Introduction
2022 — the year NITI Aayog, the public policy think tank of India, projected as the year numerous strategies would culminate to achieve the United Nations Sustainable Development Goals (SDGs). The strategies for a “New India @75” included several promises of provisions of housing, water, and electricity, with an aim to accelerate economic growth among many other facilities for the citizens of India.
That year is finally here.
Not only did the novel coronavirus and its subsequent variants throw a wrench in these plans, but it also severely ravaged the country’s economic growth. As India proceeds into the 75th year of its independence, a well-refined Union Budget would be extremely crucial to pick itself up and set the stage for the growth of our country in all its aspects. The budget would aim to navigate through concerns including global inflation, global supply chain issues, income inequality, the immense scope for improvement in private investment, as well as the risks from future waves of the pandemic. [1]
On 1st February, 2022, the Finance Minister of India, Nirmala Sitharaman presented the Union Budget 2022 proposing to spend ₹39.44 lakh crores, an increase of 4.6% from the Union Budget 2021. While the budget raised concerns over a lack of change to the current income tax structure, it received positive reviews over its emphasis on human resource development.
Highlights of the Union Budget 2022
The budget essentially sets the stage for an ‘Amrit Kaal,’ steering the country’s economy into promised prosperity over the next 25 years. With measures tailored to incentivize private investments, the Budget lays out the government’s roadmap to ‘India@100’ with a focus on PM Gati Shakti, inclusive of development, productivity enhancement, and investment financing while recognizing infrastructural development as an important cornerstone. [2]
Infrastructure:
Focus on infrastructural development under the PM Gati Shakti National Master Plan to encompass the seven engines — roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure for economic transformation, seamless multimodal connectivity, and logistics efficiency.
As a part of the ‘Atmanirbhar Bharat’ ideal, 2,000 km of the rail network will be brought under ‘Kavach,’ an indigenous world-class technology for safety and capacity augmentation in 2022-23.
The National Highways network will be expanded by 25,000 km in 2022-23.
Expressways will be expanded to allow for speedier movement of people and products.
400 new-generation ‘Vande Bharat Trains’ with better energy efficiency and passenger riding experience and 100 PM Gati Shakti Cargo Terminals for multimodal logistics facilities. [3]
MGNREGA:
MGNREGA, or the Mahatma Gandhi National Rural Employment Guarantee Scheme, the biggest scheme for rural employment, saw a budget cut by nearly 25% as compared to last year, going down from ₹98,000 crore to ₹73,000 crore.
The budget for food subsidies was decreased to ₹2,07,000 crore from ₹2,90,000 crore this year, witnessing a cut of 27%.
Fertilizer subsidy has been cut by nearly 25%, down to ₹1,05,200 crore.
Agriculture:
Allocation for the agriculture ministry saw a marginal increase from Budget 2021-22 estimates of ₹1,23,000 crore to ₹1,24,000 crore in 2022-23. The use of drone-based technology will be promoted to simplify the digitization of land records and spraying of insecticides and nutrients.
The Rashtriya Krishi Vikas Yojana has been restructured to include schemes to supplement the Green Revolution program.
Food and nutritional security allocation came down to ₹1,395 crore from ₹1,540 crore in 2021-22.
₹2.37 lakh crore was announced towards direct payments for minimum support price (MSP) for wheat and paddy farmers.
Education:
This year, ₹1,04,000 crore has been allocated to the education sector, as compared to last year’s ₹93,000 crore.
The establishment of a Digital University is now in the works.
The One Class, a one-TV-channel scheme, will be expanded from 12 to 200 channels to ensure impartation of minimum education to citizens all over the country.
Public health and welfare:
The budget allocated to the health sector increased from ₹86,000 crore to ₹86,200 crore.
Money spent on medical and public health saw a budget cut of nearly 45%. It came down to ₹41,000 crore from ₹74,000 crore down, the reasoning for this cut being a lower requirement of vaccination expenditure.
Proposal of the National Tele-Mental Health program is expected to improve and normalize the existence of mental health and its therapy. The goal of this program is to establish 23 tele-mental health facilities to help citizens with their mental health issues.
The sports budget saw a massive jump in this year’s Union Budget, with an increase to ₹3062 crore from ₹305 crore.
Tax:
With the exponential growth in digital asset transactions, it has been proposed to tax income from Virtual Digital Assets (VDAs) at a fixed rate of 30%, with no additional deductions allowed with the exception of the cost of acquiring such assets. These assets include cryptocurrency and NFTs, among others.
The surcharge on all Long Term Capital Gains (LTCGs) will be restricted at 15% to address the existing inconsistency of LTCGs between listed equity shares, units, and other LCTGs. Venture capitalists and entrepreneurs are likely to benefit from this change.
Tax relief to differently-abled persons is now available during the lifetime of parent(s) or guardian(s) as opposed to the prior laws that restricted availability to only post the guardian’s demise.
Introduction of a new section to enable taxpayers to file updated tax returns. [4]
Economy and Finance:
The top focus was PM Gati Shakti, productivity improvement, climate action, and financing of investments.
Capital expenditure target expanded by 35.4%; now at ₹75,000 crore.
Customs duty concessions and exemptions on items such as steel, consumer electronic devices, and certain chemicals to promote domestic manufacturing and production.
The Digital Rupee will be rolled out by 2023 using blockchain technology, as proposed by the Reserve Bank of India (RBI).
Green Bonds, intended to encourage sustainability and support climate-related projects, will be issued as part of the government’s overall market borrowings to fund green projects.
Miscellaneous takeaways:
Introduction of e-Passports to facilitate and augment smoother travel processes.
5G spectrum auctioning will begin to enable the roll-out of mobile services within 2022-23 by private telecom providers.
The defense budget was increased to ₹5,25,000 crore, an increase of nearly 9.8% from last year’s allocation of ₹4,78,000 crore.
Conclusion
The Budget flags concerns on many fronts, mainly with the absence of an effort to address the issues of high inflation, especially at a time when soaring prices and widespread rural unemployment are wreaking havoc on India’s consumer appetite. The Budget fails to bring forth paramount commitments to improving middle-class economic conditions, with a complete absence of any form of concessions or changes to the income tax slab. Additionally, extreme reductions in allocations towards the MGNREGA scheme have made people apprehensive of the government’s priorities, especially considering the fact that the number of unemployed people in India rose by nearly 2.5% since 2019 with the onset of the CoVID-19 pandemic. [5]
It all boils down to the degree to which the government can implement all the schemes and strategies that have been proposed in this Budget. The Budget’s overall setup is encouraging, and if the government can walk the talk in terms of spending quality over the next couple of years, this could prove to be the very push our country needs towards the resuscitation of continuous economic growth.
Keeping these concerns in mind, one must note that there is also a strong pivot towards climate change and clean energy transitions, mental health development, and sports, as well as additional allocations towards technological advancements.
Budget 2022 re-emphasizes a virtuous investment cycle which is likely to create urban employment opportunities and steadily propel economic growth.
Article by:
Yash Mutnalkar,
Co-editor, For the Record,
PES MUN Society, RR Campus
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