The Union Budget 2022 was announced on 1st February 2022, in the wake of upcoming elections in 5 states- Uttar Pradesh, Goa, Punjab, Uttarakhand and Manipur. It was expected to be a populist budget, along with a boost to education, EV industry and renewable energy.
However, not all of these expectations were met in the budget. Here are the key highlights for the Union Budget 2022
- Transportation and Logistics, under PM GatiShakti
> The National Highways network to be expanded by 25,000 kms, with an outlay of Rs 20,000 crores.
> Implementation of Multimodal Logistics Parks at four locations through public-private partnership mode.
> Four hundred Vande Bharat Trains to be developed and manufactured in next three years.
> Procurement of wheat and paddy in 2021-22 to the tune of 1208 lakh metric tonne, which will provide MSP to 163 lakh farmers, to the amount of Rs 2.37 lakh crore.
> A comprehensive scheme to increase the production of oilseeds, to reduce import dependence.
> A fund with blended capital through NABARD, to finance start-ups for agriculture and rural enterprise.
> Emergency Credit Line Guarantee Scheme extended to March 2023, with guarantee cover expanded by Rs 50,000 crores, earmarked exclusively for hospitality and related enterprises.
> Credit Guarantee Trust for Micro and Small Enterprises scheme to provide additional credit of Rs 2 lakh crores.
> 750 virtual labs in science and maths, and 75 skilling e-labs for simulated learning to be set up in 2022-23.
> A digital university to be established, which will provide education in multiple languages and ICT format.
> Launch of National Digital Health Ecosystem, an open platform, consisting of digital registries oh health providers and facilities.
> Launch of National Tele Mental Health Programme, to provide mental health counselling and care services.
> Auction of 5G spectrum to be conducted in 2022 to facilitate rollout of 5G mobile services within 2022- 23 by private telecom providers.
> Five percent of annual collection under Universal Service Obligation to be allocated to enable affordable broadband and mobile service in rural and remote areas.
- Sustainable growth
> Allocation of Rs 19,500 crores for Production Linked Incentive for achieving the target of 280 GW of installed solar capacity by 2030.
> Five to seven percent biomass pellets to be co-fired in thermal power plants to reduce CO2 emissions and avoid stubble burning.
- Banking and Capital
> The outlay for capital expenditure increased from Rs 5.54 lakh crores to 7.50 lakh crores in 2022-23. This will be 2.9% of the GDP.
> Sovereign Green Bonds to be issued for mobilizing resources for green projects. The proceeds will be utilised in projects to reduce carbon intensity of the economy.
> Issue of digital currency using blockchain technology by RBI, starting from 2022-23.
> Enhancing outlay of ‘Scheme for Financial Assistance to States for Capital Investment’ from Rs 10,000 crores to Rs 15,000 crores.
> Ken- Betwa link project, with an estimated layout of Rs 44,605 crores, which will provide irrigation benefits, supply of drinking water and Hydro and solar power.
> Promotion of use of Drone-As-A-Service, through varied applications of drones by startups.
> Allocation of Rs 48,000 crores for construction of 80 lakh houses under the PM Awas Yojna.
> Issuance of e-Passports using embedded chips to be rolled out in 2022-23.
> Revised fiscal deficit of 2021-22 is estimated at 6.9% of the GDP, and of 2022-23 is estimated at 6.4% of the GDP.
- Direct Tax
> Enabling filing of updated return upon payment of additional tax. The time limit for the same would be 2 years from the end of relevant assessment year.
> Reduction of AMT for cooperative societies to 15%. Reduction in surcharge for income between 1cr to 10cr to 7%.
> Timeline for establishing eligible startup for tax holidays extended up to 31/03/2023.
> Timeline for establishing eligible manufacturing units for concessional tax rate extended up to 31/03/2024.
> Taxation of Virtual digital assets at a flat rate of 30%, with cost of acquisition as the only allowable deduction. Further, 1% TDS is to be imposed on such transaction. Also, loss on such assets cannot be set off against any income.
> Surcharge on AOPs and LTCG on transfer of any asset capped at 15%.
- Indirect Tax
> Implementation of fully IT driven Customs Administration of SEZs by 30th Sep 2022.
> Proposal to phase out the concessional rates in capital goods and project imports and apply a tarrif of 7.5%.
This market cheered the budget as the Sensex ended 848 points higher at 58,863 points and Nifty ended 237 points higher at 17,577 points.
However, the middle class of the country would have found the budget not living up to the expectations as a highly anticipated increase in the limits of 80C, 80D, and housing loan interest was not provided. There was no decrease in tax for the salaried individuals as the incentives mostly favoured the businesses. The finance minister also apologised to the middle class for not providing them with any break but said that not increasing the tax was a relief itself.