Winners and losers of Budget 2022 and what it means for India Inc

In the backdrop of economic downturn due to Covid-19, expectations were rife for this budget to become the fulcrum for accelerating the growth engine.

This Budget has been a bold one with a clear focus on productivity enhancement, Sunrise Opportunities, and investment, instead of focussing on managing the fiscal deficit unlike traditional budgets. The discussions have been around two broad themes of Ease of Doing Business-2.0 and Ease of Living.

In order to enhance the Ease of Doing Business, trust-based governance is proposed to be implemented with reduction in duplicative compliance and establishing C-PACE to facilitate voluntary winding up of companies. It is also proposed to integrate the central and state level systems through the IT bridges. End to end online e-Bill System will further enhance the transparency in operations. Spectrum auctions along with the support of the PLI scheme will facilitate rollout of 5G mobile services and will be a great boost for the telecom sector.

Replacement of the Special Economic Zones Act with a new legislation will enable the states to become partners in ‘Development of Enterprise and Service Hubs’. This will cover all large existing and new industrial enclaves to optimally utilise available infrastructure and enhance competitiveness of exports. Further, setting up of world-class universities in GIFT City will facilitate skilled manpower in the financial services space. International arbitration centre will strengthen the dispute resolution mechanism at GIFT IFSC and enhance ease of doing business. These proposals should provide additional impetus to the GCCs/Hubs to set up their operation in India.

Union Budget 2022-23 | Key takeaways for start-ups

In order to enhance the Ease of Living, the FM has announced the issuance of chip embedded e-Passports. Setting up a high-level committee of urban planners, urban economists, and institutions to make recommendations on urban sector policies and governance will give the necessary buster to the real estate sector.

Introduction of battery swapping policy as an alternative to setting up charging stations will facilitate faster rollout of battery swapping centers where EV owners would be able to refuel their EV by replacing exhausted batteries with charged ones. This is a welcome measure both from environment perspective and shall give rise further investment in EV projects

Having a broader outlook, FM further proposed to introduce Digital Rupee, using blockchain and other technologies. Income from transfer of virtual digital assets shall be taxed at the rate of 30 per cent. It is possible to comment that whereas such an announcement should pave a path for legalization and taxation of digital currency, the proposed tax rate may have a deterrent effect.

What could have been done better – is a relief which individuals were expecting in taxation or by enhancing the deduction amount would have given a little breather to the employees whose salaries are reduced due to the pandemic. The Auto and Auto-Ancillary sectors have been under tremendous pressure, this sector could have done better with some budgetary assistance. FM announced extension of customs duty exemption to steel scrap, this may lead to continued pressure on Domestic Steel manufacturers.

Whether it would advent an Amrit Kal, lies in the belly of future; however, it could be fair to deem the current budget as a progressive budget, aimed at creating a virtuous investment cycle, crowded in by public capital investment.

(Shalini Pillay is Office Managing Partner, KPMG in India and Akash Arora, Chartered Accountant, with inputs from Rahul Kumar, Chartered Accountant)

(Disclaimer: The views expressed above are the authors’ own. They do not necessarily reflect the views of DH.)

Watch latest videos by DH here: