• News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
BW Businessworld

Poised To Drive Inclusive Growth

For a digital economy to thrive, taxes should be within a reasonable range to create a conducive environment for the sunrise segment. This becomes all the more imperative when one considers that losses arising from the sales of virtual digital assets cannot be offset against other income.

Photo Credit :


The Union Budget is commendable for its emphasis on infrastructure development, boost to the digital economy, inclusive growth and a futuristic vision. Some of the Amrit Kaal goals include driving macro-economic growth along with micro-economic welfare programmes, promoting fintech, climate action and energy transition to create a virtuous cycle of investment through both private and public capital investments. 

The introduction of a digital rupee in 2022-23 based on blockchain and other technologies via Central Bank Digital Currency (CBDC) should ensure a fillip to the digital economy. This can create a cheaper, more efficient currency management system. 

The Flip Side

Blockchain is not the best technology for a digital currency given the humongous amount of power it consumes. Instead, an energy-efficient model should be adopted that is in sync with the government’s focus on reducing the country’s carbon trail to meet climate action goals. Also, its implications on monetary policy and the banking system via the disintermediation of banks by the RBI calls for proper scrutiny. These concerns cannot be adequately addressed if the digital rupee is rolled out in FY2022-23. Here, the ‘amend as we move along’ philosophy isn’t the best way forward.

Investors and other stakeholders in cryptocurrencies must note that this does not imply the government is conferring legitimacy on any cryptocurrency simply because a 30 per cent tax will be levied on any income transfer of digital assets. The fine line should not be missed that CBDCs are backed by the government while cryptocurrencies issued by private entities have no legal sanction. Despite the tax, the Centre has reserved its right to ban cryptocurrencies in future if it deems this necessary. 

The Bright Spots

In the Budget 2022 announcements, there are multiple areas to look out for the economy and industry at large as well. The decision to sharply increase capital expenditure to Rs. 750,000 crore in the coming fiscal from Rs. 554,000 crore in 2021-22 equates to a robust rise of 35.4 per cent or 2.9 per cent of the GDP. 

Similarly, the revised fiscal deficit estimate of 6.9 per cent of the GDP in 2021-22 compared with the projected 6.4 per cent for FY2022-23 is promising if the figures hold true, given the government’s intention to aim for a deficit that’s below 4.5 per cent by 2025-26. 

The other laudable announcements include an extension of the period of incorporation for startups by a year, allowing them to benefit from tax incentives till March 31 2023, the cap on long-term capital gains tax at 15 per cent on transferring any asset class, the creation of 75 new digital banking units in 75 districts across India through scheduled commercial banks and the allocation of Rs. 48,000 crore to support urban housing, among other measures. 

Inclusion & Growth

One move requiring specific mention is the decision to have all 150,000 post offices pan-India on the core banking system this year. Allowing digital banking through post offices will boost financial inclusion across the country.

While one remains optimistic about the economic turnaround of the resilient economy. The record high GST collections of almost Rs. 141,000 crore this January gives ample indication that economic activity is rebounding. As a result, there is increasing confidence that the economy is now on track for sustained growth, which should benefit all industries, including the fintech segment. 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
Rakesh Kaul startups Magazine 22 Feb 2022

Rakesh Kaul

The author is currently the CEO and Whole Time Director at Somany Home Innovation Limited. In a career that spans over 24 years now, Mr. Kaul has worked with companies such as Reliance Retail, The Times Group, Onida and Whirlpool spanning across diverse sectors and industries.

More From The Author >>