by Namrata Singh, CFP & Chaitali Shah, MA (Economics)

Budget 2022-23 was presented by the Finance Minister – Ms Nirmala Sitharaman on the 1st February, 2022. The budget has a major focus on capex and growth through Public Private Partnership.

India’s GDP growth for FY 22 is estimated to be 9.2%, highest among all large economies. FY 2023 GDP growth projection is pegged at 8-8.5%. There is a 35% increase in capital expenditure budget.

Revised Fiscal Deficit @ 6.9% of GDP in FY22 as against 6.8% projected earlier. Fiscal deficit projected at 6.4% in FY23. A fiscal deficit occurs when the government spends more than it earns. This deficit is calculated in absolute terms and also as a percentage of the Gross Domestic Product (GDP) of the country.

The government has laid down the following priorities through the Budget:

PM GatiShakti

-The PM GatiShakti approach is driven by seven engines; Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure. These engines will be supported by the complementary roles of Energy Transmission, IT Communication, Bulk Water & Sewerage, and Social Infrastructure.

-The National Highways network will be expanded by 25,000 km and INR 20,000 crore will be mobilized through innovative ways of financing for the same.

-2,000 km of network will be brought under Kavach, the indigenous world-class technology for safety and capacity augmentation in 2022-23.

-National Ropeways Development Programme will build 8 ropeway projects for a length of 60 km and be taken up on PPP mode as a preferred ecologically sustainable alternative to conventional roads in difficult hilly areas.

Inclusive Development

-Emergency Credit Line Guarantee Scheme (ECLGS) has provided additional credit to more than 130 lakh MSMEs. The ECLGS will be extended up to March 2023 and its guarantee cover will be expanded by INR 50,000 crore to total cover of INR 5 lakh crore, for the hospitality and related services.

-‘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 1-12.

-A ‘National Tele Mental Health Programme’ will be launched, with 23 tele-mental health centres of excellence and NIMHANS being the nodal centre and International Institute of Information Technology-Bangalore (IIITB) providing technology support.

-80 lakh houses will be completed under PM Awas Yojana for eligible beneficiaries and INR 48,000 crore has been allocated towards the same.

-5 lakh post offices will come on the core banking system and enable access to accounts through net banking, mobile banking, ATMs, and also provide online transfer of funds between post office accounts and bank accounts.

-To mark 75 years of our independence, it is proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks.

Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, and Climate Action

-The issuance of e-Passports using embedded chip and futuristic technology will be rolled out in 2022-23.

-Now the Centre for Processing Accelerated Corporate Exit (C-PACE) with process re-engineering, will be established to speed up the voluntary winding-up of these companies from the currently required 2 years to less than 6 months.

-A scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme. Spectrum auctions will be conducted to facilitate rollout of 5G mobile services.

-68 per cent of the capital procurement budget will be earmarked for domestic industry. The government has proposed to reserve 25% of the R&D Budget for start-ups and private entities.

-To facilitate domestic manufacturing for the goal of 280 GW of installed solar capacity by 2030, there is an additional allocation of INR 19,500 crore.

Financing of Investments

-The outlay for capital expenditure in the Union Budget has been increased by 35.4 percent from INR 5.54 lakh crore in the current year to INR 7.50 lakh crore in 2022-23. This has increased to more than 2.2 times the expenditure of 2019-20. This outlay in 2022-23 will be 2.9 % of GDP.

-An International Arbitration Centre will be set up in the GIFT City for timely settlement of disputes under international jurisprudence.

-Sovereign Green Bonds will be issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.

-Central Bank Digital Currency (CBDC) to be issued by RBI starting 2022-23 to give a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system.

Key Highlights

-Direct taxes not changed – no change in tax slabs/rates

-A new provision has been introduced permitting taxpayers to file an Updated Return on payment of additional tax within two years from the end of the relevant assessment year.

-Income from transfer of virtual assets (crypto currencies, NFTs) to be taxed at 30% and 1% TDS to be applied

-Alternate minimum tax for cooperative societies down from 18.5% to 15%

-Tax deduction limit for state govt employees to NPS raised from 10% to 14%

-Surcharge on Corporate tax pruned from 12% to 7%.

-Surcharge on transfer of long-term capital gains tax capped at 15%

-Tax exemption to start-ups extended to March 2023.

The Budget is Pro Growth and ensures continuity in policy, stability in taxation and provides a strategic direction to the sustainable growth of the Indian economy.

__________________________________________________________________________

Namrata Singh is a Certified Financial Planner with more than 14 years of experience in banking and wealth management. ([email protected])

Chaitali Shah, MCom & MA (Economics) was a Financial Economics – Faculty at Wilson College, Mumbai ([email protected])

(Please note all views are personal)