Finance minister Nirmala Sitharaman presented the Union Budget for 2022-23 on February 1 that focused on government spending to boost growth even as some worried about the fiscal deficit arising from the investment push.
“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,” Sitharaman said in her shortest budget speech, which lasted one hour and 30 minutes. Like last year, the minister delivered a paperless budget and read out her speech from a tablet.
Here are the major announcements in Budget 2022:
-Bigger budget: The FM presented a budget of Rs 39.45 lakh crore for FY23 which focused on infrastructure investment to boost revival from the pandemic.
-Fiscal deficit target: The fiscal deficit for the current financial year is expected at 6.9% of GDP, which is slightly more than the 6.8% targeted earlier. For the next fiscal year, a deficit of 6.4% is targeted, which is higher than expected and has stoked concerns.
- Capex push: FM Sitharaman bumped up capital expenditure by 35% again to Rs 7.50 lakh crore. The move comes as India focuses on reviving the economy through higher investments amid disruption from the pandemic and rising inflation. In the last budget, a capex allocation of Rs 5.5 lakh crore for 2021-22 also meant a 35% rise over a year ago.
- Affordable housing: FM announced the completion of 80 lakh homes under the Pradhan Mantri Awas Yojana and allocation of Rs 48,000 crore under PMAY urban and rural. As many as 80 lakh homes are expected to come up by 2023. These announcements are expected to boost the affordable housing market.
- Slower privatisation: The Centre has pegged the divestment target for FY23 at Rs 65,000 crore and lowered the aim for the current financial year to Rs 78,000 crore. The latter has sparked speculation that the initial public offering size of Life Insurance Corp could be smaller than expected. Also, the smaller target for next fiscal is seen as the government scaling back plans to sell state-run companies in the wake of political criticism and market turmoil.
- Record borrowing: Gross borrowing for 2022-23 was raised 40% to Rs 14.95 lakh crore as the budget went on an investment spree to boost revival, resulting in a bond selloff that saw the benchmark 10-year bond yield rise 15 basis points.
-Updating returns: Taxpayers now have an opportunity to correct errors and file updated returns within two years of the relevant assessment year.
-Tax deduction limit: The tax deduction limit for state government employees on the employer’s contribution to the National Pension System will be increased to 14 percent from 10 percent to bring them at par with Central government employees.
-Tax framework for digital currencies rolls out: The Centre will impose a tax of 30% on income from cryptocurrencies and other digital assets, putting them in the highest tax band. In another disincentive, the Centre said losses from their sale could not be offset against other income.
- LTCG: The surcharge on long-term capital gains arising from the transfer of any type of asset will be capped at 15 percent.
-Digital currency: The FM said the central bank would introduce a digital currency in the next fiscal year using blockchain and other supporting technology. Interestingly, this comes after the central bank voiced "serious concerns" around private cryptocurrencies on the grounds that these may cause financial instability.
-SEZ Act: The Special Economic Zones Act will be replaced with new legislation that will allow states to become partners in developing enterprise and service hubs. This will cover all large existing and new industrial enclaves to optimally utilise infrastructure and enhance export competitiveness.
-Financial assistance to states for capital investment: The outlay for the ‘Scheme for Financial Assistance to States for Capital Investment’ is being increased to Rs 1 lakh crore in FY23, up from Rs 15,000 crore in the revised estimate for the current year, to assist the states in catalysing overall investments in the economy. These 50-year interest-free loans are over and above the normal borrowings allowed to states and the allocation will be used for PM Gati Shakti-related and other productive capital investments.
-Rail network: As part of Atmanirbhar Bharat, 2,000 km of network will be brought under Kavach, the indigenous, world-class technology for safety and capacity augmentation, in FY23.
- Vande Bharat trains: 400 new-generation Vande Bharat trains are to be built over the next three years.
-Gati Shakti Master Plan: It is driven by seven engines: roads, railways, airports, ports, mass transport, waterways and logistics infrastructure. The plan for expressways is to be drawn up in FY23 and 100 new cargo terminals will be built over the next three years. The national highway network will be expanded by 25,000 km in FY23.
-EV battery-swapping policy: Acknowledging the constraint of space in urban areas for setting up charging stations for electric vehicles, the finance minister proposed to introduce a battery-swapping policy and frame inter-operability standards. The private sector would be encouraged to develop sustainable and innovative business models for battery- or energy-as-a-service.
-5G rollout: Spectrum auctions will be conducted in 2022 to facilitate the rollout of 5G mobile services. The Centre will also offer incentives to encourage more design-led manufacturing to boost 5G and it aims to link all villages with optical fibre for faster broadband services by 2025.
-Natural farming, kisan drones: Chemical-free natural farming will be promoted across the country, with a focus on agricultural land along the River Ganga in the first stage. The procurement of wheat in Rabi 2021-22 and the estimated procurement of paddy in Kharif 2021-22 will add Rs 2.37 lakh crore in direct payment of minimum support prices to farmers’ accounts. Use of kisan drones will be promoted for crop assessment, digitisation of land records and spraying of insecticides and nutrients.
-Mental health programme: With the pandemic accentuating mental health problems in people of all ages, a National Tele Mental Health programme will be started to improve access to quality mental health counselling and care services.
-Digital education: With children having lost almost two years of formal education due to the pandemic, the ‘One Class-One TV Channel’ programme of PM eVIDYA will be expanded from 12 to 200 TV channels. This will enable all states to provide supplementary education in regional languages for classes 1 to 12. A Digital University will be set up to provide world-class quality universal education with personalised learning experience. This will be available in different Indian languages and ICT formats.
-Paperless e-bill system: A completely paperless, end-to-end online e-bill system will be started for use by all central ministries for their procurements as a further step to enhance transparency and to reduce delays in payments.
-E-passports: E-passports using embedded chips and futuristic technology will start rolling out in FY23 to make overseas travel more convenient.
-Defence: To reduce imports and promote AtmaNirbharta in equipment for the armed forces, 68 percent of the capital procurement budget will be earmarked for the domestic defence industry. Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with the Defence Research and Development Organisation and other entities.
-Animation and gaming: Animation, visual effects, gaming and comics (AVGC) offer immense potential to employ youth. An AVGC promotion taskforce will be set up to recommend ways to realise this and build domestic capacity to serve the domestic markets and global demand.
-Post office banking: All 150,000 post offices in the country will become part of the core banking system, enabling access to accounts through internet banking, mobile banking and ATMs and also allowing online transfers between post offices and bank accounts. This will help farmers and senior citizens in rural areas, enabling interoperability and financial inclusion.
-Hospitality: Hospitality and related services offered by small and medium enterprises are yet to bounce back to pre-pandemic levels. The government has decided to increase the guarantee cover for them by Rs 50,000 crore under a scheme that will be extended to March 2023.
-Solar modules: To facilitate the domestic manufacturing of 280 gigawatts of installed solar energy capacity by 2030, the government will make an additional allocation of Rs 19,500 crore under the production-linked incentive scheme for the production of high-efficiency modules.
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