By Pradeep Gupta

The focus of the Union Budget 2022 was aimed at boosting growth and further infrastructure spending. The stage of the budget, as set by the Economic survey stated that the government has the fiscal space to do more to support the economy and the projected growth was at 8-8.5% GDP growth in the 2022-23 fiscal. The FM in her speech pegged India’s GDP growth at 9.2% in FY 22, highest among all the large economies. The budget concentrated on major developmental aspects of inclusive development, productivity enhancement, energy transition, financing of investments and climate action.

A few of the key highlights of the budget were that the estimated capital expenditure of the central government was at 4.1% of the GDP. In addition, the Central Government has also allocated Rs 1 lakh crore for grants to states to support their capital expenditure. In spite of higher allocation to capital expenditure, the fiscal deficit is likely to go down from 6.9% in this year to 6.4% next year.

In a big move to promote digitization, digital currency was introduced. The central bank would issue Digital Rupee using block chain technology. Income from virtual digital assets to be taxed at 30%, for effective tracking of these assets, 1% TDS on transfer of such assets would be levied.

Below are few of the major highlights of the Union Budget 2022

Ease of doing business

New phase will be guided by an active involvement of the states, digitisation of manual processes and interventions, integration of the central and state-level systems through IT bridges, a single point access for all citizen-centric services, and a standardization and removal of overlapping compliances.

Incentives for startups extended by a year to 2023 to avail of tax benefits. For corporations, extension has also been granted for new companies to setup manufacturing facilities to 2024 from earlier 2023.

Digitization

The issuance of e-Passports using embedded chip and futuristic technology will be rolled out in 2022-23 to enhance convenience for the citizens in their overseas travel.

Digital rupee, using blockchain and other technologies; to be issued by RBI starting 2022-23, this is expected to give a big boost to the economy

Efficient use of land resources is a strong imperative. The adoption or linkage with National Generic Document Registration System (NGDRS) with the ‘One-Nation One-Registration Software’ will be promoted as an option for uniform process for registration and ‘anywhere registration’ of deeds & documents.

Investment

Venture Capital and Private Equity invested more than 5.5 lakh crore last year facilitating one of the largest start-up and growth ecosystems.

5G spectrum auction to be conducted in 2022 for rollout of 5G telecom services by private players in FY 2022-23

PLI (Production Linked Incentive scheme) in 14 sectors for Aatmanirbhar Bharat to create 6 million jobs, additional allocation of Rs 19,500 crore for PLI in solar PV module manufacturing.

Infrastructure

400 new generation Vande Bharat trains with better efficiency to be brought in and 100 PM Gati Shakti Cargo terminals to be developed during next 3 years

Rs 48,000 crores allocated for completion of construction of 80 lakh houses under PM Awas Yojana in rural and urban areas in the year 2022-23

The National Highways network will be expanded by 25,000 km in 2022-23. ` 20,000 crore will be mobilized through innovative ways of financing to complement the public resources

MSME Sector

ECLGS to be extended till March 2023. The guaranteed cover will be expanded by Rs 50,000 crores to total cover of Rs 5 lakh crores to aid MSME sector financing needs.
Rs 2 trillion outlay for MSMEs, Additional loans for 13mn. MSMEs.

Taxation

Taxpayers can now file an updated return within 2 years from the relevant assessment year

Income tax relief to cooperative societies with reduction in rate of surcharge from 12% to 7% for income upto Rs 10 crores

Income from virtual digital assets brought under tax net. Gaines taxable at 30% without any deduction except cost of acquisition

Income from Long Term Capital Gains will be taxed at 15%

Corporate surcharge to be reduced from 12% to 7%

In yet another push for “Atma Nirbharta” or self-reliance in defence, which has been a flagship campaign of the government, the FM announced that 68% of the capital outlay for the armed forces will be earmarked for the domestic industry.

On the whole, the budget is not populist as was feared but a growth oriented budget as well as a policy document on a number of important and critical issues for long term growth of the country. It has been a progressive budget as it accelerates the government’s efforts towards inclusive and sustainable development. The outlay of the budget is pragmatic and growth oriented and it is expected to boost and push further growth.

(Pradeep Gupta, Co-founder & Vice Chairman, Anand Rathi Group. Views expressed are the author’s own.)