The Union Budget Synopsis 2022: Nirmala Sitharaman, who presented the Budget 2022-23, estimated India's overall spending at Rs 39.45 lakh crore and anticipated a fiscal deficit of 6.4 percent of GDP in FY23. What did the budget have in store for the middle class, taxpayers, and investors? Here are the complete, in-depth details to keep an eye out for.
Prime Minister Narendra Modi stated that the focus of the Union Budget is on giving basic facilities to the poor, middle class, and young and that India must become self-sufficient. Modi described Budget 2022, which he delivered to BJP workers at the 'Aatmanirbhar Arthvyavastha' event, as a step toward a modern and self-sufficient India. He went on to say that the Budget offers a fourfold increase in public investments over the UPA era, which will create enormous possibilities. Also, the Prime Minister praised the Union Budget for being "people-friendly" and "progressive."
At a news conference following the presentation of the Union Budget on Tuesday (1st February’ 2022), Finance Minister Nirmala Sitharaman stated that a deliberate decision was made not to raise taxes because of the suffering that people have been experiencing as a result of the epidemic. Sitharaman noted during the presentation of the Union Budget that the country is likely to develop at a rate of 9.27 percent in the following year.
The Budget focuses on four pillars of growth —
Inclusive Development,
Productivity Enhancement,
Energy Transition, and
Climate Action.
According to Sitharaman, it provides a framework for the economy from India at 75 to India at 100. Even she predicts that the Central Government's effective capital spending in 2022-23 will be Rs 10.68 lakh crore or around 4.1 percent of GDP.
The Finance Minister said that the gross GST receipts for the month of January 2022 would be Rs 1,40,986 crore, the highest since the tax's debut in 2017. In a significant shift for digital currency, Sitharaman indicated that the RBI would issue digital rupees using blockchain technology beginning in 2022-23, which will considerably boost the economy. She also stated that revenue derived from the transfer of any virtual digital asset would be taxed at a rate of 30%.
The Budget 2022 focuses on 'digital and technology, as well as areas like as infrastructure, health, education, and the provision of e-services to the general public.' We are in the midst of the Omicron wave, and the rapidity of our vaccination effort has dramatically aided us. The FM claimed that 'Sabka Prayaas' will continue to develop rapidly.
Budget 2022 contains a significant increase in public investment and capital expenditure provision. There was a slew of initiatives aimed at stimulating the economy in the face of high and growing prices, as well as ongoing Covid concerns. Nevertheless, there were astonishingly few changes to the personal income tax system in a year that witnessed requests from numerous quarters for some respite in the wake of a pandemic.
Finance Minister Sitharaman outlined numerous measures in detail by sector. Have a look!
Women & Children
Recognizing the significance of 'Nari Shakti,' three programs were established to enable integrated development for women and children.
2 lakh Anganwadis will be improved to improve child health.
Education & Skilling
States should be encouraged to alter agricultural university curricula to fit the demands of natural, zero-budget, and organic farming, as well as modern-day agriculture.
PM eVIDYA's 'One class, one TV channel' initiative would be expanded from 12 to 200 Television channels.
A digital university will be established to give education; it will be based on a hub-and-spoke concept.
1-Class-1-TV Channel will be deployed to provide children with supplemental education to compensate for the loss of formal education due to Covid.
To introduce the National Skill Qualification Framework (NSQF) to meet the changing demands of the sector.
For the fiscal year 2022-23, the sports budget has been given Rs 3062.60 crore, an increase of Rs 305.58 crore from the previous year.
Finance & Inclusion
Financial aid of Rs 1 lakh crore would be granted to states in 2022-23 to catalyze investment.
RBI proposes to launch a digital rupee utilizing blockchain technology in 2022-23.
Losses from virtual digital assets cannot be deducted from other income.
Earnings from online digital assets will be taxed at 30%.
The core banking system would be implemented in all 1.5 lakh post offices, providing financial inclusion and account access via net banking, mobile banking, ATMs, and the online transfer of cash between post office accounts and bank accounts.
Facilitate the settlement of cross-border insolvencies.
Authorized commercial banks will establish 75 digital banks in 75 areas to facilitate digital payments.
An international arbitration center will be established in GIFT city to facilitate speedier dispute settlement.
A world-class institution will be permitted in the GIFT IFSC, free of local restrictions.
Provision of an annuity and lump sum payment to the differently-abled dependant during the parents '/guardians' lifespan, i.e., when the parents/guardians reach the age of 60 years.
Economy
The capital expenditure objective was increased by 35.4 percent, from Rs 5.54 lakh crore to Rs 7.50 lakh crore. The effective Capex for FY23 is expected to be Rs 10.7 lakh crore.
India's growth rate is the greatest among significant countries, and we are now well-positioned to face future difficulties.
The objective is to supplement macroeconomic growth with micro-inclusive welfare, digital economy and fintech, technology-enabled development, energy transformation, and climate action.
A total of Rs 5 lakh crore have been added to the ECLGS coverage.
States will be permitted a fiscal deficit of up to 4% of GSDP in 2022-23.
Expenditure and Deficit
By 2025/26, a budget deficit of 4.5 percent of GDP is proposed.
In 2022/23, a fiscal deficit of 6.4 percent of GDP is expected.
Fiscal deficit for 2021/22 revised to 6.9 percent of GDP 50-year interest-free loans above standard borrowing authorized for states.
For 2022/23, the scheme for financial support to states for capital expenditure outlay would be Rs 1 lakh crore.
The next fiscal year's disinvestment revenue receipt is expected to be Rs 65,000 crore, which is less than the current year's mobilization of Rs 78,000 crore.
Taxes
The government will allow a one-time chance to fix errors in previously filed ITRs, with amended returns due within two years.
One percent TDS on transfers of virtual assets over a certain threshold, as well as gifts, will be taxed.
Long-term capital gains are subject to a 15% surcharge.
Taxes will apply to cryptocurrency gifts at the recipient's end.
The Alternative Minimum Tax for cooperative groups will be reduced to 15%.
The proposal will cut the surcharge on cooperative societies to 7% for people with incomes ranging between Rs 1 crore and Rs 10 crore.
The tax deduction ceiling for employers' contributions to state government employees' NPS accounts has risen to 14 percent.
Defense
The government is committed to reducing imports and promoting self-reliance in the defense sector, with 68% of capital for the defense sector reserved for local industry.
25% of the defense R&D budget will be made available to businesses, entrepreneurs, and academics.
Through the SPV model, private industry will be encouraged to design and produce military platforms and equipment in conjunction with DRDO and other organizations.
In 2022-23, the domestic economy will get 68 percent of the national defense capital purchase budget (up from the 58 percent last fiscal).
Duties on Industry
Import tariffs on some chemicals are being/will be reduced.
The waiver from customs tax on steel scrap will be extended for another year for MSMEs.
Unblended petrol would be subject to an extra levy of Rs 2 per liter beginning in October 2022.
There will be a 5% duty on diamonds and gemstones cut and polished, but none on sawn diamonds.
Various consumer electronic gadgets will be granted duty discounts to boost the production of wearable devices, hearing aids, and parts for mobile phones.
Infrastructure & Manufacturing
A Desh stack e-portal will be established to enhance digital infrastructure.
In FY23 PM, four multi-modal national park contracts will be granted. The Gatishakti highway concept will be developed in the next fiscal year.
100 Terminals per month for Gati Shakti will be built over three years.
Over the medium term, focus on public investment to modernize infrastructure, using Gati Shakti's ICT platform through a multi-modal strategy.
PM Gati Shakti will propel the economy ahead, creating more employment and opportunity for the youth.
A 15% corporation tax rate for newly established manufacturing enterprises will be available for one more year until March 2024.
Housing & Urban Planning
PM Awas Yojana has been allocated Rs 48 000 crores.
In 2022-23, 80 lakh dwellings will be constructed for selected PM Awas Yojana beneficiaries; 60,000 houses will be identified as PM Awas Yojana beneficiaries in rural and urban locations.
60,000 crore has been set aside to provide 3.8 crore homes with access to running water.
Eighty lakh families will be identified for the affordable housing project in 2022-23.
In 2022-23, Rs 60,000 crore has been earmarked to give tap water connections to 3.8 crore homes.
There will be five Centres of Excellence for Urban Planning, with an endowment fund of Rs 250 crore.
The implementation of modern construction codes will also take place.
Proposal to cut the Minimum Alternative Tax on co-operative societies to 15%, online with corporations.
Ease of Business & Living
To simplify for enterprises in India to begin the next phase of Ease of Doing Business EODB 2.0 and Ease of Living, 75,000 compliances have been abolished and 1,486 union laws repealed.
The voluntary withdrawal period for corporations will be reduced from two years to six months.
MSMEs & Startups
Over five years, a Rs 6,000 crore initiative to grade MSMEs would be implemented.
MSMEs like Udyam, e-shram, NCS, and Aseem portals will be linked, expanding their reach.
They will now function as portals with live organic databases, facilitating G-C, B-C, and B-B services such as credit facilitation and improving entrepreneurial prospects.
A fund with blended capital collected through a co-investment approach enabled by NABARD to finance agricultural entrepreneurs and rural companies for the farm product value chain.
Drone Shakti PE/VC spent Rs 5.5 lakh crore in startups. An expert group would be formed to recommend strategies to attract investment.
Existing tax breaks for startups that have received tax refunds for three years in a row will be extended by one year.
Jobs
ECLGS has been extended until March 2023, and 60 lakh jobs will be created over the following five years.
To be launched is a digital ecosystem for skilling and livelihood.
Through online training, the goal is to skill, reskill, and upskill citizens.
API-based skill credentials, as well as payment layers, are used to discover appropriate employment and opportunities.
Farming & Agriculture
The government would pay Rs 2.37 lakh crore for wheat and paddy purchase under MSP operations in 2022-23, designated as the International Year of Millets.
Railways will provide new goods for small farmers and small and medium-sized enterprises (MSMEs).
Kisan Drones for crop evaluation, land records, and pesticide spraying will likely generate a wave of technology in the agricultural industry.
The Ken Betwa river connection project, approximately Rs 44,605 crore, has been launched.
The draught DPRs for five river linkages have been completed.
It is planned to promote natural farming along the Ganga river corridor.
A new dynamic village initiative to boost development would cover villages on India's northern border.
NABARD will assist in establishing a co-investment fund to finance agricultural and rural sector startups related to the farm product value chain.
The government will provide financial aid to farmers to start agroforestry operations.
Electric Vehicles (EV)
A battery swapping strategy will be developed to allow EV charging stations for autos.
The private sector will be expected to promote sustainable and creative business models for battery and energy as a service, hence enhancing EV ecosystem efficiency.
Healthcare
A nationwide digital health ecosystem open platform will be launched.
It will include computerized registers of health care providers and institutions, a unique health identity, and universal access to health care services.
95 percent of the 112 aspirational districts have achieved considerable health, infrastructure, and education gains.
A National Telemental Health Program will be developed to provide mental health counseling.
Telecom
A spectrum auction will be held in 2022 to facilitate the introduction of the 5G Program for design-led manufacturing that allows cheap internet and mobile connectivity in rural and remote locations.
Five percent of the USO Fund will be allocated to R&D and technological advancement.
Contracts for installing optical fiber in villages will be given under the BharatNet PPP project in 2022-23.
To facilitate funding, infrastructure status will be granted to a data center and an energy storage system.
Contracts will be awarded to lay optical fiber in rural regions, with completion expected in 2025.
Transportation including Railways
Four hundred brand-new generations of Vande Bharat trains will be produced during the next three years.
Two thousand kilometers of the rail network will be built using indigenous technology. KAWACH for increased safety and capacity.
The Railway Ministry would be given Rs 140367.13 crore, Rs 20,311 crore higher than the revised estimates for the previous fiscal year.
Over the next two years, the national highway network will be extended by 25,000 kilometers.
Highway expansion is expected to cost Rs 20,000 crore in 2022-23.
Climate & Net Zero
The government's top priorities will be energy transformation and climate action.
Sovereign green bonds will be issued to support green infrastructure as part of the government's borrowing plans in FY23.
Proceeds will be used for public-sector projects.
Four pilot projects for coal gasification would be established at the cost of Rs 19,500 crore. PLI has received extra funding for the production of high-efficiency solar modules.
A low-carbon development approach creates job opportunities.
Travel
E-Passports will be available for use in foreign travel in 2022-23.
E-passports with integrated chips will be issued.
A new program dubbed the PM Development Initiative for the North East will be introduced. A National Ropeways Development Programme will be undertaken in a PPP format to improve connectivity and encourage tourism.
The Budget arrives when India's employment rate is at an all-time low. Historic unemployment and sluggish development increased income and wealth disparities. They resulted in a rise in the absolute number of impoverished people in India - an unprecedented and humiliating reversal in poverty eradication. There was much dispute regarding the government's strategy in the years leading up to the Covid-led technical recession.
The Economic Survey, released just one day before Sitharaman announced the Union Budget 2022-23, underlining the necessity for the government to offer a buffer against pressures such as global uncertainty the cycle of liquidity withdrawal of major central banks.
According to the Survey, demand measures alone will not be enough in the government's attempts to develop a post-Covid economy.
India will need to establish a supply-side strategy to deal with the long-term unpredictability of the post-Covid world, primarily due to the interaction among a wide range of factors, such as consumer behavior, technological advancements, geopolitics, supply chains, and climate change.
What is your opinion of the budget for 2022? Was it up to your expectations? Feel free to share your thoughts!
Take care and have a wonderful day!
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