Jobaaj Stories
The Budget for the FY 2022-23 was growth as well as a future-oriented budget with our finance minister talking about different technologies & tech-based industries including blockchain, drones, edtech, agritech, fintech, EVs, etc. & how the investment in these technologies can create numbers job opportunities in the coming future.
The total size of the budget is approximately 15% of the GDP which is much higher than the pre covid levels, indicating the support which the government is trying to provide to the economy.
Budget expenditure is planned at Rs 39.45 lakh crores & the total receipts are 22.84 lakh crores with a fiscal deficit target of Rs 16.61 lakh crores i.e. 6.4% of the GDP (check out the embedded video to understand the fiscal deficit & why it should be less).
https://youtu.be/GSFZNhoYR_E
According to the finance minister, the fiscal deficit is on track with the goal of achieving a target of 4.5% by FY 2025-26.
The government's ability to spend depends on the income it earns & the Gross tax revenue is targeted at 27.58 lakh crores which is 9.6% higher than the revised figures of FY 21-22.
The Indian economy is recovering at a very fast pace after the first & the second wave, also the third wave has not impacted the momentum which is evident from the GST collection figures of January 2022 standing at an all-time high (Rs 1.4 lakh crores) since the introduction of the GST Act.
The government expects the Indian economy to grow by 9.5% in the current FY which is the highest among all the large economies which shows that new India is ready to withstand any challenges.
Now let's talk about the main theme of the budget & which sectors are going to be benefited the most?
The biggest gainers from this budget will be the infrastructure linked companies & new-age companies which are working on modern-day technologies.
O Capital Expenditure
In order to achieve the dream of India becoming a 5 trillion dollar economy, the expenditure on infrastructure has to be kept at a higher-end for the coming years.
Hence, the government has planned a capex at 3% of the GDP i.e. Rs 7.5 lakh crores in FY 22-23, this is 24.5% higher than the revised current-year expenditure of Rs 6.03 lakh crores.
Capital expenditure creates a ripple effect in the economy which boosts up consumption demand & ultimately drives growth.
According to a 2014 study titled 'Fiscal Multipliers for India' by Sukanya Bose and N.R. Bhanumurthy “Every rupee of capital expenditure by the government adds ₹2.50 to the GDP”.
i) National Highways
National Highways will be expanded by 25,000 Kms in FY 22-23 & this will cost the government Rs 20,000 crores.
ii) PM Awas Yojana
80 lakh houses will be completed in FY 2022-23 & Rs 48,000 crore has been allocated for this purpose.
Construction of houses creates a good multiplier effect in the economy as it involves a number of allied sectors including cement, steel, labor, etc.
iii) 1 lakh crores for States
An additional amount of Rs 1 lakh crores will be provided to states for capital expenditure.
iv) Jal Jeevan
The government has allocated 60,000 crores for piped water access to 3.8 crores homes in India.
Companies to benefit:-
L&T, UltraTech cements, DLF, Jain Irrigation system, etc.
O Tax on Digital Assets
Without referring to crypto, NFTs, and other technology-based assets, the finance minister announced a tax of 30% on the income generated on the transfer of digital assets, and the loss from these assets are not allowed to be set from other incomes.
Also, proposed TDS of 1% for transactions above a certain threshold.
This move will help the government in regulating or monitoring the investments or transactions in such assets & preventing misuse of the same.
This also indicates that the government is not planning to ban these assets ( refer to video for more details)
O Boost for Agriculture Sector
i) Kisan Drones
The government announced the use of 'Kisan Drones' for crop assessment, spraying of insecticides & digitalization of land records.
Startups will be encouraged to provide drone services in order to achieve this goal.
Also, the digitization of land records will increase transparency in the real estate sector & will increase the participation of foreign investors.
ii) Minimum Support Price (to understand MSP check out the video)
The government has planned to procure agricultural goods directly from 16.3 million farmers and Rs 2.37 lakh crore will be directly credited to the account of farmers. This will help in creating more income in rural areas & drive consumption demand.
iii) Also, the government wants to promote chemical free farming & to set up a fund for agritech.
O Digital Push
i) Introduction of the digital Rupee using Blockchain technology
The government has planned to introduce India's official virtual currency which is a major step & will help the government in achieving the vision of digital India.
ii) Edutech
The government aims to provide a personalized e-learning experience to all the students across the nation & hence more digital channels will be established to provide content not only in Hindi or English but also in the regional languages.
This will provide supplementary education to all the students from grades 1 to 12.
iii) Digitalising Post Offices
All 1.5 lakh post offices will be included in the core banking system & people will be able to access their accounts via Net Banking, mobile banking, ATMs. Also, citizens will be able to transfer funds between post office accounts & bank accounts.
O Job Creation (Employment)
Unemployment is still a big issue for our country & after the pandemic this issue has become more critical.
Also, to create employment, along with creating jobs, we will have to develop certain skills among the professionals and the government is working on the same theme.
Aligned with the government's vision, jobaaj.com was set up to provide the recruiters & job seekers a common platform for match making and by now we have successfully placed more than 10,000 professionals.
We are also working on creating a job-ready skilled workforce via our edutech arm Jobaaj learnings.
i) One Station - One Product
400 new Vande Bharat trains will be introduced in the next three years and the rail sector will develop “One station - One product” which will create demand for local products in different areas of the country.
ii) PLI schemes
With production-linked schemes, the government plans to create 60 lakh new jobs in the next 5 years.
One of such schemes is to provide incentives worth Rs 19,500 crores for solar modules to boost local manufacturing & at the same time promoting green energy.
Companies to benefit:-
Tata Power, Suzlon energies, IRCTC, etc.
O Technology
i) 5G Technology
Spectrum auction will be done in 2022 so that the private players can roll out 5G services within FY 22-23 & also design-led PLI schemes will be launched to build an ecosystem for 5G technology.
Also, the government has allocated a budget to bring faster broadband in rural areas of the country.
ii) Data Centers
The government has also classified expenditure on data centers and energy storage systems as infrastructure spending which will help in easy finance.
iii) E-passports with embedded chips
The government will start issuing e-passports this year with electronic chips which will contain important security related data.
iv) EV Boost
The Finance Minister laid down the government plan of promoting clean transport technology, one of such is the Battery Swapping Policy.
The government is bringing a battery swapping policy to boost the use of electric vehicles in the country. Also, the private companies will be promoted to set up business models for battery or energy related services in order to improve the electric vehicle ecosystem in India.
Companies to benefit:-
Bharti Airtel, Reliance Industries, HFCL, Exide Industries & Amara Raja Batteries Ltd., etc.
O Boost for startups
India currently is the 3rd largest startup ecosystem (only behind US & China) with 83 unicorns, out of which 44 were created in the year 2021 itself.
The Finance Minister in her budget speech praised the progress of the startup ecosystem in India & planned to take several steps for further growth.
The government plans to set up an expert committee for VC & PE investments in India, also the government has capped the long term capital gain (LTCG) at 15%, this will effectively reduce the tax rate from 28.5% to 23% for angel investors & will help attract more investments.
O Defence Sector
The government is committed to reduce the import bills & promote domestic manufacturing industries & therefore 68% of the planned capital expenditure on defence is allocated for Indian companies.
Also, the expenditure on R&D in this sector will also be increased to create export quality defence equipments.
Conclusion:-
Overall the budget seems to be in line with the goal of a 5 trillion dollar economy & the same is evident from investors' reaction to the budget.
The Nifty index closed 1.37% higher on the day of budget & today also the index is more than 1% up.
Hope the government gets all the success in achieving its vision of “ Aatmanirbhar Bharat”.
