right-sizing of how much we open each sector for foreign investors; and to balance it with Atmanirbharta, in terms of encouraging our domestic entrepreneurs to build products and services – ‘Make in India, for the world’.

In this journey, we need to do more for our SME & MSME sectors. We have over 6.33 crore MSMEs who provide employment to over 11 crore Indians. As a learning, a look at China – Over previous three decades, China had developed (M)SMEs, very strategically for growth & employment generation purpose; they contribute to over 60% of the GDP and account for 80% of jobs in China.

Currently, access to credit is still low for Indian (M)SME Sectors. This has to move up in multiple proportion, if we want to create a robust self-sufficient entrepreneurship for our society. Hope the budget can bring some focus on this topic.

During covid, we have seen a shift of people moving into larger housing units – be it for rental or ownership. In this aspect, it would be useful to allow for growth of the affordable housing space. Currently, there are financial incentives for buying or financing affordable housing. A wish list would be to increase the size of tenement and ticket size that’s currently eligible for such incentives. It would solve for families buying larger home-space. In this aspect, one might even wish for increased income tax benefits in housing loan.

Having seen a shortage of healthcare infrastructure, both in public and private ownership, it would be useful to offer tax holidays for setting up healthcare clinics across India.

For the citizens, a wish list would be to expect allowing for out-of-pocket hospitalisation expenses (post-insurance payouts) to be written off for individual tax payers. And in encouraging individuals to cover themselves and their families for adequate healthcare insurance coverage, increase in income tax exemption limit for medical insurance premiums paid would go a long way.

Go-Green & NetZero2070
As a conscientious global nation, we have made an ambitious commitment for Net Zero 2070. A tall order considering that we have 1/6th of global population, and not necessarily that proportionate wealth ! We have to take into account inclusive growth, and do it responsibly. After all, we will need large investments into green-shifting our current real-economy industries and taking us closer to our NetZero2070 goal.

In this aspect, the budget could indicate our strategy to fast-track investments through climate change bonds, sovereign green bonds and sustainability-based global equity investments. In short, green-finance could get a massive push in this budget.

Despite all odds, and much spouted ‘gharibi hatao’ rhetoric for decades, finally as a nation we have started embracing policies that can improve lives & livelihood. We have now embraced digital as a democratic-unifier. In the structural shift of bringing digital as an enabler, we have started disintermediation across many sectors, including public governance. This game-changer would continue to build-up with positive impact. For a country with 1.3 billion to take care of, and of which over 800 million have access to Internet, digital can impact positively. An economy where over 840 million are less than 35 years of age, and whose global economic ranking ranks third in terms of purchasing power parity (PPP), we can grow faster, and with responsible & inclusive consumption.

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