'A mature budget committed to India's growth path'

Growth-fuelled, not consumption led

In our current strait-jacketed circumstances?after more than two years of a pandemic,?there are two ways of firing the engines of the economy. One is to cut taxes and put more money in the hands of people.?The other is?the formula?of?massive government?funding?on roads, railways, airports, seaports, mass transport, waterways and logistics infrastructure.?Budget 2022 shows that the government has chosen the latter, through new initiatives like the ‘Gati Shakti’.

"The 'Big Bang'?capex-driven approach is?a pragmatic way forward because it will create infrastructure that will make the Indian economy much more efficient and have a multiplier effect?across sectors?in the decades ahead, including the Commercial Real Estate sector."

The ripple effect on Commercial Real Estate

Commercial Real Estate in India is slowly but surely maturing and advancing as an asset class over the last 20 years. If India’s?economy grows at a robust pace, it will result in a rapid?demand for?Commercial Real Estate.

In this case, the government’s spend on building roads, airports and logistics hubs is creating unprecedented earnings for companies making steel, cement, trucks, hauling equipment - all of which are major engines of economic growth.

This 'Big Bang'?capex-driven approach is?a pragmatic way forward because it will create infrastructure that will make the Indian economy much more efficient and have a multiplier effect?across sectors?in the decades ahead, including the Commercial Real Estate sector.?That is something that would not have happened by giving tax breaks and putting more money in people’s pockets, making all happy in the short term.?

Here is a case in point on the ripple effect.?With?intense?competition?for hiring and retaining?top-notch talent,?organisations will need to seriously look at a work-life balance as an essential factor to employee happiness and success. Organisations will need to provide a world class office experience?and?ensure that they are located in?areas of employee's choice. Creation of new airports in Tier 2/3 cities will not only encourage organisations to open offices there, so that they can access more labour pools, but also allow such labour pools to not necessarily find the need to migrate to Tier 1 cities for work. This would also allow them the flexibility to work from hometowns and travel to the main centres in Tier 1 cities, as and when required, due to ease of commute.?

"With?intense?competition?for hiring and retaining?top-notch talent?that regards a work-life balance as essential to their happiness and success, organisations will need to ensure a world class office experience."

As for the work-from-home concept that was forced upon the world by the pandemic, we think it will evolve into a hybrid model where employees will initially come to office some days of the week by rotation. This has already started to happen and will steadily increase office attendance.?

Working from home is “dissipating the social capital that you need to be a successful complex organisation,” Octavius Black, co-founder and CEO of the Mind Gym said to the Financial Times last month.?The Financial?Times?quoted Ashley Whillans, an assistant professor at Harvard Business School as saying?“remote working undermines productivity because “we’re over-scheduling our calendar to compensate for the lack of social interaction”. These are crucial observations to show that working from home cannot continue forever.

At the end, we think the work scenario will settle into a flexible and hybrid way of working, that will be dynamic.?

New SEZ regulations that Corporate India eagerly awaits

The announcement by the government on reforms in SEZ regulation via a new legislation by September 2022, in partnership with States, was very encouraging. This has been long awaited by Corporate India.?

Today, only Net Foreign Exchange (NFE) earners can conduct business out of SEZs and benefits are subject to the work done physically from those SEZs (with exceptions given due to pandemic). Also, organisations in SEZs have multiple administrative hurdles in custom administration, etc.?

New SEZ legislation in custom administration by moving from physical process to 100% IT driven to promote ease of doing business is very encouraging. The new legislation also talks about use of readymade infrastructure within SEZs as a plug-and-play for both export and domestic industry. For years, NFE earners were at an advantage. Now the government wants to make this a level playing field by allowing domestic work to also be conducted from unused SEZ infrastructure in existing parks. This will open the door for more flexible ways of working especially for the 250 million sft of SEZ Parks in the IT / ITeS sector. Managed Offices, like Table Space, welcome this move.