View from India: Budget creates roadmap for next 25 years
The move to 5G, the digital rupee, and digital infrastructure were among the highlights of the Union Budget 2022-2023, as delivered by Finance Minister Nirmala Sitharaman on 1 February.
Omicron may be in the news, but the Budget seems to have some relief moments as technology enablers have been put in place across key contributory sectors. This may have a multiplier effect, which could be seen as job creation, with probably better pay packs and a digitally updated workforce. For instance, the Budget has chalked out measures for seamless multimodal movement of goods and people. This is how it is planned: the data exchange among all mode operators will be brought on the Unified Logistics Interface Platform, designed for application programming interface; this will provide for efficient movement of goods through different modes, reducing logistics cost and time, assisting just-in-time inventory management, and eliminating tedious documentation. The aim is to provide real-time information to all stakeholders and improve international competitiveness.
An open-source mobility stack for organising seamless travel for passengers will also be facilitated. “A capital expenditure allocation of a massive Rs 7.5 lakh crore [Rs 7.5 trillion, or £740bn] towards digitisation of the economy is a clear message to the world that New India’s inclusive and differentiated growth will lead to creation of opportunities for millions of youths, women and farmers. It also seeks a smooth transition in the country’s energy needs and commitments on climate change,” said Rahul Tikoo, MD of India Sub Continent, Huntsman International (India).
It is believed that the Budget's proposal to introduce the digital rupee as a digital currency will lead to a more efficient and cheaper currency management system. A central banking digital currency will be introduced by the Reserve Bank of India, the country's central banking institution which controls the monetary policy of the Indian rupee.
The introduction of digital rupee by using block chain technology, focusing on 5G and drone technology, are all enablers to building a sustainable, digital and inclusive India. The Budget 2022 is a futuristic step taken by the government to complement the nation’s macro-growth, encompassing digital economy, tech-enabled development, and inclusive sustainable actions.
“The announcement of data centres being awarded an infrastructure status is truly commendable as this move will be a major thrust to data localisation. The new status will enable the data centre sector to get credit at competitive rates and on a long-term basis with enhanced limits. This move will also be a catalyst in realising India’s vision of attaining the position of a global data centre hub,” said Anshuman Rai, area vice president, India and South Asia for Commvault. Data centres could open up new avenues of training and skilling; the functioning of data centres will include cyber security, and a need for professionals who can handle cyber-security issues can increase.
India is turning 75 this year and has a roadmap for its 100th year through growth supportive plans. “The ongoing race to deploy 5G will be crucial in addressing and streamlining the avalanche of data and the multitudes of IoT [Internet of Things] connections that will power the smart cities, utilities, education, healthcare, transportation, and enterprise needs of today and tomorrow. We are truly on our way to building an open, digital and inclusive India within the next 25 years,” observed Suman Reddy, managing director and country head of Pegasystems India.
Telecommunication in general, and 5G technology in particular, can enable growth and offer job opportunities. The Budget has indicated that the required spectrum auctions will be conducted in 2022 to facilitate rollout of 5G mobile services within 2022-23 by private telecom providers. A scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme. To enable affordable broadband and mobile service proliferation in rural and remote areas, 5 per cent of annual collections under the Universal Service Obligation Fund will be allocated; this could promote R&D and commercialisation of technologies and solutions.
Village India has also been mapped. The vision is that all villages and their residents should have the same access to e-services, communication facilities and digital resources as urban areas. The contracts for laying optical fibre in all villages, including remote areas, will be awarded under the Bharatnet project through PPP (private public partnership) in 2022-23 and is expected to be completed in 2025.
The Budget has tried to bring marginal sections into the gamut of digital payments. Mobile payment gateway options, which were restricted to smartphone users, have been broadened. In turn, this could widen the scope for more payment options. What could it mean to the user? “The government has brought reforms for feature phone and voice-based payments, as there are 97.3 crore [973 million] mobile subscribers who are still not on UPI [Unified Payments Interface]. Top UPI apps like GooglePay, PhonePe, PayTM, AmazonPay and the government’s own BHIM, as well as apps of another 55 banks, have only been able to enrol 20 crore [200 million] users on UPI. Most of these users are from the lower-middle-income segment, non-tech savvy, from villages and elderly who struggle to make cost-free zero-MDR [Merchant Discount Rate] money transfers; while we zip through addictive UPI-based apps,” said Mitesh Thakker, CEO and founder of MissCallPay, a fintech startup.
The thrust on digital economy can be understood from the announcement of 75 digital banking units in 75 districts, along with the digitisation of 150,000 post offices. It’s also about providing core banking to every nook and corner of the country. Many announcements could be a move towards the vision of Self Reliant India, or Atma Nirbhar Bharat. A case in point is the Productivity Linked Incentive (PLI); as Union Finance Minister Nirmala Sitharaman has said, the PLI for achieving the vision of Atma Nirbhar Bharat in 14 sectors has received excellent response, with potential to create six million new jobs and an additional Rs 30tr (£296bn) during the next five years. “It is progressive budget and is likely to add to ongoing growth momentum on the supply and demand side. The capex (capital expenditure)-friendly budget orientation is positive for growth levers of the economy; doing more of the things which have worked well and maintain status quo to a large extent,” added Sanjeev Sharma, country head and managing director of ABB India Ltd.
What could be noteworthy is that the Budget has recognised startups as key drivers of growth and innovation in the country. The extension on the period of incorporation and providing tax incentives will provide impetus and inspire entrepreneurs to continue driving innovation to put the Indian economy strongly on a clear growth trajectory. “We believe the measures and initiatives announced for the upliftment of MSMEs (micro, small and medium enterprises) will significantly help in boosting the economic activity impacted by the pandemic. The decision to revamp the Credit Guarantee Trust for Micro and Small Enterprises scheme and infuse additional credit of Rs 2 lakh crore [Rs 2tr, or £20bn] will also assist in business continuity, exploring new opportunities in manufacturing, and creating more employment avenues,” explained Rahul Raj, founder and CEO of FloBiz. In addition, the Emergency Credit Line Guarantee Scheme extension up to March 2023 may be seen as a booster for MSMEs, especially for enterprises that are not yet back to the pre-pandemic levels of business scale.
Overall, the Budget appears to have laid out a robust path to fast-track India towards a centenary of equality, entrepreneurial drive, and economic upliftment, with an aspiration of sharp rebound in the Indian economy at 9.2 per cent.
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