4 Feb 2022, 12:48 — 4 min read
The budget is out. The Finance Minister has spoken.
Is it a growth budget?
The demand mojo is needed. That is what motivates entrepreneurs to create capacity! However Manufacturing is at 60% of capacity utilisation across industries. Growth conditions can come only with government spending and it is heartening to note that capex is allocated to infrastructure creation. The focus on green energy is commendable for our planet to last.
Growth happens in conditions wherein interest rates are lower, commodity prices reasonable and enough opportunity to create demand. The government has allowed for 3 crore plus houses to be constructed with government support. Housing is a multiplier effect industry and helps industrials in a meaningful manner.
Growth conditions can come only with government spending and it is heartening to note that capex is allocated to infrastructure creation. The focus on green energy is commendable.
The key problem at hand seems to come from overseas interest rate conditions. In the next two years if the inflation in the US rises to the peak of 14 percent from the current 7 percent the world economy will take a hit.
However, I guess it should be closer to 8-9 percent inflation per annum as with a digital world, especially in the developed world, cost optimisation has happened to full effect as the Federal Reserve Washington has indicated a 3 times rate hike this year. Generally it is in the region of 25 bps per hike, however, at times if situations warrant it can rise.
The thrust on tap water for millions of homes is good for health. 'Health is wealth' is understood by the government and that is good for the future and consumption industries over a period of time as people will fall less ill and be able to benefit from the government policies in education and the MSME funding picture.
That has gone full throttle with the impetus on Digital Learning with an increase of 10% from last year. Should one want to be an entrepreneur MSME funding is available should the business model be viable and the accounts are in order. The core idea is to ensure people work from their home towns and help the local economy through their spending.
The startup taxation has been extended for a year for eligible companies. Growth can take place over the longer period through the Digital mode and that is of relevance! This is true from a payments point of view as usage of money increases from 3 times to 7 times in a digital world. The digital situation has become a habit in our lives and two factor authentication seems to prove this.
Where will all the money come from for this?
GST collections have been rising steadily. Disinvestment has not taken root because of government long term orientation to sell family silver at the right price. This gives the government sufficient ammunition to execute the capex needed to sustain the economic growth in the year to come.
Seize the day. Build the future.
GlobalLinker recently conducted a webinar where a seasoned Chartered Accountant & Tax Expert shared insights on how Budget 2022 impacts MSMEs. Watch the highlights below.
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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.
Posted byAnirudh Anand Gupta
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