Budget 2022: Expectations

Union Budget is one of the important events in the country as it impacts every single segment in India.  The budget presented in the year 2021 clearly focused on boosting capital that was spent on  promoting massive growth and economy to revive. It also focused on creating a positive burst in the market and realizing the Government's vision of an Atmanirbar Bharat. Amidst pandemic, the business turned around and walked the path to recover post pandemic which was supported by Tata Capital. The total outlay earmarked for the year 2021-22 was 34.83 lakh Crore.

The budget presented a reliable framework for the coming fiscal year and a shift that was important from short- term disaster relief to medium- term economic recovery. The massive spending of government on capital projects and policies help promote the investment both private as well as foreign despite facing crisis due to pandemic.

The key Highlights to be expected to get a new dimension in various sectors in Budget 2022-

Hospitality Sector to look for lower taxes

The Pandemic hit hard on the hospitality sector and incurred heavy losses. Hence, they seek lower taxes and incentives in the sector, expecting it in Union Budget 2022.

"The government supported us, but more need to be done in terms of offering interest-free loans, subsidies, reduction in tax structure, which will help in the recovery and covering up the previous losses," says Aryavir Kumar, Managing Director, The Clarks Hotels & Resorts.

The Industrial Automation Sector needs improvements in technology

Union Finance Minister Nirmala Sitharaman organized meetings with industries, financial sector players, labor unions, agriculturists, and leading economists, which rationalized income tax slabs and infrastructure status for digital services and hydrogen storage incentives. The manufacturing industry is innovative and important in balancing operating costs and profitability.

In an interaction with the Editor of Siliconindia,  Sohinder Gill, CEO, Hero Electric and Director General of Society of Manufacturers of Electrical Vehicles said, " I believe that all the big players who have the future in this industry cannot wait for the future to come to present but take leap of faith so that there are better products, better offerings, best of technologies and align with localization and Make in India, which will push the ecosystem and infrastructure to kick start. "

 The industrial automation industry also has its bucket list. Speaking on the expectations from Budget 2022 on the industrial automation sector, Nagraj GP, Head - Industrial Solutions at Utthunga said: "India's Make-in-India push has been launched at the right time, although the objectives and targets seem to be a tall ordeal. But a closer look reveals that it is not only realistic, but also extremely desirable. In fact, it is a necessity in the economic and geopolitical dynamics of the post-COVID era."

PHDCCI wants govt to bring all branded, unbranded packaged cereals and staples under 5% GST uniformly

The trade and industry sector wants to make it necessary for all to benefit from exemption from GST. Any such benefits as may be available for Skimmed Milk Powder (SMP) may be extended to all types of supplies ranging from the production of Milk, Curd, and Lassi.

The PHD Chamber of Commerce and Industry (PHDCCI) wants the government that all packaged cereals, including rice, wheat, millets, and flours, should be taxed uniformly under 5%, irrespective of brand owner, to maintain equity tax structure and avoid revenue exposure.

PHDCCI has said, "Dairy Farmers are the backbone of our economy, rationalization of the rate of GST on Milk based products like Ghee and Dairy based drinks from 12% to 5% will promote the consumption of these products and provide remunerative rates to Dairy Farmers."

Hike expected in agri-credit target to 18 lakh cr

The government has fixed the current financial year target of 16.5 crore. It expects to boost the agricultural sector, thereby raising the farm credit target to about 18 lakh crore in the Budget 2022-23.

The annual agricultural credit is fixed by the government that includes crop loan targets for the banking sector. The farm loans normally attract an interest rate of nine percent. However, the government will provide interest assistance to make existing short-term crop loans affordable and boost farm output.

The government is providing a two percent increase in interest subsidy to ensure farmers get short-term farm loans ranging from Rs 3 lakh. Also, an additional incentive of three percent is given to farmers to repay loans. Therefore a total developed coverage of small and marginal farmers is seen in the credit system.

Taxpayers are expecting some relief.

Last year, the government announced multiple stimulus packages to revive the economy that was impacted by the Pandemic. "Taxpayers are expecting some rebate or relief from the Finance Minister in the upcoming union budget. This will eventually lead to more liquidity in the hands of the buyers, and nothing could be better if the government decrease the tax rates for both buyers and sellers as it will rejuvenate the market as the demand for housing and high-end products is poised to rise.

However, the expected rate hikes from the RBI could be a major concern to watch out for as it may push out the liquidity from the economy at a fast pace," says Raghunandan Saraf, Founder & CEO Saraf Furniture.

Government is uncertain to include capital infusion for PSU bank

Government is uncertain to announce capital infusion for PSU banks in Budget 2022. The reason stated for the same is that their financial health has shown positive growth due to lower bad loans.

Banks have been asked to work on the recovery process to boost their financial health during the current financial year. This year the government has earmarked 20, 000 cr. for the recapitalization of PSBs.

Banks would be encouraged to raise funds to be procured from the market and sell their non-core assets to expand their resource base.

Their various reforms undertaken by the government include recognition, resolution, and recapitalization that will bring in a progressive decline in non-performing assets (NPAs) and a subsequent rise in profit.

Generating employment opportunities and economic activities

As the economy is facing crisis which a rare once- in - a generation struggle. The inequalities are widening and there is not enough jobs left. As the economy is fighting the scars of the Covid-19 Pandemic, an investment cycle can help to re-start a glorious pattern of jobs, income and consumption critically.

"Because of the shock to the economy, a lot of economic activity declined. As such, the only way to revive the economy has been stable investments from the government," said NR Bhanumurthy, vice chancellor at the Dr. B.R. Ambedkar School of Economics University. "The government must be proactive to ensure that recovery is strong and entrenched and is not an outlier."

Focus on making Tax administration simpler and improving access to data

The Union Budget 2022 is likely to announce steps to reduce tax administration and boost compliance by increased oversight of transactions and work towards bringing more industries into the fold of the sector.

 The idea is simple: it needs to simplify tax administration and get the departments more access to information linked to transactions while facilitating voluntary compliance. The income tax department will be encouraging digital payments and slowly expanding the levy of taxes.

In an interaction with the Editor of Siliconindia, Sujay Vasudevan, Vice President, Cyber & Intelligence Solutions, South Asia, Mastercard said, " For industry to ensure that digital banking methods are secure while being simple and seamless. In order to mitigate some of the major risks like data breaches, targeted ransomware attacks, and others, businesses will need to allocate their budgets correctly to building a stronger security infrastructure."

The emphasis is laid on improving tax compliance when both the direct and indirect tax administrations are on the verge of having tasted success in leveraging technology and data analytics.

Centre disagrees with infusing equity into the bad bank

The government said it would not invest any value in the bad bank as proposed in the Union Budget. Secretary Debashish Panda said commercial banks would manage by creating their financial services. The loan amount accounted for the bad loan is more than 500 crore and will be eligible to be transferred to another entity, said Panda.

The bad bank will pay lenders 15 % in cash for loans purchased while the rest 85% will be paid as securitized receipts.

Relaxation expected for the Real Estate Sector

Real estate is the very crucial  key pillars of the Indian economy, accounting for around 8% of the overall GDP. Despite the sector being affected hard by the Covid-19 Pandemic, the real estate sector is looking at a big entry back into the demand in 2022. It expects the Union Budget 2022 to play a supportive role in achieving this status.

Some key relaxations in taxes will help gain the real estate sector to boost and the waivers or reductions on GSTs on raw materials amFexpecong other expectations from the Budget 2022 by the industry.

Giving infrastructure status to the sector is also long due as it can help build liquidity in the sector," says Siddharth Maurya, Resource Specialist, Expertise Real-Estate and Fund Management.

Hence, there is a need to encourage expansion of international finance centres to gain advantages of higher income and job benefits and formulate schemed to improve local networks and channelise efforts to widen the search for job opportunities. So, it is expected that Budget 2022 will provide the most awaited tax relief by bringing in changes in personal income tax for middle-grouped people.

The efforts are required to push for digital and support for the ecosystem players such as banks are desirable. The economy has recovered after the second Covid-19 wave, thus the government has taken a V-shaped recovery. "The MD & CEO of Fincare Small Finance Bank said many high-frequency indicators show rapid growth. Thus, we are optimistic about the upcoming budget being growth-driven and brings in  hopes with the Budget 2022 to give different sectors of industries a ray of happiness as it is expected that reforms on reduction in GST, streamlining KYC norms, special SOPs for agriculture, land reforms, and rural town development along with micro-housing development. In contrast, some industries like construction, housing, building roads, and irrigation works need a greater push.

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