UNION BUDGET 2022: HIGHLIGHTS

The country is expected to grow at 9.27%, Finance Minister Mrs. Nirmala Sitharaman lays down the Blueprint for India’s Budget 2022

Finance minister Nirmala Sitharaman presenting the fourth Budget of the Modi 2.0 government today

This budget seeks to lay the foundation and give a blueprint to steer the economy over the Amrit Kaal of the next 25 years — from India at 75 to India at 100,” the FM said in her shortest budget speech

–Finance Minister Nirmala Sitharaman, on Budget 2022–23

On February 1, 2022, Finance Minister Nirmala Sitharaman presented the Budget for the fiscal year 2022–2023 in a tablet encased in red case, marking her fourth budget presentation in a row and the nation’s second paperless budget in an attempt to reach environmental sustainability. In 2021, the government had also launched the ‘Union Budget Mobile App’ so that the Members of Parliament (MPs) and the general public could access the documents with just a few clicks, reducing the copious amount of paper usage.

Stressing on the economic adversities and challenges India is facing on the fore-front of Covid-19 pandemic, she urged foreign investors to invest in emerging start-up companies and small businesses, in India’s aim to become self-reliant and emerge as ‘Atmanirbhar Bharat’. In one of the shortest Budget speeches which lasted only for 1 hours and 30 minutes, Sitharaman began her presentation by expressing empathy and grief towards the innocent lives lost amidst the pandemic. She said,

We are in the midst of an Omicron wave with high incidence but milder symptoms. Further, the speed and coverage of our vaccination campaign have helped greatly. With an accelerated improvement of the health infrastructure in the past year, we are in a strong position to withstand challenges.

Sitharaman quoted a verse from Mahabharata and stressed government expenditure to boost growth even as some worried about the fiscal deficit arising from the investment push. However, unlike last year’s budget which specially focused on the healthcare sector followed by the announcement of Pradhan Mantri Atma Nirbhar Swasth Bharat Yojana, which was a new central healthcare scheme to consolidate India’s healthcare infrastructure over the next six years, this year the FM didn’t make any major announcements regarding public health sphere.

Approximately Rs. 86,200.65 crore has been allocated to the Ministry of Health and Family Welfare for 2022–23 which is a mere 0.23 per cent higher than the revised estimate of Rs. 86,000.65 crore in 2021–22.

Here are some key announcements, major numbers and new policies made in Budget 2022–2023.

Major Numbers:

  • Nominal GDP for 2022–23 estimated at Rs 258 lakh crore, assuming an 11.1 percent growth over Rs 232.15 lakh crore estimated for 2021–22.
  • Fiscal deficit for 2022–23 estimated at 6.4 percent of nominal GDP. For the current fiscal year, the fiscal deficit target has been revised to 6.9 percent from 6.8 percent in the budget estimates.
  • Market borrowings (government securities and treasury bills) are estimated at Rs 11.59 lakh crore for the next year. Borrowings for the current fiscal year lowered to 8.76 lakh crore from 9.68 lakh crore estimated in the budget.
  • Gross tax revenues of the Union government are estimated to rise to Rs 27.58 lakh crore, up 9.6 percent from the revised estimates for 2021–22 and 24.4 percent more than the budget estimates.
  • About 51.5 percent of the gross tax revenues would come from corporate tax and personal income tax. This is marginally higher than the 50 percent estimated in the budget and the revised estimates for the current year.
  • The Union government’s total expenditure is estimated to rise to Rs 39.45 lakh crore, up 4.6 percent from the revised estimate and 13.2 percent from the budget estimates. Capital expenditure will be about 19 per cent of the total expenditure at Rs 7.50 lakh crore.
  • Disinvestment target for the year set at Rs 65,000 crore, lower than the revised estimate of Rs 78,000 crore for the current fiscal year.
  • Collection from road and infrastructure cess on petrol and diesel, a form of excise duty, estimated at Rs 1.38 lakh crore, down 31.9 percent from the revised estimates for the current year. This is the impact of a cut in excise duty on motor fuels in November 2021.

Direct Taxes

  • A new provision allows taxpayers to amend a prior return and include omitted income by making an extra tax payment. Within two years of the conclusion of the relevant assessment year, the revised return can be filed.
  • For startups, the tax incentive period has been extended by one year. Tax incentives will now be available to eligible startups formed under Section 80-IAC until March 31, 2023.
  • The corporate surcharge will be cut from 12% to 7%.
  • The Alternative Minimum Tax (AMT) for co-operative societies would be decreased to 15%.
  • Income from the transfer of digital assets, such as bitcoin, will be taxed at a rate of 30%. Except for the expense of acquiring digital assets, no deductions will be allowed. Losses on the sale of digital assets cannot be offset against other sources of income.
  • The Finance Ministry recommended raising the employer contribution to the National Pension Scheme (NPS) Tier-I account from 10% to 14% to achieve parity between central and state government employees.
  • Once a parent or guardian of a differently-abled child reaches the age of 60, the payment of an annuity or lump sum during the parent’s or guardian’s lifetime is tax-deductible.
  • Any surcharge or cess levied on income is not allowed as business expenditure.
  • Any surcharge or cess charged on income is not recognized as a business expense. • Brought forward loss cannot be set off against undeclared income discovered during any survey or search.

Indirect Taxes

  • The gross GST revenue collection of Rs 1,38,394 crore in January 2022 was the highest since the start of GST.
  • Concessional customs duty on capital goods imports would be phased out, with a starting rate of 7.5 per cent.
  • Over 350 import exemptions for agricultural products, chemicals, pharmaceuticals, and other items will be phased out.
  • The tariff on cut and polished diamonds and stones would be decreased to 5%.
  • A year’s worth of customs duty exemption on steel scrap has been extended to benefit MSMEs.
  • Methanol’s customs duty will be decreased.
  • Increasing the excise levy on unblended fuel by Rs. 2 per liter to encourage fuel mixing.

Budget Allocation

  • India’s fiscal deficit is expected to be 6.4 per cent in FY23.
  • The revised fiscal deficit is anticipated to be 6.9% of GDP.
  • States will receive Rs 1 lakh crore in interest-free loans over 50 years to help support PM Gati Shakti’s investments.
  • In 2022–23, the government’s effective capital spending is expected to be Rs 10.68 lakh crore or 4.1 percent of GDP.
  • In 2022–23, the capital expenditure budget would be increased by 35.4 per cent, from Rs 4.54 lakh crore to Rs 7.50 lakh crore.

Education

  • 2 lakh Anganwadis will be updated to improve the health of children.
  • After two years of educational regression for school-aged children, we must double down on our efforts and spending to close the education gap. The National Education Policy has proposed allocating 6% of GDP to education. While we are still far short, the announcement of tech-based platforms, such as PM e-VIDYA’s “One class, one TV channel” program for schoolchildren and the formation of a digital university, was timely.
  • A hub and spoke model will be used to set up a digital university for online education centered on ICT.
  • In all states, certain ITIs will offer skilling courses.

Agriculture

  • The government should push funds for blended finance (with the government’s contribution limited to 20%) for sunrise prospects like climate action, agri-tech, and so on.
  • NABARD would facilitate a fund to finance agriculture and rural enterprise startups that are related to the farm produce value chain. FPOs will be supported by startups, which will give technology to farmers.
  • The use of Kisan Drones for crop evaluation, digitization of land records, and insecticide and fertilizer spraying will be pushed.
  • Wheat procurement in Rabi season 2021–22 and anticipated paddy procurement in Kharif season 2021–22 will encompass 1208 lakh metric tons of wheat and paddy from 163 lakh farmers, with a direct payment of MSP value of Rs 2.37 lakh crore to their accounts.
  • The delivery of high-tech services to farmers will begin.

Investment, Sectoral Allocation

  • The venture capital regulatory framework will be evaluated, and an expert group will be formed.
  • The North Eastern Council will implement PM development measures for the northeast. Youth and women will be able to engage in livelihood activities as a result of this. This program is not intended to replace current federal or state programs.

MSME

  • To aid sectors that have been disproportionately affected by the pandemic, the FM has extended the ECLGS until March 23. Given that MSMEs account for roughly 95% of ECLGS borrowers, this action will ensure that MSMEs and the services sector continue to be supported. The services sector, which accounts for over 60% of India’s GDP, continues to be a key driver of economic growth, job creation, income production, and livelihood assistance in the country.
  • The extension of ECLG will boost lending to small and medium-sized businesses. Simultaneously, Soumya Kanti Ghosh of SBI believes that the overhaul of CGTSME will provide an additional incentive for banks to issue credit.
  • The extension of the ECLGS (emergency credit line guarantee system) until March 2023, according to experts, is a vital move.

E-vehicles and Energy

  • Energy conservation and efficiency will be promoted.
  • To help the EV ecosystem, a battery-swapping policy with interoperability standards will be released.
  • The FM has announced a PLI allocation of Rs 19,500 crore for solar modules.

Internet Connectivity

  • In 2022–23, a 5G spectrum auction will be held.
  • The PPP model will be used to award Bharatnet project contracts for optical fiber networks.
  • Villages should have access to the same digital resources as cities.

Defense

  • In 2022–23, the domestic defense industry will receive 68 per cent of the capital procurement budget.

E-Passport

  • The finance minister has said India would start issuing e-passports in 2022–23. When first announced in 2019, these were some of the features proposed:
  • These e-passports will take a few seconds to read.
  • The prototype was tested in a US government identified laboratory.
  • They are expected to have thicker front and back covers.
  • The back cover is expected to have a small silicon chip.
  • The chip will have 64 kilobytes of memory space.
  • Holder’s photograph and fingerprints will be stored in the chip.
  • Will have the capacity to store 30 visits.

Healthcare

  • The National Digital Health Ecosystem will be given an open platform. Digital registries of health practitioners and facilities, a unique health identity, and universal access to health services will all be part of it.

The pandemic has brought mental health to the forefront. There will be the launch of a nationwide tele-mental health program.

INFRA, ROADWAYS, RAILWAYS, WATERWAYS AND LOGISTICS

  • Over the next three years, new rail products such as ‘One Station — One Product,’ 400 next-generation Vande Bharat trains, and 100 PM Gati Shakti cargo terminals will provide integration of NIP with Gati Shakti, which is likely to prove crucial in job creation because the transportation network is rich in backward and forward linkages with the rest of the economy.
  • Five river linkages’ draught DPRs have been completed.
  • In the following three years, 400 Vande Bharat trains with improved passenger efficiency would be created.
  • The Budget prioritizes public investment in infrastructure modernization over the medium term, leveraging Gati Shakti’s technology platform through a multi-modal approach.
  • In FY23, four contracts for multi-modal national parks will be issued.

Housing And Basic Amenities

  • The Affordable Household Scheme would target 80 lakh households in 2022–23.

Rs. 60,000 crore has been set aside to provide 3.8 crore households with access to safe drinking water.

  • Unlike the evident 34.5 per cent rise last year to Rs 5.5 lakh crore, the value of the increase in infrastructure spending under the PM Gati Shakti program remains unknown.
  • The Ken-Betwa link, worth Rs 44,605 crore, would be built to supply irrigation to 9.05 lakh hectares, drinking water to 65 lakh people, and hydro and solar power.

Employment

  • The Production Linked Incentive (PLI) Scheme for attaining

Atma Nirbhar Bharat has got a strong response, with the potential to create 60 lakh new employment and $30 billion in increased production over the next five years.

  • PLI initiatives in 14 sectors have sparked a massive reaction, resulting in the creation of 60 lakh jobs.

Central Bank Digital Currency And Virtual Digital Assets

· The FM delivered several key cryptocurrency announcements, including an update on the ‘central bank digital currency and VDAs, as specified in the Finance Bill 2022. 3 According to the Budget, the Reserve Bank of India will launch the ‘digital rupee’ or ‘central bank digital currency in 2022–23, which will be based on blockchain technology. The currency management system should become more efficient and cost-effective as a result of this.

· Cryptocurrencies, non-fungible tokens, information/code generated through cryptographic means, and any other digital assets recognized by the government were all taxed in the Budget. It proposed a 30% tax on money received from the transfer of VDAs, as well as a 1% tax on payments deducted at source. Recipients of VDAs will be taxed as well.

Drones

· The Budget emphasized the multi-sectoral adoption of drones led by start-ups, which was identified as a sunrise sector. Drone Shakti will be facilitated by start-ups using a variety of applications and Drone-as-a-Service (DrAAS).

· To meet the growing demand, several ITIs across the country will offer the necessary courses. The FM advocated the deployment of ‘Kisan Drones’ to help farmers with crop evaluation, insecticide spraying, and other tasks in her speech

Incentives For Startups

· The tax benefits were extended in the Budget to encompass enterprises founded on or before March 31, 2023. Start-ups are eligible for incentives for up to three years out of ten from the date of incorporation under this program.

· In addition, the FM stated that the government will establish an expert group to address the regulatory challenges that private equity and venture capital investors face while investing in the startup ecosystem. The group will make recommendations on how to scale up investments while also addressing the barriers to doing so.

Online Gaming

· The Animation, Visual Effects, Gaming, and Comics (AVGC) sector has the potential to employ young Indians, according to the Budget. It will establish a task force for the promotion of the AVGC sector to help the sector flourish.

· It has asked all stakeholders for suggestions on how to improve capacity so that it can better serve the Indian market as well as global demand.

India’s economic growth is expected to be 9.2 per cent this year, the highest among all global economies. The economy’s general, rapid comeback and recovery from the pandemic’s negative consequences reflects our country’s great resilience. In conclusion, most sectors were neutral in the Union Budget 2022–23, barring these efforts. The purpose of the Union Budget is to promote our country’s rapid and well-balanced economic growth, with a focus on Education and Health, Agriculture, Corporate Tax, NRI Tax, and Income Tax. The overall tone of the Budget is upbeat, and the Union Budget has sparked new hopes for a brighter India. The government is dedicated to implementing all of the Budget Speech’s announcements.

You were reading a Dais Editorial©2022

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