Good morning, nothing in today's newsletter is really new. And that's because we are summing up the Union Budget 2022.
While everyone with a PR agency on retainer received press coverage of their analysis of the Budget, we found this one to be the crispest.
🎙 “Short & simple budget. No complex regulation. No new tax on labour or capital (other than crypto, which is needed). No excessive populism. Focus on investment, infrastructure & digital. The remarkable Indian growth story continues.” - Jay Kotak tweeted.
Coming in at a close second is Anand Mahindra's tweet;
🎙 “Brevity has always been a virtue. N Sitharaman's shortest budget address may prove to be the most impactful…”
And the bronze goes to Anuj Puri, Chairman, Anarock.
🎙 “Providing a broad-spectrum booster shot to the economy, UnionBudget 2022-23 is progressive -- especially with its emphasis on building the infrastructure of the country”, he tweeted.
India On A 'Spending Spree'
Undoing the purse strings a little more, Finance Minister Nirmala Sitharaman, presenting the annual budget to parliament, said total government spending in FY23 will be 4.6% higher than the current fiscal.
With that, growth is estimated to be 9.2% in FY22, coming off a low base and slowing to 8 - 8.5% in the coming fiscal year, but that's still the fastest among the world's major economies.
Here's A Quick Overview Of Budget22
📎 INR 7.5 lakh crore allotted for capital expenditure in FY23, a 2.2x jump from FY20.
📎 Spending of INR 200 billion (USD2.68 billion) for a highway expansion programme and said 400 new trains would be manufactured over the next three years.
📎 INR 48,000 crore allotted for affordable housing under the PM Housing Scheme in FY23.
📎 Additional allocation of INR 19,500 crore to boost domestic manufacture of solar power equipment.
📎 Current SEZ act to be scrapped and a new one to be brought in it's place to enable greater participation of states in a zone's development.
📎 Gross borrowing for FY23 was increased 40% to INR 14.95 trillion. FYI, Gross borrowing by the Modi government has more than doubled during the pandemic as the Centre went on a spending spree to cushion the economy and provide relief to the poor.
📎 Tax rebate on profits made by startups to continue for another year.
📎 RBI to introduce a digital currency in FY23 using blockchain and other supporting technology.
📎 Flat 30% tax on income from virtual digital assets aka cryptocurrency earnings.
📎 Status quo on taxation.
📎 Big digitalisation push in every sector, from agriculture, healthcare, to land records.
But, But, But. . .
🧐 India's fiscal deficit for the current year would be 6.9% of GDP, slightly more than the 6.8% targeted earlier, Sitharaman said, drawing concern in the bond market.
Real Estate Industry Voices
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This is a real estate newsletter and sooner or later, it had to come down to the business end of things.
And to keep ourselves out of the analysis, we thought it best to let you know what industry veterans think of Budget22 and its impact on real estate.
So here goes. . .
🔽 "The government could have given a further boost to the housing sector given the strong multiplier effect this sector has on the economy," said Shishir Baijal of Knight Frank India.
🔽 Hailing the government's 'One Land, One Registration' system, CREDAI (MCHI) President, Boman Rustom Irani, said developers were hoping for tax rebates from the union budget.
🔽 National Association of Real Estate Development Council (NAREDC) president, Rajan Bandelkar said the Budget missed out on incentives to boost home sales.
🔼 "The budget has taken a commendable position of increasing expenditure significantly in order to boost demand and investment," said Anurag Mathur of Savills India.
🔼 The commitment to develop 18 lakh low-cost homes at an investment of INR 48,000 crore in FY23 under PM Awas Yojna was hailed by all.
🔼 Granting of infrastructure status to data centres was welcomed by all.
🔽 “Despite the fact that the real estate industry was expecting a number of immediate demand-side pushes for the sector, some significant opportunities were missed,” said Raman Sastri of Sterling Developers.
🔼 "The sector is further buoyed by the fact that the Special Economic Zones Act would be replaced by a new legislation for the development of enterprise hubs," said Anshuman Magazine of CBRE.
🔼 "The industry welcomes the much-awaited focus to resolve longstanding issues of reduction in approval timelines for land and construction," said Niranjan Hiranandani.
🔼 Finally, the emphasis laid towards modernization and reforms in building bylaws, TDR reforms, urban planning schemes, and transit-oriented multi-modal corridors were appreciated by all.
Chilling In The Shade With Green Bonds
In her Budget speech yesterday, Finance Minister Nirmala Sitharaman announced that the government will be issuing green bonds ‘for mobilising resources for green infrastructure’.
What Is A Green Bond Anyway?
Climate change today is a major concern for policymakers and the link between climate change and financial markets runs in both directions asymmetrically.
On the one hand, it impacts financial markets unfavourably as climate shocks could lead to losses for banks and financial institutions.
On the flip side, financial markets can address climate change favourably by designing financial products to lower the risks.
Find out more about green bonds here.
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Before we sign off, here's the ‘negative takeaway’, per Vijay Kumar Gaba of the Equal India Foundation.
Vijay feels that while Budget22 has many pluses, one big miss is in the transparency department.
“…the key negative is the lack of transparency. Not mentioning ‘end of bonus stripping’; comparing FY23BE(budgeted estimate) capital expenditure with FY22BE instead of FY22RE(revised estimate) are a couple of examples that may hurt the investors’ sentiments tomorrow morning.”
Have a good day. 💚
☕ The Crew@Ginger Chai