Despite the pandemic, the Indian economy is expected to remain the fastest growing major economy, according to the Union Budget 2022-23, which prioritizes long-term growth via increasing consumption. It has made a respectable and audacious move by boosting capital spending by 35.4 percent. Even before the global breakout of COVID-19, which has not spared India, our country’s economic situation was a source of great anxiety. As a result, the effect of COVID-19 on the country’s economy was quite substantial, despite the fact that a recent turnaround has been observed. Our country has also seen a lot of joy as a result of the economic recovery. 

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When we look at the state of the country’s economy, we can see that two elements are very much at work to the harm of the economy. While one is rising unemployment, the other is a worsening of the country’s economic situation for a sizable portion of the people. True, no nation has been spared the COVID-19 attack, despite the fact that the natures of the difficulties to the economies differ. After all, no country was spared the bombardment of COVID-19.

The economic assessment suggested that the “second wave” had a lower economic impact, despite the fact that the health damage was substantial. With activity in most sectors returning to pre-pandemic levels, it forecasts 9.2 percent GDP growth in FY22. Housing loans, the largest component of personal loans, having grown at an annual rate of 8% in November 2021. Bank loans to commercial real estate rose by 0.4 percent as well. Overall, the study revealed that the Indian economy was well positioned to develop at a rate of 8.0-8.5 percent in FY23.

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The Hon Finance Minister’s budget address, one of the shortest of her four speeches, was obviously focused on developing broad-based platforms for the long haul rather than instant quick-fixes. Infrastructure development, as well as more support for industries, remained at the center of the budget. The Gati Shakti masterplan has received significant push, with an emphasis on expressways, cargo ports, and multi-modal national logistic parks to support long-term investment and growth. Payment infrastructure digitization, as well as a plan to establish a central bank-backed blockchain currency, were significant new economic priority areas.

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Furthermore, the restatement of commitment to the circular economy, incentives for solar panel manufacturing, policy focus on EVs, incentives for private firms to partner in defense sector R&D, and so on, highlight the approach of creating avenues that will eventually benefit the economy and open investments in industrial and commercial real estate. This is also consistent with the aim to link communities via digital networks.

In addition to the urban development focus, direct announcements in real estate came for data centers, which would be granted infrastructure status, and housing, which got an allocation of INR 48,000 crores for 80 lakh new dwellings. Other significant announcements include a revision in SEZ law that now incorporates state participation, the much-desired digitization of land records, and the creation of expert groups for urban capacity building. The latter is a crucial stage because the emphasis has been declared to be on tier 2 and 3 towns as well as the larger cities.

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With the ongoing revolution in digital consumption and an emphasis on data localisation regulations, the grant of ‘infrastructure status’ to data centers is projected to attract substantial investment interest and expanded access to financing. This is likely to attract a big number of global IT corporations that have been considering India as a feasible location for data centers. A specific task force on the AVGC sector would strengthen India’s ability to perform on a global scale – we believe foreign AVGC corporations will be eager to tap into Indian expertise.

IT firms will be closely monitoring the new law that will replace the Special Economic Zones Act. The new legislation will be implemented in collaboration with other states, with the goal of increasing export competitiveness. The high-level committee for urban planners and economists to make recommendations on urban capacity building, planning implementation, and governance will open up new avenues for development and investment, as working-from-home during the pandemic has forced a large portion of the workforce to relocate to tier 2 and 3 cities. States are being incentivized to implement such policies by receiving interest-free loans from the central government.

Among other budgetary announcements, the extension of the Emergency Credit Linked Guarantee Scheme (ECLGS) through March 2023, as well as an extra grant of INR 50,000 Cr, is a good measure that is likely to support the MSME sector, particularly the troubled hotel subsegment.

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The enhanced allocation under the Production Linked Incentive (PLI) Scheme for solar PV modules is expected to help domestic production and warehousing. As part of the PLI Program, a design-led manufacturing scheme will be developed to help build a solid ecosystem for 5G.

Overall, the union budget 2022-23 has remained committed to the long-term aim of supplementing macroeconomic growth with a focus on infrastructure, digital economy and fintech, tech-enabled development, energy transition, and climate action.