Finance Minister delivered her fourth budget in a long one hour thirty minutes speech in Lok Sabha, projecting an expected growth rate of the country at 9.27% in the coming fiscal year. The Budget 2022 was focused on four pillars of development namely, inclusive development, productivity enhancement, energy transition, and climate action.
The Finance Minister of the nation with her budget laid the foundation of Amrit Kal for the next 25 years. By achieving certain during the Amrit Kal, the government aims to achieve the following:
- Complementing the macro-economic level growth focus with a microeconomic level all-inclusive welfare focus,
- Promoting digital economy & fintech, technology-enabled development, energy transition, and climate action,
- Relying on a virtuous cycle starting from private investment with public capital investment helps to crowd-in private investment.
The Finance minister in her budget speech said, this budget will provide an impetus for growth and will benefit youth, women, farmers, the Scheduled Castes, and the Scheduled Tribes and will make India ready at 100 years. Keeping the goal in mind, the budget laid down four priorities:
- PM Gati Shakti,
- Inclusive Development,
- Productivity Enhancement &Investment, Sunrise Opportunities, Energy Transition, and Climate Action,
- Financing of investments.
PM Gati Shakti- transformative approach for economic growth and sustainable development. The approach is driven by seven engines, namely, Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure. All seven engines will pull forward the economy in unison.
unison.
Roads- Under PM Gati Shakti Plan, the National highway network is to be expanded by 25,000Km in FY2022-23.
Railways-Railways will develop efficient logistics services for small farmers and SMEs. Furter to help local businesses, the One station-One Product concept will be popularised. For better energy efficiency and passenger riding experience, 400 new-generation VandeBharat Trains will be manufactured in the next 3 years.
Inclusive Development- Under inclusive development, agriculture, MSME, Digital banking, Ken Betwa Project, food processing Skill Development, housing, education among others to be taken care of.
Agriculture- In the procurement of 2021-22 of wheat in Rabi and Paddy in Kharif will cover 1208 lakh metric tonnes, from 163 lakh farmers and MSP of Rs 2.37lakh crores will directly be credited to the respective account.
Chemical-free farming will be promoted on the farmer’s land in 5kh wide corridors along river Ganga.
2023 has been announced as the international year of Millets. Support will be provided for post-harvest value addition, enhancing domestic consumption, and branding millet products nationally and internationally.
For crop Assessments, digitization of land records, spraying of insecticides and nutrients, use of Kisan drones will be promoted.
Syllabi of agricultural universities to be revised to meet needs of natural, zero-budget & organic farming, modern-day agriculture
Ken Betwa Projects- at an estimated cost of Rs 44,605 crore will be taken up for implementation of Ken Betwa Project. This is aimed at providing irrigation benefits to 9.08 lakh hectares of farmers’ lands, drinking water supply for 62lakh people, 103 MW of Hydro, and 27 MW of solar power.
MSME- Udyam, e-Shram, NCS, and ASEEM portals will be interlinked. With a live and organic database, they will provide G2C, B2C, and B2B services. These services will help to further formalize the economy and enhance entrepreneurial opportunities for all.
The hospitality and related services, especially those by micro and small enterprises, are yet to regain their pre-pandemic level of business. Considering the same, the ECLGS will be extended up to March 2023 and its guarantee cover will be expanded by Rs50,000 crore to the total cover of Rs5 lakh crore.
Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme will be revamped and will facilitate additional credit of Rs2 lakh crore for MSME and expand employment opportunities.
An outlay of Rs 6000 crores will be rolled out over the next 5 years to raise and accelerate MSME performance.
Skill Development- The National Skill Qualification Framework (NSQF) will be aligned to meet the dynamic industry needs.
The DESH-Stack portal will be launched to empower citizens to skill, reskill or upskill through online training.
Quality Education- One class one TV channel, the program of e-vidya will be expanded from 12- 200 Tv channels, to enhance regional education for classes 1-12.
To promote crucial critical thinking skills, to give space for creativity, in 2022-2023, 750 virtual labs in science and mathematics, and 75 skilling e-labs for simulated learning environments will be set up.
Digital University-Digital universities will be established to provide access to the student with a personalized learning experience. University will be based on a hub and spoke network. Private universities will collab with the hub and spoke network.
Ayushman Bharat Digital Mission- National Digital Health Ecosystem will be rolled out, consisting of digital registries of health providers and health facilities, unique health identity, consent framework, and universal access to health facilities.
Har Ghar, Nal se Jal-Rs60,000cores will be allotted to cover 3.8 crore households to provide tap water.
Housing For All– for the identified eligible beneficiaries of PM Awas Yojana, both rural and urban, 80 lakh houses will be completed in 2022-23.
For reduction of time required for all land and construction-related approvals, for promoting affordable housing, the central government to work with the respective state government.
Prime Minister’s Development Initiative for North East Region (PMDevINE)- A new scheme will be implemented through the North-Eastern Council fund infrastructure, in the spirit of PM GatiShakti, and social development projects based on the needs of the North-East. An initial allocation of Rs1500 crores will be made.
Anytime Anywhere Post Office Saving– In 2022, 100% of post offices will come under the core banking system to enable financial inclusion.
Digital Banking– 75 Digital Banking Units (DBUs) in 75 districts of the country to be set up by Scheduled Commercial Banks.
Digital Payment- financial support for the digital payment ecosystem announced in the Budget 2021 will continue in 2022-23, to promote the use of payment platforms that are economical and user friendly.
Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, and Climate Action
Ease of Doing Business 2.0 and Ease of Living- over 25,000 compliances were reduced and 1486
Union laws were repealed.
The new phase of ease of doing business and ease of living will be guided by the active involvement of the states, digitization of manual processes and interventions, integration of the central and state-level systems through IT bridges, single-point access for all citizen-centric services, and standardization and removal of overlapping compliances.
Green Clearance-The scope of PARIVESH, the single window portal launched in 2018 will be expanded, to provide information to the applicants
This will enable application for all four approvals through a single form, and tracking of the process through Centralized Processing Centre-Green (CPC-Green).
E-Passport-Issuance of e-passport using embedded chips and futuristic technology will be rolled out in 2022-23.
Urban Planning Support to States-to facilitate reforms for people to live and work closer to mass transit systems Modernization of building bylaws, Town Planning Schemes (TPS), and Transit-Oriented Development (TOD) will be implemented.
Battery Swapping Policy- To improve efficiency in the EV ecosystem, the private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service’.
Land Record Management- One-Nation One-Registration Software’ will be promoted as an option for a uniform process for registration and ‘anywhere registration’ of deeds & documents.
Accelerate Corporate Exit- Voluntary exit for corporates to be cut down to 6 months from existing 2 years.
Government Procurement-Provision has been for encouraging settlement of disputes through conciliation. further provisions are made for payment of 75 percent of running bills, mandatorily within 10 days.
End-to-end online e-Bill System will be launched for use by all central ministries, to enhance transparency and reduce delays in payments, and go completely paperless.
AVGC Promotion Taskforce- to recommend ways to realize and build domestic capacity for serving our markets and the global demand, an AVGC promotion task force with all stakeholders will be set up.
Telecom Sector-Spectrum auction for 5G to roll out in 2022. As part of the PLI scheme, design-led manufacturing is to be launched for the 5G ecosystem. For R&D and technology up-gradation, 5% of USO fund to be allocated. Infrastructure status to be given to Datacenter and energy storage.
Export Promotion-The Special Economic Zones Act will be replaced with a new legislation development of Enterprise and Service Hubs’.
AtmaNirbharta in Defence- To reduce dependence on imports, 68 %of the capital procurement budget will be earmarked for the domestic industry in 2022-23, up from 58% in 2021-22.
Energy Transition and Climate Action-This budget proposed several near-term and long-term strategies for climate action.
Allocation of Rs 19,500 crore to facilitate domestic manufacturing for the ambitious goal of 280 GW of installed solar capacity by 2030.
Transition to Carbon Neutral Economy-5%-7% biomass pellets will be co-fired in thermal power plants resulting in CO2 savings of 38 MMT annually.
Financing Of Investment
Public Capital Investment- Outlay for capital expenditure increased by 35.4% from Rs 5.54 lakh crore in the current year to Rs 7.50 lakh crore in 2022-23.
Effective Capital Expenditure-The ‘Effective Capital Expenditure’ of the Central Government is estimated at Rs10.68 lakh crore in 2022-23, which will be about 4.1% of GDP.
Green Bonds-Green Bonds will be issued for mobilizing resources for green infrastructure. Proceeds from the same will be used for projects which help in reducing the carbon intensity of the economy.
Digital Rupee-CentralBank Digital Currency (CBDC) will be introduced to boost the digital economy. this will lead to a more efficient and cheaper currency management system.
Digital Rupee to be introduced using blockchain and other technologies by the Reserve Bank of India starting 2022-23.
Financial Assitance to states for capital Investment-the outlay for ‘Scheme for Financial Assistance to States for Capital Investment’ is being enhanced from Rs10,000 crore in the Budget Estimates to Rs 15,000 crore in the Revised Estimates for the current year.
Following the recommendations of the 15th Finance Commission, in 2022-23, states will be allowed a fiscal deficit of 4% of GSDP of which 0.5 percent will be tied to power sector reforms.
Fiscal Management-2021-22 revised expenditure is reported at Rs 37.70 lakh crore.
The estimated total expenditure in 2022-23 is Rs39.45 lakh crore, while the total receipts other than borrowings are estimated at Rs 22.84 lakh crore.
The fiscal deficit is estimated at 6.9% of GDP.
DIRECT TAX
The government intends to bring more reforms that will take ahead our vision to establish a trustworthy tax regime that will further simplify the tax system, promote voluntary compliance by taxpayers, and reduce litigation.
Introduction of “Updated Return”
Under this provision, taxpayers can file an Updated Return on payment of additional tax within two years from the end of the relevant assessment year.
Minimum Tax rate and Surcharge for cooperatives
Surcharge on co-operative societies from present 12% to 7% for those having total income of more than Rs 1 crore and up to Rs10 crores. This will help to enhance the income of cooperative societies and their members who are mostly from rural and farming communities.
Tax relief to a person with a disability
The Finance minister allowed the payment of annuity and lump sum amount to the differently-abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardians attaining the age of 60.
Parity Between employees of state and Central Government
Tax deduction limit increased to 14% from existing 10% on employer’s contribution to the NPS account of State Government employees
Incentives for Startup and new incorporated manufacturing Entities-
Startups established before 31st march,2022 gets tax incentive for 3 years out of ten years from incorporation. The budget has extended the period of incorporation of the eligible start-up by one more year, that is, up to 31st March 2023.
The last date for the incorporation of manufacturing entities has been extended till March 2024.
Taxation on Virtual Digital Asset
Any income from the transfer of any virtual digital asset shall be taxed at the rate of 30%. No deduction shall be allowed in respect of any expenditure or allowance. Loss on sale of virtual assets can’t be set off against any other income.
To capture transaction detail TDS of 1% will be provided above a monetary threshold. ven the gift of a virtual asset to be taxed at the hand of the recipient.
Tax Incentive to IFSC
The income of a non-resident from offshore derivative instruments or over-the-counter derivatives issued by an offshore banking unit, income from royalty and interest on account of lease of a ship, and income received from portfolio management services in IFSC shall be exempt from tax.
Rationalization of Surcharge
Surcharge on AOP’s to be capped at 15%. Surcharge on any capital gain on transfer of any type of asset will be capped at 15%.
INDIRECT TAX
Progress in GST
Gross GST revenue for Jan 2022- Rs1,40,960 crores, the highest since the GST regime started.
SECTOR-SPECIFIC
Electronics- Customs duty rates are being calibrated to provide a graded rate structure to facilitate domestic manufacturing of electronics like wearable devices, transformer of mobile phone chargers and camera lens of the mobile camera module, and certain other items.
Gems and Jewellery- Customs duty on cut and polished diamonds and gemstones is being reduced to 5%.
The customs duty on imitation jewelry has been proposed at Rs 400 per Kg of import.
Tariff Measure to encourage Blending of Fuel
To encourage the blending of fuel, unblended fuel to attract additional excise duty of Rs2 per litre from October 2022.
The budget was more towards the development of the agriculture sector that will help push the GDP of the country coupled with infrastructural development and encouragement to the new startups. However, there was no tax relief for the common man.
The market did take the budget with happy notes in the early hours of the trade and touched the intraday high of 17604.10, but as the budget presentation proceeded, the market subdued and slipped to close the day at 17576.85