Budget at a Glance 2022- 2023

Union Budget for 2022-23 is based on PM Gati Shakti (Infrastructure), Inclusive Development, Productivity Enhancement, Sunrise Opportunities, Energy Transition, Climate Action and Financing of investments.

This Year Modi Government presented growth-oriented budget where their complete focus was to increase capital expenditure with key focus area infrastructure which creates major jobs in India and has long term impact. The overall growth and development of the infra sector will also help provide better healthcare services to all citizens and help creating jobs in the country.

Estimates were of the govt. will provide some tax relief by changing the tax slabs or offering higher deduction under Section 80C, 80D, or Section 24 but govt. has not touched any of the tax structure instead income tax rate remain unchanged. With battery swapping policy Govt. aims at strengthening the whole ecosystem of the EV industry, which will increase the demand for Electric Vehicles. For the first time, budgeted expenditure on education is set to cross Rs 1 lakh crore in FY23.

In FY22, the government had budgeted to raise Rs 1.75 lakh crore through divestments but it failed to achieved the target and now revised its estimate for FY22 for Rs 78,000 crore.  The central government plans to borrow Rs 14.95 lakh crore through the sale of dated securities on a gross basis in 2022-23 (April-March) following which 10-year bond yield rose to 6.87 per cent up from its previous close of 6.67 per cent.

Indian Budget Highlights

Fiscal numbers:

• FY22 fiscal deficit pegged at 6.9% of GDP. FY23 fiscal deficit target at 6.4% of GDP

• Target to reach a fiscal deficit level below 4.5% of GDP by 2025-2026

• Govt plans Capex increased to 7.5 lakh crore vs 5.54 lakh crore.

• Capital expenditure for FY23 is pegged at Rs 7.5 lakh crore, forming about 2.9% of GDP.

• Total expenditure for FY23 is estimated at Rs 39.45 lakh crore, while total receipts, other than borrowing, are seen at Rs 22.84 lakh crore

• Overall, effective capital expenditure of central govt estimated at Rs 10.68 lakh crore which is about 4.1% of GDP.

Direct Taxes:

• Surcharge on capital gains tax on any long-term asset fixed at 15%.

• Virtual digital assets to be taxed at flat rate of 30%. No deductions allowed for any expenses. No loss from such transaction can be set off. 1% TDS on such transfer – beyond a threshold.

• To provide an opportunity to correct an error, taxpayers can now file an updated return within 2 years from the relevant assessment year.

Economy and Finance:

• The government has lowered its disinvestment target for FY23 at Rs 65,000 crore.

• That comes after India is set to miss its Rs 1.75 lakh crore target for the current fiscal. The government’s revised estimate for FY22 is Rs 78,000 crore.

• The FY23 allocation for Mahatma Gandhi National Rural Employment Guarantee scheme has been lowered to Rs 73,000 crore from a revised estimate of Rs 98,000 crore in FY22.

• The government has set gross market borrowing target of Rs 14.95 lakh crore for FY23.

• As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be issued for mobilizing resources for green infrastructure.

• Digital rupee to be issued using blockchain and other technologies and will be issued by RBI starting 2022-23.

• 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.

• Co- operative societies are required to pay Alternate Minimum Tax at the rate of eighteen and one half per cent. Government has reduced AMT to fifteen per cent.

• Both Centre and States govt employees’ tax deduction limit will be increased from 10% to 14% on NPS accounts.

Agriculture, Irrigation and Rural Development:

• 2.37 lakh crore direct payment to 1.63 crore farmers for procurement of wheat and paddy.

• Chemical-free Natural Farming will be promoted throughout the country

• Use of ‘Kisan Drones’ will be promoted for crop assessment, digitization of land records, spraying of insecticides, and nutrients.

• NABARD to facilitate fund with blended capital to finance startups for agriculture & rural enterprise.

• Implementation of Ken Betwa Link Project benefitting 9.1 lakh hectare farm land, providing drinking water to 62 lakh people and generating 130MW power.

Transport and Infrastructure: PM Gatishakti

• The seven engines that drive PM GatiShakti are Roads, Railways, Airports, Ports, Mass Transport, Waterways and Logistics Infrastructure

• PM GatiShakti Master Plan for Expressways will be formulated in 2022-23 to facilitate faster movement of people and goods.

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

• 400 new-generation Vande Bharat Trains with better energy efficiency and passenger riding experience will be developed

• 100 PM GatiShakti Cargo Terminals for multimodal logistics facilities will be set up during the next three years.

• 2,000 km of rail network to be brought under the indigenous world-class technology KAWACH, for safety and capacity augmentation.

• Contracts to be awarded through PPP mode in 2022-23 for implementation of Multimodal Logistics Parks at four locations.

Health and Sanitation:

• Announced an allocation of Rs 60,000 crore to cover 3.8 crore households in 2022-23 for Har Ghar, Nal Se Jal. Current coverage is 8.7 crores and of this 5.5 crore households were provided tap water in last 2 years itself.

• In 2022-23, 80 lakh houses will be completed for the identified eligible beneficiaries of PM Awas Yojana, both rural and urban and Rs 48,000 crore is allocated for this purpose.

• To better the access to quality mental health counseling and care services, a National Tele Mental Health program will be launched

Banking:

• In 2022, 100 per cent of 1.5 lakh post offices will come on the core banking system enabling financial inclusion and access to accounts through 11 net banking, mobile banking, ATMs, and also provide online transfer of funds between post office accounts and bank accounts.

• Proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks to ensure that the benefits of digital banking reach every nook and corner of the country in a consumer-friendly manner.

Hospitality:

• ECLGS will be extended up to March 2023. Guarantee cover will be expanded by Rs 50,000 crore to total cover of Rs 5 lakh crore, with the additional amount being earmarked exclusively for the hospitality and related enterprises.

Telecom:

• Spectrum auctions will be conducted in 2022 to facilitate rollout of 5G mobile services within 2022- 23 by private telecom providers.

• A scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme.

• Contracts for laying optical fibres in all villages to be awarded under ‘Bharat Net project’ in 2022, 2023. The project is expected to be completed in 2025

Defence:

• Committed to reducing imports and promoting AtmaNirbharta in equipment for the Armed Forces.

• 68 per cent of the capital procurement budget will be earmarked for domestic industry in 2022-23, up from 58 per cent in 2021-22.

• Defence R&D will be opened up for industry, startups and academia with 25 per cent of defence R&D budget earmarked.

Education:

• Government will spend Rs 104,278 crore in FY23 on education against the revised estimates of Rs 88,002 crore in FY22.

• One class-one TV channel’ programme of PM eVIDYA will be expanded from 12 to 200 TV channels and this will enable all states to provide supplementary education in regional languages for classes 1-12.

• A Digital University will be established to provide access to students across the country for world-class quality universal education with personalised learning experience at their doorsteps.

• Startups will be promoted to facilitate ‘Drone Shakti’ through varied applications and for Drone-As-A-Service (DrAAS).

PLI Scheme:

• To facilitate domestic manufacturing for the ambitious goal of 280 GW of installed solar capacity by 2030, an additional allocation of Rs. 19,500 crores for Production Linked Incentive for manufacture of high efficiency solar PV modules will be made.

Automobile:

• Will bring a battery swapping policy to boost use of EVS in the country in view of space constraints for setting up charging stations and interoperability standards will be formulated. The private sector would be encouraged to develop sustainable business models for the battery as a service and battery swapping policy.

Indirect Taxes:

• Customs Import duty on certain chemicals are being reduced

• 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 additional duty of 2 rupees per litre from October 2022.

• Government proposed reforms in SEZs. Alongside, they have also undertake reforms in Customs Administration of SEZs and it shall henceforth be fully IT driven and function on the Customs National Portal with a focus on higher facilitation and with only risk-based checks. This reform shall be implemented by 30th September 2022.

• Customs duty on methanol and acetic acid reduced.

• To give a boost to the Gems and Jewellery sector, Customs duty on cut and polished diamonds and gemstones is being reduced to 5 per cent.

• Duty on umbrellas is being raised to 20 per cent. Exemption to parts of umbrellas is being withdrawn.

MSMEs:

• ECLGS to be extended up to March 2023.

• Guarantee cover under ECLGS to be expanded by Rs 50000 Crore to total cover of Rs 5 Lakh Crore.

• Rs 2 lakh Crore additional credit for Micro and Small Enterprises to be facilitated under the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).

• Raising and Accelerating MSME performance (RAMP) programme with outlay of Rs 6000 Crore to be rolled out.

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