PEAKLIFE

With the release of the Union Budget 2022-23, we gathered insights from industry leaders and researchers in three distinct arenas – gender economics, the MSME sector, and real estate – to analyse how the budget can best address some of the most pressing concerns of India’s socio-economic landscape. Also included – reactions from the education, real estate, electronics manufacturing, and electric mobility sectors.

GENDER RESPONSIVE ECONOMIC RECOVERY

The pandemic and ensuing lockdowns underlined and widened existing gender inequalities – as evidenced by the high rates of job losses among women, a rise in domestic violence and the burden of care placed on women, and increased food and income security in households. A new report by The Initiative for What Works to Advance Women and Girls in the Economy (IWWAGE) and The Quantum Hub suggests that India should put women and girls at the centre of its economic recovery plans by introducing monetary and fiscal measures – including reforming the skilling ecosystem and generating employment opportunities; strengthening the enterprise landscape for women; securing the rights and promoting decent working conditions; as well as expanding investments in data systems and undertaking structural policy measures.The paper also identifies innovative financing options to achieve gender-equitable outcomes. Some key recommendations of the paper are highlighted below:

Monetary Policy – The government can consider incentivising commercial banks to respond to the growing demand for credit by women borrowers, revising models for assessing the creditworthiness of women, assisting in the repayment of outstanding loans for weaker members of Women Self-Help Groups, and scaling up the network of Banking Correspondents.

Employment generation and Skilling – To improve female labor force participation, investment in areas of health and education can be increased, and women-specific centers for upskilling and reskilling should be set up with adequate funding.

Procurement from Women’s Enterprises – To provide impetus to women entrepreneurs, the government can strengthen systems and incentivise the private sector to procure from women-owned businesses through tax breaks and subsidies.

SUPPORT FOR STRUGGLING MSMEs

MSMEs continue to struggle to counter the impact of the pandemic. As per a recent online survey of 150 MSMEs across India, conducted by MSMEx – an MSME edtech company – 50% of MSMEs were yet to recover from the impact, 43% had to change their business models for survival, and 35% sought government support through lower input costs. With regard to the support to be extended to India’s MSME sector, Mr. Alok Mittal, Co-Founder & CEO, Indifi Technologies – India’s leading MSME lending platform, said, “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 transmit to the bottom of the pyramid MSMEs mostly catered to by fintechs or 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.”

A BOOST FOR REAL ESTATE

The real estate sector, which was experiencing a recovery after the first two waves of the pandemic, requires a push from policy to tackle the impact of the third wave and emerge unscathed. Punit Agarwal, M.D & C.E.O of Nirvana Realty–India’s largest Weekend Homes Developer–explained, “Real estate contributes around 8% to the overall GDP of the country. Acknowledging such a strong pillar of the economy, the government must foster policy reforms to accelerate growth in the realty sector. As the industry is slowly and steadily getting back on track after two consecutive waves of Covid-19 pandemic, it is looking at a robust housing demand revival in 2022. Here, the Union Budget 2022 can play a supportive and enabling role. The sector is looking at a few tax relaxations. There should be a revision in ₹2 lakh Interest rebate under Income Tax Section 24, as in the aftermath of the pandemic, disposable income has reduced due inflation and salary cuts. Secondly, raw material prices have increased by 30% in the last 2 years, which is eating away the margin for the low cost housing sector. Input credit of GST should be allowed to overcome these losses.”

Rohit Kharche, Director of The Baya Company — a premier new-generation real estate developer based in Mumbai — added, “Real Estate developers today are extensively focused on meeting the specific needs of younger buyers as the average age of the city’s home buyers decreases. One of those requirements is a price that is just right. Additional value can be provided to homebuyers by reducing the amount of taxes paid. The GST reduction/exemption for properties under construction would give a huge boost not only to the real estate sector but also to the homebuyer. This allows larger units to be provided at the same price point, thereby adding value. In metropolitan areas, various tax benefits are available to developers and homebuyers when investing in affordable housing – units priced at less than 45 lac and up to 60 square meters. A slight revision to provide such benefits for units up to 60 square meters and up to Rs. 1 crore will immensely benefit the homebuyer and developer, and enable a steady supply of affordable housing units in metropolitan areas. Long awaited industry status for the real estate industry will directly make credit available to developers on better terms. Since commodity prices have skyrocketed in the recent past any GST reduction of such prices would directly benefit the home buyer as developers currently have no choice but to increase prices due to scarcity and rising commodity prices.”

A FORWARD-LOOKING BUDGET

Reacting to the budgetary allocations for the education sector, Vamsi Krishna, CEO & Co-Founder at Vedantu–a personalised online learning platform–said, “The COVID-induced gap in learning needs to be addressed on priority and EdTech platforms should continue to ensure that students receive uninterrupted learning in such challenging times. By providing students easy access to quality learning, this year’s budget lays a clear emphasis to reduce the gap between students in remote areas and education. Initiatives such as the ‘One Class One TV Channel’ and the E-Vidya scheme is a welcome move that will drive impact at scale and bridge the language divide amongst students from small-town India. We believe that this budget rightly aligns with our vision of democratizing education by providing students access to high quality learning, improving learning outcomes and thereby contributing to a vibrant knowledge economy,”

Post the announcement of the Budget, Punit Agarwal of Nirvana Realty shared his thoughts, “The Union Budget continues with the trend of announcing major reforms. This year’s budget mainly focused on infrastructure, MSME & Rural development which is going to bolster the overall consumption of goods & services by the lower & middle class resulting in the increase in nation’s GDP & will make India grow at a faster pace, overcoming the roadblocks of the pandemic.Though the budget was short, it may have more impact in the longer run. The private housing sector did not have any direct reforms made or benefits but the focus on upgradation of technology is going to play a pivotal and catalysing role in surging the demand for the real-estate sector. I see a consistent growth for the realty sector in the next 5 years.”

Summarizing the perspective of the electric mobility sector with regard to the Budget, Dr Amitabh Saran, Founder & CEO, Altigreen Propulsion Labs, commented, “The forward-looking, progressive Budget has further strengthened India’s commitments towards its sustainable development goals, switching to electric mobility and a green future. The announcements made by the Honourable Finance Minister Nirmala Sitharaman are an encouragement for all stakeholders in the EV segment such as buyers, manufacturers, and sellers, and this will accelerate EV adoption in the country. Today, there is a huge demand for last-mile delivery in the country and the boost in e-commerce has fuelled the growth. And here, the battery swapping policy, portability which will make vehicles more cost-effective and the development of special mobility zones for EVs will be game-changers. The announcements made in the budget will definitely provide a fillip to e-commerce delivery and 3Ws which are bound by time and space constraints. India has set a target of 30% EV sales penetration for private cars, 70% for commercial vehicles, 40% for buses, and 80% for two-wheelers and three-wheelers by 2030, and the Union Budget 2022 has definitely taken India a step ahead towards a future that is electric.”

In response to the Budget, Mr. Pradeep Bakshi, MD & CEO, Voltas Limited, noted some positive aspects of the allocation, “Drawing inspiration from Atmanirbhar movement, Budget 2022 continues to provide the impetus for growth in the domestic market. The measures introduced by the Finance Minister in Budget 2022 will not only support domestic capacity creation but also ease the raw material supply constraints. The approval of the PLI scheme for white goods was a major milestone for the consumer durables sector in India and we are pleased to see that the Government has unleashed plans for PLIs and Phased Manufacturing for other sectors that are bound to grow rapidly in the coming years. At Voltas, we have been contributing towards nation building since our inception and we look forward to being a part of India’s growth story as it strives for development.”

Mr. Rajeev Sharma, Chief Strategy Officer, Mitsubishi Electric India Pvt. Ltd., echoed the sentiment, “This is a growth-oriented Budget, I am sure that stepping up the capital expenditure sharply by 35.4% will have an incremental effect on the overall growth of the economy. It is good that the policy makers understand that nearly half of our population is likely to be living in urban areas by 2047 when India is at 100. The announcement for an urban capacity building like mass transit, planning help, etc. would act as a good principle for the development of the country. The budget has demonstrated a good balance between today’s needs and the future’s demand.”