The Union Budget 2022-2023 has come when our country’s economy and the world continue to struggle amid the pandemic (1).
The Economic Survey tabled a day before the Union Budget presentation emphasized the government’s need to offer relief against stresses, including the uncertainty in the global economy, liquidy withdrawal cycle by most central banks, and more (2).
It pegged the government’s effort to give rise to a robust post-pandemic economy, and demand measures will not offer a solution. It is based primarily on the fact that many factors like technological developments, consumer behavior, supply chain, geopolitics, and climate change can unpredictably impact our economy. Overall, India will need to build a new supply-side strategy to tackle the long-term unpredictability post-COVID-19 (3).
Need a quick guide to make sense of budget terms, numbers, steps, and documents? Read our previous article Understanding the Indian Union Budget, For Beginners.
Click here to get access to the budget speech, highlights, documents, and other key announcements.
Highlights of the Union Budget 2022
The Finance Minister opened the Union Budget 2022 presentation by expressing sympathy for individuals suffering from health and economic consequences due to the COVID-19 pandemic. India’s great resilience is reflected in the economy’s overall quick resurgence and revival.
“Budget 2022 includes a significant increase in funding for public investment and capital spending,” said Nirmala Sitharam.
She added, “we are in the thick of the Omicron wave, and the rapidity with which we launched our vaccine program has tremendously aided us. I am convinced that ‘Sabka Prayaas’ will continue to grow at a rapid pace.”
There is a total of four priorities for Union Budget 2022:
- PM Gati Shakti
- Inclusive Development (Productivity Enhancement and Investment)
- Energy Transition and Climate Action
- Financing of Investment
- As per this year’s Economic Survey, the Indian economy will grow at an annual rate of 8.5% in FY23, continuing its world-beating growth following a 9.2% rise in the current fiscal year.
- India’s economic growth is expected to be 9.2% this year, the highest among all global economies.
- The strategic ownership transfer of Air India has been accomplished.
- Budget 2022 aims to establish the groundwork for the economy to steer over the following Amrit Kaal of 25 years, from India at 75 to India at 100, while building on Budget 2021 goals.
- In 2022-23, the Central Government’s effective capital expenditure is expected to be 10.68 lakh crores INR or around 4.1% of GDP.
- The total expenditure is expected to be 39.45 lakh crore INR. The total receipts are estimated to be 22.84 lakh crore INR. The budget deficit is estimated to be 6.4% of GDP in FY23, down from 6.9% in FY22.
- For 2022-23, states are allocated 1 lakh crore INR to catalyze overall economic investment. These interest-free loans for 50 years are in addition to the standard borrowing limits for states. The government will use it for PM Gati Shakti-related and other state-level productive capital investments.
- Capex spending increased by 35% to 7.05 lakh crore INR in FY23.
- The gross GST collections for January 2022 were 1,40,986 crores INR, the highest since the introduction of GST.
The government will build 400 Vande Bharat trains with better efficiency in the next three years. 100 PM Gati Shakti cargo terminals will be built during the next three years, and novel techniques to build metro systems.
Roads, trains, airports, ports, mass transportation, waterways, and logistics infra are the seven engines that will power PM Gati Shakti. All seven engines will work simultaneously to stimulate the economy forward with the help of energy transmission, information technology, bulk water and sewerage, and social infrastructure.
The government will develop the Gati Shakti Master Plan for Expressways to enable a faster movement of people and commodities in 2022-23. In 2022-23. Also, the government will expand the NH Motorway network by 25,000 kilometers. The government will mobilize 20,000 crore INR to supplement public resources.
The government plans to bring 2,000 km of the rail network under the KAWACH indigenous world-class technology for safety and capacity enhancement.
The government aims to establish a high-level panel for urban planning.
Aim to update building regulations.
Five existing urban planning academic institutions will be designated as Centres of Excellence, with a 250 million USD endowment fund.
Eighty lakh families will be identified for the affordable housing scheme in 2022-2023. In 2022-23, the PM Awas Yojna will see 80 lakh affordable dwellings built at the cost of 44,000 crores.
Aim to implement a new dynamic village program to improve development in villages along India’s northern border.
“Climate change risks are the world’s most serious externalities,” said our FM.
The government aims to establish special mobility zones with a zero-fossil-fuel policy to encourage people to use public transportation in cities. In addition, it will also implement a ‘Battery Swapping Policy’ due to space limits in metropolitan areas.
Aim to establish four coal gasification pilot projects.
The Ken Betwa Linking project, estimated to cost Rs 44,605 crore, will provide irrigation to 9 lakh hectares of farmland, drinking water to 62 lakh people, 103 MW of hydropower, and 27 MW of solar power generation.
Wheat procurement in Rabi season 2021-22 and anticipated paddy procurement in Kharif season 2021-22 will include 1208 lakh metric tonnes of wheat and paddy from 163 lakh farmers, with a direct payment of MSP value of 2.37 lakh crores to their accounts.
In the first stage, chemical-free natural farming would be promoted across the country, concentrating on farmers’ land in 5 km wide lanes along the Ganga.
Kisan Drones will be promoted for crop evaluation, land record digitization, and insecticide and nutrient spraying.
NABARD will support a fund to finance agriculture and rural enterprise startups important to the farm produce value chain. FPOs will be supported by startups, which will give technology to farmers.
Farmers will be given financial assistance to begin agroforestry.
68% of the total capital procurement budget for Defense will be set aside for the indigenous industry to boost Atma Nirbharta and reduce dependency on defense equipment imports. It is up from 58 percent the previous fiscal year.
PLI and Other Schemes
The PLI, Production Linked Incentive Scheme for achieving Atma Nirbhar Bharat has gotten a positive reaction, potentially generating 60 lakh new employment and 30 lakh crore in increased production over the next five years.
The ECLGS Emergency Credit Line Guarantee Scheme will be extended until 20th March 2023. Fifty thousand crores INR will increase ECLGS’ guarantee cover to a total of 5 lakh crores INR.
Aim to promote One Station One product to assist local businesses and supply chains.
The animation, visual effects, gaming, and comics industries have a lot of room for young people to work. Plan to form an AVGC promotion task group with all stakeholders to recommend ways to achieve this and increase domestic capacity to serve our markets and worldwide demand.
Aim to replace the Special Economic Zones Act with new legislation promoting enterprise and hub development. It will encompass existing industrial enclaves and boost export competitiveness.
An extra allocation of 19,500 crore INR for PLI for manufacturing high-efficiency modules would be made with priority to completely integrate manufacturing units to solar PV modules to permit local manufacturing of more than 280 gigawatts of installed solar capacity by 2030.
Aim to expand PM eVIDYA’s ‘One class, one TV channel’ program from 12 to 200 channels. As a result, all states will provide extra education in regional languages for students in grades 1 through 12.
Finance Minister Nirmala Sitharaman recommended establishing a digital university to provide education using a hub-and-spoke concept.
Free of local control, a world-class university will be allowed in the GIFT IFSC, International Financial Services Center.
The issuance of e-passports with embedded chips will begin in 2022-23 for people’s ease in their overall travels.
In 2022, a spectrum auction for 5G will be held.
Ministries for procurement will establish an entirely paperless, e-bill system.
The RBI will begin issuing digital rupees in 2022-23, utilizing blockchain and other technologies. The economy will benefit greatly as a result of this.
Aim to urge States governments to adopt the Unique Land Parcel Identification Number to facilitate IT-based land record management.
Finance, Economy, and Taxes
People will be able to access their accounts online and move money between post office accounts and other banks after all 1.5 lakh post offices in India are connected to the core banking system.
Taxpayers can now file an updated return within two years of the relevant assessment year to correct an error.
Tax breaks for startups will be available until 31st March 2023.
Transfers of digital assets will be taxed at a rate of 30%, and a 1% TDS will be charged for transactions exceeding a particular level. In the case of a gift of a virtual digital asset, the recipient will be taxed.
Propose raising the tax deduction ceiling for employers’ contributions to state government employees’ NPS accounts to 14%.
The corporate surcharge will be decreased from 12% to 7%.
Long-term capital gains on listed equity share units are subject to a 15 percent maximum fee. Suggest a 15% cap on long-term capital gains transfers.
Losses incurred as a result of the transfer of virtual digital assets cannot be offset against other sources of income.
Capital items will be subject to a 7.5 percent import duty.
Until March 2024, a 15% corporate tax rate will be offered to newly incorporated manufacturing enterprises for one more year.
5% reduction in duty on cut and polished diamonds and gemstones.
GIFT City will establish an international arbitration center to facilitate faster dispute settlement.
Taxpayers will now have two years from the end of the relevant assessment year to file an updated ITR. This brand-new provision ensures voluntary tax submission and lowers litigation costs.
A reduction in the surcharge on unlisted shares from 28.5 percent to 23% to make it easier for entrepreneurs and unicorns to exit.
Health and Sanitation
60,000 crore has been set aside to provide tap water to 3.8 crore households.
Almost everyone has been affected by the coronavirus pandemic, exacerbating mental health issues. Aim to create a National Tele Mental Health program to improve access to quality mental health counseling and treatment services.
Things Getting Cheaper in FY 2022-23
- Cut and polished diamonds and gemstones
- Cell phones
- Chargers for mobile phones
- Custom duties on chemicals required for petroleum products
- Tariffs on specific compounds, such as methanol, Acetic acid
- A one-year extension of the customs duty concession on steel scrap
- Frozen squids, mussels
- Cocoa beans
Things Getting Costlier in FY23
- All imported goods
- Increase in umbrellas duty
- Imitation Jewelry
- Earphones and Headphones
- Single and multiple loudspeakers
- Smart Meters
- Solar Modules and cells
- Smart Meters
- X-ray Machines
- Electronic toys parts
Facts and Trivia About the Union Budget 2022
- Longest Budget Speech: Manmohan Singh gave the longest Budget address in terms of words in 1991, under the Narasimha Rao administration, with 18,650 words. With 18,604 words, Arun Jaitley, the then-finance minister, gave the second-longest speech in terms of word count in 2018. Jaitley delivered a one-hour-and-49-minute address.
- Positive Indian Market: The Sensex has surged about 662 points ahead of the budget presentation, while the Nifty has climbed past 17,514 at 9:24 am and closed at 848 pts higher, Nifty above 17,550 (4).
At 12: 44, IST Union Finance Minister Nirmala Sitharaman introduced the Finance Bill 2022 in Parliament, following which the Lok Sabha was adjourned.
Click here to access the Finance Bill.