The Union Budget of India for 2022, presented by Finance Minister Nirmala Sitharaman, shows a clear preference for sustaining India’s economic growth trajectory, resulting in India becoming the world’s fastest-expanding economy. While the budget includes some strong development-support measures for all sectors, it singles out technology as a vital area for creating a digital ecosystem that will serve as a basis for business and economic growth. Digital infrastructure investment and policy initiatives will help India lay a solid basis for long-term growth.
Strong fundamentals are critical, and the government’s announcement of major investment in strengthening India’s digital infrastructure speaks volumes about the government’s commitment to moving the country toward a digital future. This can be seen in the contracts that will be awarded to lay optical fiber lines to hundreds of thousands of communities, as well as the investment strategy for design-led manufacturing that will aid in the development of our 5G ecosystem. Furthermore, the future 5G spectrum auctions will aid in the adoption of faster, more efficient mobile networks in India.
Fintech, which is a critical component in developing accessible financial services for the country, is also included in these fundamentals. The government acknowledges it and has set aside INR 1,500 crore for it. Commitment to bolstering the rural sector’s digital payments ecosystem is a welcome development. Connecting India’s 150,000 small businesses to the central banking system is also a smart measure that would definitely boost the country’s financial inclusion. The introduction of digital money is a significant step forward in the development of tech-enabled new-age financial solutions to address the country’s unmet financial demands, which traditional infrastructure has failed to provide.
It is apparent that there is an emphasis on establishing IT infrastructure while also pushing local technologies and SAAS-based solutions in order to create a digital ecosystem that is suitable for India’s socio-economic context.
Overall, the news is positive for start-ups and small businesses. The government’s commitment to establishing a healthy start-up ecosystem in the country is clear from the budget. Extending tax benefits to new start-ups for an additional year is a positive step that will allow them to concentrate on growth and innovation rather than costs. The decision to establish an expert group tasked with streamlining venture capital and private equity investments, as well as capping the surcharge on long-term capital gains, will help entice investors. Other steps to minimize compliance burdens that have been announced are also extremely welcome.
Startups and small businesses, particularly new ones, have been grappling with the effects of the global health crisis in various ways. Some businesses had to adjust to new digital strategies overnight, while others had to create totally new company models. These shifts take time, and the government made a good move by providing additional support to small firms and start-ups affected by the healthcare crisis. Extending the ECLGS (Emergency Credit Line Guarantee Scheme) to March 2023 and providing an additional INR 50,000 crore to it is extremely beneficial. The redesign of CGTMSE should also aid with job placement.
The most encouraging aspect of the Union Budget release was a 12% increase in spending on education and youth upskilling. With increased digitization on the horizon, the government understands the need for young upskilling. Because new occupations and labor will require significantly different skill sets, incorporating new learnings and upskilling will be critical for job security and fair opportunity.
The budget has set aside 25% of defense spending for start-ups, which is significant in and of itself. Some of this money is going to research and academia, which will encourage the country’s educated youth to be more innovative. Expanding the one-class, one-channel TV system, developing a digital university, and other initiatives will go a long way toward eliminating disparities, boosting accessibility, and increasing employability. The greatest defining success factor of the economy is and will be the country’s talent. As a result, every budget should prioritize the development of skills and talent. Overall, I’m excited by the budget’s emphasis on strengthening India’s digital ecosystem and network backbone, which should provide exciting new prospects for start-ups and small companies.