On the first morning of February 2022, Finance Minister, Mrs. Nirmala Sitaraman, presented the Union Financial Budget 2022. The Finance Minister said that “The overall sharp rebound and recovery of the economy is reflective of our country’s strong resilience.”
The finance minister also stated that this budget is the foundation for the next 25 years from “India at 75” to “India at 100”. Which was very well welcomed by the stock market as well.
During the Budget 2022, SENSEX grew 916 points, and Nifty was up by 183 points.
Before going into the technicalities, let’s check out the facts on budget allocation and Fiscal Deficit in the budget 2022.
The revised fiscal deficit for the year 2021-22 is at 6.9% of the GDP. And it is projected that the fiscal deficit for 2022-23 will be 6.4% of the GDP with a total expenditure estimate of ₹39.45 lakh crores. With that being said, it is also proposed that a fiscal deficit of 4.5% of GDP shall be achieved by 2025-26.
For those who are new enthusiasts of the 2022 budget highlights and wondering what is fiscal deficit? We got you covered too. Fiscal deficit refers to the difference between a government’s total revenue and total expenditure. It serves as a barometer of the government’s total borrowing needs.
Now to help you understand the budget allocation more precisely, we have divided it into the below-mentioned sections.
PM GatiShakti Plan/Infrastructure – Budget Highlights 2022
- Auctions for the 5G spectrum should conclude by FY2023.
- The production-linked strategy will include a scheme for design-led manufacturing for 5G.
- Contracts will be awarded for the installation of optical fiber in rural areas, with a completion date of 2025.
- In FY2022-23, ₹48,000 crores will be set aside for affordable housing.
- ₹1400 crores granted to hydroelectric and solar energy projects.
- ₹1 lakh crore to be given to states for economic transformation.
- In FY2022-23, the national highway network is aimed to expand by 15% or about 25000 kilometers.
- Exclusive EV zones and battery swapping areas for Electric vehicles to be developed.
- ₹60,000 crores have been allotted for the PM Awas Yojana.
- Ministries will implement fully paperless billing systems in order to reduce payment delays.
- 400 new Vande Bharat trains to be produced over the next three years.
- 60 kilometers of ropeway constructions are planned as part of the Parvat Mala project.
- Within the following three years, 100 Gati Shakti cargo terminals will be built.
- In FY2022-23, e-passports equipped with digital chips will be issued.
Finance – Union Budget 2022
- The extension of the emergency credit line guarantee scheme for small and medium-sized firms until March 2023.
- Budget initiatives from the previous year have received enough funding in the current budget.
- The Special Economic Zones Act will be repealed and replaced by new legislation.
- Change in the bankruptcy code in order to expedite the settlement procedure.
- Aims to reduce the time required to wind up a company to six months from the current two years.
- Surcharge on long-term capital gains would be set at 15%.
- In FY2022-23, the RBI will introduce a digital rupee based on blockchain technology.
- A sovereign green bond will be launched and issued in support of public sector efforts aimed at reducing carbon emissions.
- Public offering of LIC is scheduled to occur shortly, and others are in the works as well.
- India’s growth rate is expected to reach 9.27%.
- To promote digital banking, 75 digital banking units would be established in 75 districts.
- Post offices to begin offering core banking services.
Taxation – Central Budget 2022
- There is no change in the income tax bracket.
- Import duty on certain chemicals like Methanol’s customs duty will be decreased.
- Customs duty exemption on steel scrap to be extended for another year for small- and medium-sized businesses.
- Customs duty on stainless steel, flat products, high steel bars to be revoked.
- Unblended fuel to get an additional duty of 2 rupees per litre from October 2022.
- A new provision allows taxpayers to amend previous returns and include omitted income with an extra tax payment. The amended return must be filed within two years of the end of the assessment year in question.
- For startups, the tax incentive term is extended by one year. Tax incentives will now be extended until March 31, 2023, for eligible startups formed under Section 80-IAC.
- The corporate surcharge will be cut from 13% to 7%.
- The Alternate Minimum Tax (AMT) for cooperative societies will be decreased to 15%.
- Income derived from the transfer of digital assets such as cryptocurrency will be taxed at a rate of 30%.
- There would be no deductions saved for the cost of acquiring digital assets. Losses on the sale of digital assets cannot be deducted from other income.
- TDS of 1% on the transfer of virtual digital assets.
- Gifts of digital assets will likewise be taxable in the receiver’s hands.
- To achieve parity between central and state government employees, the Finance Ministry proposed raising the employer contribution level to the National Pension Scheme’s (NPS) Tier-I account from 10% to 14%.
- Once the parent/guardian of the differently-abled reaches the age of 60, the parent/guardian may claim a tax deduction on the payment of the annuity or lump sum for the parent’s or guardian’s lifetime.
- Duty on cut and polished diamonds and gemstones will be reduced to 5%.
- In January 2022, the record collection of ₹1,40,986 crore gross GST revenues was the highest since the introduction of the GST.
- To phase away concessional customs duties on capital goods, an initial rate of 7.5% will be imposed.
- Over 350 exemptions on the importation of certain agricultural products, chemicals, and medications will be phased out.
- Duty exemptions on imports of phone chargers, transformers, and other electronic components permit indigenous manufacturing.
Defence – Nirmala Sitharaman Budget 2022
- Defence Research and Development would be made available to private businesses and startups.
- Startups will be aided in facilitating ‘drone shakti’ in order to increase drone usage.
- The government has committed to lowering defense imports.
- 68% of defence sector capital should be reserved for indigenous industries
Education – Budget Updates 2022
- Using a hub and spoke concept, a digital university will be established for online education with a concentration on ICT.
- Select ITIs around the country will offer skill development courses.
- PM eVIDYA’s ‘One class, one television channel’ initiative will be expanded from 12 to 200 television channels. This enables all governments to offer extra education in regional languages for students in grades 1 to 12.
Agriculture – Union Budget 2022
- Fund to be facilitated by NABARD to finance agriculture and rural enterprise startups that are relevant to the farm product value chain. Startups will aid FPOs by providing technology to farmers.
- Kisan Drones will be promoted for crop evaluation, land record digitization, and insecticide and nutrient spraying.
- 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 ₹2.37 lakh crore being paid directly to their accounts as MSP value.
- The delivery of high-tech services to farmers will begin.
- MSP would be paid straight to farmers’ bank accounts.
- Natural farming without the use of chemicals to be promoted in India.
- To finance farm entrepreneurs, a fund with blended capital raised through a co-investment strategy will be established.
- In FY2022-23, railways will create infrastructure for small farms.
Healthcare – Budget 2022
- 2 lakh Upgraded Anganwadis to improve child health.
- The National Digital Health Ecosystem will be built on an open platform. It will include computerized registers of health providers and institutions, a national health identity, and universal access to health care.
- A national telemental health service will be established to focus exclusively on mental health.
- 23 centers of excellence for telemental health.
- Women and children benefit from integrated services provided by Mission Shakti, Mission Vatsalya, Saksham Anganwadi, and Poshan 2.0.
- In FY2022-23, ₹60,000 crores have been earmarked to cover 3.8 crore homes under Har Ghar, Nal se Jal.
That was all from our side to the most-awaited Nirmala Sitaraman Union Budget. Please comment below to share your thoughts on the union budget 2022-23.