Finance Minister Nirmala Sitharaman announced the 75th Budget of India focusing on the empowerment of MSMEs, indigenous defence manufacturing capabilities, solar and EV sectors. Finance Minister spoke about two parallel tracks: public investments in infrastructure and an inclusive and futuristic Budget.
The Union Budget 2022 reflects the resilience of the Indian economy to bounce back from the economic slowdown in 2020 to post a record growth of 9.2 per cent in the fiscal year 2021-22, the highest among other major countries affected by the pandemic. Marking the 75th year of India’s independence, the Budget outlays the plans for the ‘Amritkal’- the next 25 years.
Focus on MSMEs
The Budget highlighted the importance of MSMEs in India’s economic growth and the damage that the pandemic has caused to many micro and small firms. The budget announced that the Emergency Credit Line Guarantee Scheme (ECLGS) scheme which gave support to more than 1 lakh MSMEs will be extended by a year to March 2023 in view of the current Omicron wave of the pandemic.
#AatmaNirbharBharatKaBudget pic.twitter.com/IEYuGwaCJI
— MyGovIndia (@mygovindia) February 1, 2022
Further, the guarantee cover provided by ECLGS will be increased by Rs 50,000 crore to reach a total cover of Rs 5 lakh crore. The scope of portals such as Udyam, e-shram, NCS & Aseem portals meant to support MSMEs will be interlinked and their scope will be widened, aligned with the government’s efforts to further formalize the economy.
Push for Participation of Private Players & Local Manufacturing in Defence
Nirmala Sitharaman wishes to change the position of India as the second-largest importer of firearms in the world by focusing more on the domestic defence manufacturing sector. As such, the government will allocate 68% of the capital procurement budget increased from 58% for the domestic manufacturers. Defence research and development (R&D) will also be opened up for the private players and defence startups with 25% of the defence R&D budget earmarked for this.
Smt. #NirmalaSitharaman announced extension of tax benefits for #startups to boost the innovation ecosystem!#AatmanirbharBharatKaBudget #Budget2022 @FinMinIndia @nsitharaman @nsitharamanoffc @_DigitalIndia @startupindia pic.twitter.com/UIxs7yIyGq
— Invest India (@investindia) February 1, 2022
Boost for EV Manufacturers
Transitioning towards a greener economy, the government will bring a battery swapping policy to boost the use of electric vehicles in the country and mitigate the problem of space constraints for setting up charging stations, which is one of the key challenges for EVs.
The Finance Minister also mentioned that this Budget will focus on promoting clean and green technologies and also electric vehicles as the main public transportation in India moving out from a large fossil fuel-driven transportation system. To that end, special mobility zones with zero fossil fuel policies will be introduced. This is expected to promote a shift to the use of public transport in urban areas. The new EV policy is expected to lead to a faster rollout of battery swapping centres where the EV owners will be able to refuel their EVs by replacing exhausted batteries with charged ones.
FICCI welcomes the decision of extending the ECLGS up to March 2023 with a guarantee cover of Rs. 50,000 crores with an additional amount earmarked for hospitality & related service MSMEs: Dr Jyotsna Suri, Past President, FICCI.#BudgetWithFICCI pic.twitter.com/NiTIAHuqUG
— FICCI (@ficci_india) February 1, 2022
PLI Scheme for Solar Energy Sector
Keeping in line with the Government’s target of achieving a massive goal of 280 gigawatts of installed solar capacity by 2030, Finance Minister Nirmala Sitharaman has announced an additional Rs 19,500 crore in the budget for 2022-23. This amount will be used for setting up a production linked incentive (PLI) scheme for the manufacturing of high-efficiency solar modules. The government will give priority to fully integrating manufacturing units from exiting polysilicon to solar PV modules to reduce the carbon footprint of the industry.
The scheme has the potential to create 60 lakh new jobs and additional production of 30 lakh crore jobs during the next five years, Nirmala Sitharaman added.
Sovereign Green Bonds for a Greener Economy
The Indian government will issue sovereign green bonds for funding the transition to a greener economy with a focus on using cleaner alternatives in every sector- from automobiles to infrastructure.
Finance Minister Nirmala Sitharaman has said that the money raised from green bonds will be used for projects that will help reduce the carbon footprint of the Indian economy. The issuing of green bonds is expected to prove crucial in India’s journey towards becoming a low-carbon economy and achieving targets like reaching 175 gigawatts of renewable energy capacity by the year 2022.
Speaking on #AatmanirbharBharatKaBudget 2022. https://t.co/vqr6tNskoD
— Narendra Modi (@narendramodi) February 1, 2022
Introduction of 5G Technology
After a long wait, Finance Minister Nirmala Sitharaman has announced that design-led manufacturing in 5G will finally be launched as a PLI Scheme in the upcoming fiscal year. The required spectrum auction for 5G rollout will also be conducted in FY22-23, added the finance minister.
The Budget outlines the government’s efforts to introduce private players into the defence sector to reduce reliance on imports and focuses on the renewable sector through issuing green bonds and a PLI scheme for the development of solar infrastructure. The new EV policy will benefit consumers greatly and the extension of the credit scheme for MSMEs will provide much-needed breathing room for these businesses which form the bulk of the Indian economy.
