Budget Aims To Propel Long-term Growth Of Indian Economy

Mobility Outlook Bureau
01 Feb 2022
08:15 PM
4 Min Read

An increase in consumption amidst a constrained supply chain environment may add further to the inflationary trend, which could have been avoided at this stage.

Nirmala Sitharaman

Vehicle manufacturers across the board have expressed satisfaction with the Union Budget presented today by Finance Minister Nirmala Sitharaman, as the expansion of the national highway network, multi-modal national park contracts and the 100 GatiShakti terminal contracts and the big boost to capital expenditure collectively aim to propel a long-term growth of the Indian economy. 

Satyakam Arya – Managing Director & CEO, Daimler India Commercial Vehicles, said the FM has not taken an aggressive target on reducing the fiscal deficit; this also provides the headroom for spending and capital expenditure to enable the growth momentum on a sustainable basis. The various measures announced to boost the road infrastructure and logistics sectors should keep the commercial vehicles (CVs) industry on a positive trend this financial year. The 25,000 km expansion of the national highway network, multi-modal national park contracts and the 100 GatiShakti terminal contracts should generate greater demand for the CVs in the market in FY23 as well as FY24

Arya further said that the allocation of INR 48,000 crore for the PM Awaas Yojana is also a welcome move for it will have a positive impact on the CV industry, given that 80 lakh houses are planned in FY23 for urban and rural beneficiaries under the scheme.

However, he said that the focus on direct taxation could have been better to increase overall consumption. On the other side, an increase in consumption amidst a constrained supply chain environment may also add further to the inflationary trend, which is best avoided at this stage. 

Martin Schwenk, Managing Director & CEO, Mercedes-Benz India said, the Budget is overall growth-oriented with a clear focus on digitisation, electrification, infrastructure development and ease of doing business. It aims to propel the long-term growth of the Indian Economy. The battery-swapping announcement is in the right direction and will be helpful to a limited segment. “We however need a broader holistic view on the strategy around developing electric mobility for the passenger vehicle segment. A mid-to long term planning for demand creation is needed and we hope the fine prints will have ripple effect and passively stimulate growth for the auto industry.”

Venu Srinivasan, Chairman, TVS Motor Company, said, “Union Budget 2022 sets the pace for the Indian Economy’s growth trajectory amidst the challenges brought forth by the pandemic. The big boost to capital expenditure is welcome and it would give a fillip to the Indian Economy. For the automobile sector, we welcome the ‘PM Gati Shakti Master Plan’ focusing on building world-class infrastructure and improved connectivity for commuters. The strong push towards augmenting agricultural productivity should help enable buoyant rural demand. In the electric mobility space, we strongly support the measures undertaken by government to promote clean and green mobility, mainly introducing the battery-swapping policy will be instrumental in supporting an efficient EV ecosystem.”

Dheeraj Hinduja, Executive Chairman, Ashok Leyland, saw the Budget as growth-oriented and pro-development as it focused on sustainable planning and development, energy transition for a cleaner tomorrow and inclusive growth through a tech-enabled economy. Also, the investment-led growth strategy and the sizeable capital investment for sustained and speedy economic revival are reflected in the sharp increase in capital expenditure for FY23. In addition, the special focus on education, digital and clean mobility is laudable, he said.

The Battery Swapping policy and special EV mobility zones will help in the smooth transition to electric vehicles. In addition, the Budget has laid the roadmap for long-term development over the next 25 years, and areas like artificial intelligence, drones, semiconductors, space economy, genomics, green energy, and clean mobility systems will collectively lead the future growth of the Economy, Hinduja added. 

Vinod Aggarwal, MD & CEO, VECV, hailed the long-term focus in the Budget on infrastructure and logistics development and modern vehicle technologies. He said the CV industry will benefit as trucks play a crucial role in infrastructure development proposed under the PM Gati Shakti Plan, highway network construction, and other infrastructure projects. This, in turn, will pave the way for modern trucks and buses to operate efficiently on Indian roads. Initiatives in the Budget that strengthen the rural Economy will improve vehicle buying sentiment for a diverse range of passenger and commercial vehicles. In addition, EV battery standardisation and the formulation of new interoperability standards will facilitate the development of the EV ecosystem -particularly in the two-wheeler and last-mile delivery segments.

According to the spokesperson from Toyota Kirloskar Motor, the Budget has sought to achieve a fine balance between fiscal consolidation and continued public spending for nurturing economic growth with a clear emphasis on sustainability and infrastructure development through public-private partnerships. Furthermore, with the government’s push for green energy and clean mobility systems, India is on the path of limitless possibilities.

One of the biggest challenges for the EV ecosystem has been battery charging stations. The proposed battery-swapping policy will help create interoperability standards, thereby making EVs more accessible and affordable.

The Gati Shakti Initiative of expanding the National Highway network by 25,000 km will augur well for the auto sector, and the outlay for the rural economy will improve the sentiments of people, thereby playing a catalyst for the increase in vehicle demand, the spokesperson added. 

Nagesh Basavanhalli, Group CEO & MD, Greaves Cotton, said the Budget will accelerate economic growth by focusing on four core pillars of productivity, climate action, financing investment and PM Gati Shakti Programme, which will help strengthen infrastructure and the MSME sector. The expansion of the National Highway network will provide better connectivity to our towns and cities and strengthen the supply chain network. There is a huge impetus on rural growth through various schemes and technological intervention, which will help create more rural jobs and create more demand from rural and semi-urban areas. The battery swapping policy will boost the adoption of EVs, he added.

Baba N Kalyani, CMD, Bharat Forge, congratulated the FM for a growth propelling Budget with significant thrust on enhancing competitiveness, infrastructure development, holistic digital drive and promoting financial inclusion. The proposed new legislation for SEZs with states as partners coupled with a heightened emphasis on the seven engines under PM Gati Shakti initiative should pave the way for a new India that is recognised for its speed, productivity and scale, thus, boosting the country’s overall investment attractiveness and export competitiveness. 

Earmarking 25% of Defence R & R&D budget for industry, start-ups, and academia is a forward-looking measure that will pave the way for frontier technologies and capability development investments. Industry in partnership with DRDO through SPV mode for developing critical weapon systems and military platforms is a path-breaking reform that will significantly transform the Indian defence ecosystem and lead India to be a net-exporter of defence equipment/platforms, he added.

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