Finance Minister, Nirmala Sitharaman, presented India’s Union Budget 2022 in the Indian Parliament at 11:00 AM (IST). Analysts stated that the finance minister would have to strike a delicate balance whilst maintaining the momentum between the citizens’ expectations and the government’s implementation tactics. The balance is, in turn, expected to revolutionise economic recovery and tax collections. Parallelly, the Union Budget will create jobs for the multitudes and tackle inflation as India deals with the prevalent Omicron wave.
Good newsflash before the Union Budget 2022
Goods and Services Tax (GST) collection in India crossed INR 1.38 lakh crore in January 2022, a growth of 15% compared to last year. The overall number of GSTR-3B returns assessed up to January 30, 2022, is INR 1.05 crore, encompassing INR 36 lakhs quarterly returns, the Finance Ministry stated. January 2022 is the fourth straight month when the GST collections crossed INR 1.30 lakh crores.
There was something to be grateful about before the announcement of the Union Budget. India’s goods exports accomplished a record high of USD 393 billion after rotting in the USD 250-330 billion annual range for ten years. A solid recovery in global goods trade assisted, of course. However, India’s global share of exports also surged to an unsurpassed high. In the previous quarter, it likely went beyond 2%. Higher commodity rates delivered, which could also inverse trends in numerous large industries, seemed sustainable.
A swiftly growing major economy
According to IMF’s latest World Economic Outlook prognoses, India’s real GDP is estimated to advance at 9% in 2021-22 and 2022-23. Furthermore, it is estimated that the GDP is projected to grow at 7.1% in 2023-24, making India the fastest-growing economy globally for all 36 months.
Macroeconomic stability pointers suggest that the Indian economy is well placed to take on the tests and trials of 2022-23.
The Indian Job Market
The unemployment rate dilapidated to 7.9% in December 2021 from 7% as the Omicron wave of COVID19 led to weekend and night curfews across the country.
The Union Budget 2022
Top Cabinet Ministers advanced towards the Parliament to attend the Union Budget presentation. Prime Minister Narendra Modi, Union Home Minister Amit Shah, Defence Minister Rajnath Singh, Communications and IT Minister Ashwini Vaishnaw, Parliamentary Affairs Minister Pralhad Joshi, and others arrived at the Parliament for the union cabinet meeting ahead of the Union Budget’s presentation at IST 11:00 AM.
Here are some of the highlights of the Indian Union Budget 2022 as discoursed by Finance Minister Nirmala Sitharaman.
Indian Union Budget 2022 – Deficit and Expenditure
- Proposal for a fiscal deficit of 4.5% of GCP by 2025-26.
- Projection of fiscal deficit of 6.4% of GCP in 2022-23.
- Reviewed fiscal deficit for 2021-22 at 6.9% of GDP.
- Vast expenditure in 2022-23 is witnessed at INR 39.45 trillion.
- States will be permitted a 4% fiscal deficit to GCP in the fiscal year of 2023.
- States are to be allocated 50-year interest-free loans over and above regular borrowing.
- The Finance Ministry established a scheme for financial aid to states for capital investment of INR 1 trillion in 2022-23.
Indian Union Budget 2022 – Taxation
- Reduction of import duty on specific chemicals.
- Exemption of customs duty on steel scrap to be expanded for another year for SMEs.
- Revocation of customs duty on stainless steel, high steel bars, and flat products.
- Unblended fuel to beget an extra duty of INR 2 per litre from October 2022.
Indian Union Budget 2022 – Finance
- Emergency credit line guarantee scheme for SMEs to be prolonged to March 2023.
- The Indian government will prioritise climate action and energy transition.
- Life Insurance Corporation’s public issue is expected soon.
- Initiatives from the Union Budget 2021 are suitable distributions in the Union Budget 2022.
- Replacement of Special Economic Zones Act with new-fangled legislations.
- Amendment of bankruptcy code to hasten resolution process.
- Lowering of termination of firms from 12 months to 6 months
- Long term capital expansion surcharge to be pegged at 15%.
Indian Union Budget 2022 – Digital Currency
- Digital rupee to be launched by utilising blockchain technology from 2022-23.
- It is launching a scheme for the taxation of virtual digital assets.
- Taxation on income from virtual digital assets at 30%.
- Losses from virtual digital assets sales cannot be counterbalanced against other incomes.
Indian Union Budget 2022 – Defence
The Government of India is committed to inhibiting defence imports.
Indian Union Budget 2022 – Infrastructure
- Conducting 5G spectrum auctions in 2022.
- The scheme for design-centric production for 5G will be a fraction of a product associated scheme.
- Awarding contracts to lay optical fibre in rural areas, the completion of which will be achieved in 2025.
- INR 480 billion to be kept aside for inexpensive housing in 2022-23.
- Allocation of an extra INR 195 billion for production-centric incentives towards solar equipment manufacturing.
Indian Union Budget 2022 – Agriculture
- Introduction of a domestic scheme to inhibit reliance on oilseed imports.
- Blended capital financing to be raised under the co-investment model to fund agriculture start-ups.
- Railways to develop infrastructure for small farmers in 2022-23.
“Chemical-free natural farming is a big announcement for exports as well as the health of the nation.”
- Rajat Wahi, partner, Deloitte India
Indian Union Budget 2022 – Chemical Free Farming
- Chemical-free farming and organic farming to enhance exports.
Indian Union Budget 2022 – Transport
- Manufacturing of 400 energy efficient trains over the coming three years.
- National highways network to be extended by 25,000 kilometres in 2022-23.
- A cost of INR 200 billion for highways extension in 2022-23.
- India to establish a battery switching policy.
Indian Union Budget 2022 – International arbitration centre at GIFT City
To hasten dispute tenacity, Finance Minister Nirmala Sitharaman declared the establishment of an international arbitration centre at GIFT City.
Alongside the arbitration centre, the Government of India also anticipated the setting up of world-class foreign universities in GIFT City.
The university will facilitate the availability of a skilled workforce and be independent of any regulation.
Indian Union Budget 2022 – Taskforce for animation, visual effects, comic, and gaming promotion
A task force on animation, visual effects, comic, and gaming promotion is established to recommend ways to deliver to the markets and create an augmented global demand.
Indian Union Budget 2022 – Gemstones and Precious Stones
Import duty on polished and cut gemstones and diamonds inhibited to 5%.
Currently, the import duty on polished and cut gemstones and diamonds stand at 7%.
What did the Union Budget 2022 have for India’s electric vehicle manufacturers?
The government will bring a battery switching policy to augment electric vehicles in the nation in light of space restrictions for establishing charging stations.
The policy will birth a swifter rollout of battery switching hubs where electric vehicle users can refuel their electric vehicles by substituting drained batteries with charged ones.
This will also save time in charging the implanted electric vehicle batteries.
Currently, a handful of such options are available in the nation, and electric vehicle users have to devote hours to charge their electric vehicles at charging stations, specifically in cities.