BUDGET SYNOPSIS — Decoding the Big Numbers!
The Finance Minister, Nirmala Sitharaman, presented the 4th union budget of Modi 2.0 on the usual pre-specified day of 1st Feb, 2022 (Tuesday).
According to the budget, the projected growth rate of India’s nominal gross domestic product (GDP) stands at 11.1% whilst the real GDP growth rate ranges between 8%– 8.5%. Since, these numbers of projected GDP growth rates seem promising, this budget showcases the path for India’s economic recovery amid challenges posed by the Covid -19 pandemic.
The government is expected to spend Rs 39.45 lakh crore in the upcoming financial year (2022–2023). 6.4% forms the proportion of GDP contributing to fiscal deficit as per the government estimates.
Following are the key highlights of this budget
1) Capital Expenditure
Budget has evidenced a 35.4% increase in capex outlay. This rises from 5.54 lakh cr in FY2022 to 7.50 lakh crore in 2022–23. Capex as a percentage of total budget expenditure stands at nearly 19%.
2) MSME Sector
There is an expansion in guaranteed cover for Emergency Credit Line Guarantee Scheme (ECLGS) for small companies to the extent of 50,000 crores. The scheme will also be extended by one year up to March 2023.
3) Cryptocurrency and Fintech Space
The tax @30% have been introduced which would be levied on ‘any income from transfer of any virtual digital asset’. This is expected to cover cryptocurrencies as well as Non-Fungible Tokens (NFT’s). Moreover, 1% TDS shall be deducted on transfer of such assets. Gifts received as cryptocurrencies shall also be taxed at this rate. Further, any loss from the transfer of virtual digital assets cannot be set off against any other income.
In order to give a boost to the digital economy, centre has proposed to set up 75 DBU’s (Digital Banking Units) in 75 districts of the country by scheduled commercial banks. They also announced that 100 % of 1,50,000 post offices will shift to core banking system enabling financial inclusions and access to accounts through net banking, mobile banking, ATM’s and will also provide online transfer of funds between post office accounts and bank accounts. It was also announced that RBI will start issuing country’s much awaited digital currency in FY 2023.
4) Infrastructure Push
A fresh impetus to connectivity push is given through Gati Shakti Master Plan which will set out to build 25,000 km more of national highways, 100 new cargo terminals, four logistics park, eight ropeway projects, and introduction of 400 new Vande Bharat trains. Rs 20,000 crores will be mobilised for this through innovative ways of financing to complement the public resources.
5) Education Sector
Centre acknowledged the learning loss due to the pandemic and hence has decided to expand the One Class One TV Channel initiative under the PM e- Vidya scheme to 200 channels from the existing 20. The government will also establish a digital University to provide access to students across the country to world-class quality universal education, with personalised learning experiences. Despite the push in digital education, allocation under the digital India e- learning programme, which includes the PM e — Vidya scheme, was lowered to odd 421 crores for FY 23 from odd 645 crores in the last financial year. The allocation towards midday meal scheme (renamed as PM Poshan last year) also evidenced a marginal drop. More funds for central schools such as Kendriya Vidyalaya are promised.
6) Healthcare Sector
The government will launch a national tele-mental health programme to provide 24*7 free counselling and care to people across the country. The centre has also stressed upon boosting digital health care. The budget has allocated odd 86,200 crores for FY 23 which is about 16.59% more than the previous year’s estimates.
7) Climate Crises and Net Zero
The budget announced 19,500 crores for Production Linked Incentive (PLI) for manufacturing of high efficiency solar modules. The finance minister also announced Sovereign Green Bonds under the government’s overall market borrowings in FY 23, which will be used to mobilise resources for green or climate friendly infrastructure. To promote clean transport, steps like battery swapping business and special mobility zones for electric only vehicles will be taken.
8) Agriculture Sector
Government will pay Rs 2.37 lakh crore towards procurement of wheat and paddy under MSP operations in the upcoming financial year. Initiatives like Kisan drones for crop assessment, land records, spraying of insecticides is all expected to drive a wave of technology in agriculture sector. Govt will promote chemical-free natural farming throughout the country to boost sustainable agricultural productivity and income of farmers.
9) Atmanirbharta in Defence
68% of capital procurement budget in defence will be earmarked for domestic industry in 2022–23 (up from the 58% last fiscal). Defence R&D will be opened up for industry, start-ups and academia with 25% of defence R&D budget.
10) Miscellaneous
Borrowings for States:
Allocation of whooping 1 lakh crore has been made to assist states in catalysing investments for FY 2023. This will be done through 50 — year interest — free loans, over and above normal borrowings allowed to states.
Welfare Spend:
MGNREGA and food subsidy account for a chunk of government’s welfare expenditure. The allocations to both these areas have been squeezed and have been bought to the levels of 73,000 cr and 2,06,831 cr respectively owing to high liabilities under MGNREGA and pending debt for Food Corporation of India (FCI).
Disinvestment:
The government has revised its disinvestment estimate for the current financial year to 78,000 cr, down from 1.75 lakh crore envisaged in the budget estimate last year, which is a 55.4% reduction. The budget estimate for disinvestment in 2022–23 has been further trimmed by 16.6% compared to 78,000 cr in the RE (revised estimate) of current financial year.
Please note that this article does not contain any analysis of budget but surely serves the purpose of those who are looking for a crisp, simple and understandable synopsis of the union budget 2022.
Sources:
1) Publication of the Hindustan Times
2) Article of The Economic Times
