Finance Experts, Associations Welcome Infrastructure, MSME Investments

New Delhi: Economic experts, industry associations have hailed the latest Union Budget presented by Finance Minister Nirmala Sitharaman, as the central government has splurged massively towards infrastructure development. The Hans India spoke with experts to know their view on the slew of announcements made by the Finance Minister on Tuesday.

Speaking candidly with The Hans India, Finance Expert and Director of Dalton Capital Advisors, Ullal Ravindra Bhat said that based on the broad interpretation of the budget, it is clear that despite the pandemic of the current financial year, the fiscal management has been prudent.

"You can say that the budget estimates for FY 2023 are quite reasonable and realistic. The big drop to the budget if you see is the infrastructure. This speaks volumes of about the confidence of the government in terms of nation building. These infrastructure projects are short term election-oriented (announcements) which have been the bane of the nation for the last 70 years. You are always thinking of the next election. Here is one budget that doesn't bother about the next election because the payback and the economic consequences of the infrastructure project will come to the floor only after a decade," said Bhat.

While five assembly elections are scheduled for this year, Mr. Bhat says that the announcements were made keeping in mind the long-term gain as against the backdrop of state elections. He also pointed to the fact that although employment generation schemes such as MNREGA that has got slightly lower allocation, larger investment into infrastructure will create adequate employment demands.

"I think if you are really talking of building 25,000 kms of highways and all that, all these highways go through rural areas. When you are connecting two big cities, in-between there are rural areas and this is where infrastructure plans have a huge multiplier effect in terms of job generation and uptake of cement and steel," he said.

While many middle-income groups have been left disappointed with no tax relief offered in the present budget, Mr. Bhat said the stable tax slab will invite private sector investments further. He also said that the effort by the central government and state government to implement infrastructure projects is a much-appreciated idea.

"The other point is stability in terms of taxation. There is always a tendency for us to keep peaking the taxation system every year. Whereas this year if you see there is very minimal taxation peaking as a result if you have a stable tax regime that is when you will have private sector investing. Some custom duty reduction in raw materials like iron ore, coal, which is good, because all these materials are used for building infrastructure. Another thing that I saw was a thrust to boost the start-up ecosystem with tax incentives because they (central government) recognise the importance of the start-up ecosystem in creating economic growth, I believe this is encouraging.

Sharing similar sentiments, Mr. Ravi Nandan Sinha, Director of Development, MSME Business Forum India, told Hans India, the infrastructure growth is critical for the holistic development of the nation.

"If infrastructure grows, everything grows, even employment grows. And the Finance Minister spoke about infra development, expressway development. One should note about the announcement of linking rivers. It's a very big point. In 70 years, it has not happened. It will give boost to logistics movement," Mr. Sinha emphasised on the key announcements.

He also said that greater efforts put in the direction of warehousing and logistics would mean that India is expecting growth. Finance Minister Sitharaman has extended the Credit Guarantee Scheme for MSME segment till March 2023.

"After many years, the government has once again emphasised on the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme. Also, custom duty reduction in materials for steel manufacturers, agricultural tools, indirectly most of the segments have been touched," Mr. Sinha told the Hans India.

The Finance Minister has also announced in her speech that India will manufacture 400 new, energy-efficient Vande Bharat trains in the next three years, whereas the rail sector will also develop "One Station One Product", which will leverage local produce carried on the railways. Sitharaman, in her Budget speech, had announced a Rs 6,000-crore programme to support MSMEs over the next five years. Under the initiative, digital infrastructure, an e-portal will be launched. The extension of ECLGS scheme by Rs. 50,000 upto March 2023, with a special focus on ailing hospitality sector is crucial to facilitate its faster recovery. The credit support has also been provided in the form of Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) revamp with credit of Rs 2 lac crore for micro and small enterprises.

Mr T V Narendran, President Confederation of Indian Industry (CII), too applauded the announcements on public investment to crowd in private investment and for setting the virtuous cycle of demand, investments, and jobs in motion.

"The proposed 35.4 per cent increase in the allocation for capital expenditure on top of the last year's increase of 34.5 per cent, is a booster shot for the economy. It will pump prime demand and private investment and create jobs; said Mr T V Narendran. In absolute terms the budgeted capital expenditure has increased from Rs 4 lakh crores in FY21 to Rs 7.5 lakh crores in FY23," Mr. Narendra has said in an announcement.

He added, "The budget has also extended support to the pandemic hit MSMEs, through the extension of the ECLGS upto March 2023 and an additional allocation of Rs 50,000 crores taking the total allocation to Rs 5 lakh crores. Support to MSMEs is important for job creation, for boosting exports and more regionally distributed growth and development."

Narendran, too, has supported the decision on the tax slab in the Union Budget as he believes that the tax proposal would focus on stability and predictability, which is very important for nurturing the incipient revival in the private capex cycle.