Union Budget 2022 and Key Highlights

The Union Budget 2022 is the Indian Republic’s annual budget. The Union Finance Minister normally delivers it in the month of February each year. As per the Article 112 of the Indian Constitution, the Union Budget declares the government’s expected expenditure and receipts for a given year.

On Tuesday, February 1st, 2022, Finance Minister Nirmala Sitharaman presented the Union Budget 2022-23 to Parliament. This is Narendra Modi’s tenth budget, and the second digital budget in light of the ongoing Covid-19 outbreak, as well as Nirmala Sitharaman’s fourth budget.

The Union Budget for 2022-23 aims to complement macroeconomic growth by focusing on microeconomic welfare for everybody. The budget aspires to establish a solid foundation for the Indian economy to progress towards Amrit Kaal during the next 25 years, from 75 to 100 years.

The Union Budget for 2022 is built on four pillars:

• PM GatiShakti.
• Inclusive Development.
• Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, and Climate Action.
• Financing of Investments.

According to the Finance Minister’s speech, India’s GDP will increase at 9.2 per cent in FY22, the most among all major economies. Increased vaccines will put India in a good position to deal with problems.

A slew of policies aimed at stimulating growth in the face of high and growing inflation, as well as continued Covid uncertainty, were announced. In a year marked by calls from numerous sources for some relief in the event of a pandemic, however, there were surprisingly few changes to the personal income tax structure.

Highlights of Budget 2022

The following are the budget’s main highlights:

Infrastructure

• The PM Gati Shakti National Master Plan is estimated to cost 20,000 crores.
• Auctions for the 5G spectrum will take place in 2022.
• The production-linked strategy will include a scheme for design-led manufacturing for 5G.
• To award contracts for installing optical fibre in rural areas, with a target completion date of 2025.
• An additional 195 billion rupees would be allocated for production-linked incentives for solar equipment manufacturers.

Railways

• Two thousand kilometres of the railway network would be brought under Kavach as part of the PM Gatishakti Masterplan.
• Over the next three years, 400 next-generation Vande Bharat trains will be built.

Agriculture

• Direct payments of Rs. 2.37 lakh crore to 1.63 crore farmers for wheat and paddy procurement.
• Chemical-free natural farming will be encouraged across the county. Farmers’ holdings in 5 km broad stretches along the Ganga are the initial emphasis.
• NABARD will help set up a fund with a mix of debt and equity to finance agricultural and rural sector startups.
• Drones called ‘Kisan Drones’ to be used to inspect crops, digitise land records, and spray insecticides and nutrients on crops.

Education

• A networked hub approach will emerge to build Digital University.
• To provide supplementary education in all regional languages, One Class, One TV channel will increase from 12 to 200 TV channels.

Health

• There will be launch of the National Digital Health Ecosystem.
• To emphasise mental health, there will be an establishment of a national telemental health programme.
• Mission Shakti, Mission Vatsalya, Saksham Anganwadi, and Poshan 2.0 provide integrated benefits to women and children.

Defence

• As part of the Atma Nirbhar Bharat plan, the Budget 2022-23 would boost self-reliance in defence production.
• Domestic procurement received 68% of the sector’s capital procurement allocation.
• Encourage the private sector to design and produce military systems and equipment.

Finance

• There will be imposition of a 15 per cent fee on long-term capital gains.
• There will be extension of the small and medium-sized business credit line guarantee programme through March 2023.
• Life Insurance Corporation is planning a public offering.
• To speed up the bankruptcy resolution process by amending the bankruptcy code.

MSME’s

• There will be implementation of the Raising and Accelerating MSME Performance (RAMP) programme over five years with a budget of Rs 6,000 crore.
• There will be extension of the Emergency Credit Line Guarantee Scheme (ECLGS), which offers much-needed additional credit to over 1.3 million MSMEs. The extension will be until March 2023, with the guarantee cover being increased by Rs 50,000 crore to Rs 5 lakh crore.

The Union Budget’s Policy Highlights

PLI Scheme

• Over the next five years, the Centre’s Production Linked Incentive (PLI) Scheme can create 60 lakh new jobs.
• As part of the PLI programme, there will be introduction of a design-led manufacturing scheme to create a strong ecosystem for 5G.
• An additional allocation of Rs 19,500 crore under the PLI plan for manufacturing high efficiency (solar) modules is existing to help domestic manufacturing.

Empowerment of Women

• Mission Shakti, Mission Vatsalya, Saksham Anganwadi, and Poshan 2.0 are examples of similar programmes.
• In 2022-23, there will be allocation of a total of Rs 60,000 crore under the ‘Har Ghar Nal Se Jal’ scheme to cover 3.8 crore homes.

PM GatiShakti

• There will be inclusion of the seven engines for economic transformation, seamless multimodal connectivity, and logistical efficiency in the PM GatiShakti National Master Plan.
• Roads, railways, airports, ports, mass transportation, waterways, and logistics infrastructure are among the seven engines.
• In FY23, the National Highways Network will expand by 25,000 kilometres to improve people and products flow.
• In the next three years, there will be introduction of 400 new Vande Bharat trains.
• For small farmers and MSMEs, railways will develop new products and logistic services.
• There will be promotion of the concept of ‘One Station-One Product’ to assist local businesses and supply chains based on a hub and spoke paradigm.
• A new programme, Kavach, will bring 2,000 kilometres of a network under its umbrella for safety and capacity enhancement.

The Prime Minister’s North-East Regional Development Initiative (PM-DevINE)

In the Union Budget for 2022-23, there was announcement of a new plan ‘PM-DevINE’  to fund infrastructural and social development projects in the Northeast.

Under the scheme, there is a grant of an initial allocation of Rs. 1,500 crore to assist youth and women in engaging in livelihood activities.

However, there were surprisingly few changes to the personal income tax structure in a year that saw several requests for some form of relief in the event of a pandemic. The decision to charge receivers of digital asset transfers a steep 30% tax drew much attention.

Tax

• The government promises a steady and predictable tax system.
• The government will allow a one-time chance to amend omissions in previously filed ITRs, with new returns due within two years.
• There will be tax of TDS of 1% on transfers of virtual assets above a certain threshold and gifts.
• The government will tax digital asset transactions at a rate of 30%.
• Except for acquisition costs, no deductions apply for calculating income.
• The Alternative Minimum Tax for cooperative societies will reduce to 15%.
• For cooperative societies with an annual income of between Rs 1 crore and Rs 10 crore, the proposal will cut the surcharge to 7%.
• Employer contributions to state government employees’ NPS accounts are now eligible for a 14 per cent tax deduction.

Further, India’s economic growth will be the greatest among large economies at 9.2 per cent. 60 lakh new employment will emerge in 14 industries under the productivity-linked incentive scheme. There will be launch of Digital Ecosystem for Skill Development and Livelihood (DESH-Stack e-portal) to enable citizens to skill, reskill, or upskill via online training. Startups will also get encouragement to help with ‘Drone Shakti’ and Drone-as-A-Service (DrAAS). Apart from that, the promise of a digital rupee was another key highlight in a budget devoid of large populist giveaways.