Summary of the Budget 2022-23

WHY IN NEWS?

• Finance Minister Nirmala Sitharaman presented the Union Budget 2022-23 in Parliament on 2^nd February 2022.

INTRODUCTION

• India’s economic growth in the current year is estimated to be 9.2 per cent, highest among all large economies.
• India has entered into Amrit Kaal, the 25-year-long leadup to India at100. By achieving certain goals during the Amrit Kaal, Government aims to attain the vision such as:
  • Complementing the macro-economic level growth focus with a micro-economic level all-inclusive welfare focus
  • Promoting digital economy and fintech, technology enabled development, energy transition, and climate action
  • Relying on virtuous cycle starting from private investment with public capital investment helping to crowd-in private investment.

FOUR PRIORITIES:

1. PM GatiShakti

• PM GatiShakti is a transformative approach for economic growth and sustainable development.
• The approach is driven by seven engines, namely, Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure.
• These engines are supported by the complementary roles of Energy Transmission, IT Communication, Bulk Water & Sewerage, and Social Infrastructure.
• Finally, the approach is powered by Clean Energy and Sabka Prayas – the efforts of the Central Government, the state governments, and the private sector together – leading to huge job and entrepreneurial opportunities for all, especially the youth.
• PM GatiShakti National Master Plan:
  • The scope of PM GatiShakti National Master Plan will encompass the seven engines for economic transformation, seamless multimodal connectivity and logistics efficiency.
  • It will also include the infrastructure developed by the state governments as per the GatiShakti Master Plan.
  • The focus will be on planning, financing including through innovative ways, use of technology, and speedier implementation.
  • The projects pertaining to these 7 engines in the National Infrastructure Pipeline will be aligned with PM GatiShakti framework.
  • The touchstone of the Master Plan will be world-class modern infrastructure and logistics synergy among different modes of movement – both of people and goods – and location of projects.
  • This will help raise productivity, and accelerate economic growth and development.
• Road Transport:
  • 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.
  • 20,000 crore will be mobilized through innovative ways of financing to complement the public resources.
• Seamless Multimodal Movement of Goods and People
  • The data exchange among all mode operators will be brought on Unified Logistics Interface Platform (ULIP), designed for Application Programming Interface (API).
  • This will provide for efficient movement of goods through different modes, reducing logistics cost and time, assisting just-in-time inventory management, and in eliminating tedious documentation.
  • Most importantly, this will provide real time information to all stakeholders, and improve international competitiveness.
  • Open-source mobility stack, for organizing seamless travel of passengers will also be facilitated.
• Multimodal Logistics Parks
  • Contracts for implementation of Multimodal Logistics Parks at four locations through PPP mode will be awarded in 2022-23.
• Railways
  • Railways will develop new products and efficient logistics services for small farmers and Small and Medium Enterprises, besides taking the lead in integration of Postal and Railways networks to provide seamless solutions for movement of parcels.
  • ‘One Station-One Product’ concept will be popularized to help local businesses & supply chains.
  • As a part of Atmanirbhar Bharat, 2,000 km of network will be brought under Kavach, the indigenous world-class technology for safety and capacity augmentation in 2022-23.
  • Four hundred new-generation Vande Bharat Trains with better energy efficiency and passenger riding experience will be developed and manufactured during the next three years.
  • One hundred PM GatiShakti Cargo Terminals for multimodal logistics facilities will be developed during the next three years. 
• Mass Urban Transport including Connectivity to Railways:
  • Innovative ways of financing and faster implementation will be encouraged for building metro systems of appropriate type at scale.
  • Multimodal connectivity between mass urban transport and railway stations will be facilitated on priority.
  • Design of metro systems, including civil structures, will be re-oriented and standardized for Indian conditions and needs.
• Parvatmala: National Ropeways Development Programme
  • As a preferred ecologically sustainable alternative to conventional roads in difficult hilly areas, National Ropeways Development Programme will be taken up on PPP mode.
  • The aim is to improve connectivity and convenience for commuters, besides promoting tourism.
  • This may also cover congested urban areas, where conventional mass transit system is not feasible.
  • Contracts for 8 ropeway projects for a length of 60 km will be awarded in 2022-23.
• Capacity Building for Infrastructure Projects
  • With technical support from the Capacity Building Commission, central ministries, state governments, and their infra-agencies will have their skills upgraded.
  • This will ramp up capacity in planning, design, financing (including innovative ways), and implementation management of the PM GatiShakti infrastructure projects.

2. Inclusive Development 

• Agriculture
  • Direct payment of MSP:
    • The procurement of wheat and paddy in 2021-22 will cover 163 lakh farmers, and 2.37 lakh crore direct payment of MSP value to their accounts.
  • Chemical-free Natural Farming:
    • Chemical-free Natural Farming will be promoted throughout the country, with a focus on farmers’ lands in 5-km wide corridors along river Ganga, at the first stage.
  • Promotion of millets:
    • 2023 has been announced as the International Year of Millets. Support will be provided for post-harvest value addition, enhancing domestic consumption, and for branding millet products nationally and internationally.
  • Scheme for oil seeds:
    • To reduce our dependence on import of oilseeds, a rationalised and comprehensive scheme to increase domestic production of oilseeds will be implemented.
  • Digital and hi-tech services to farmers
    • For delivery of digital and hi-tech services to farmers with involvement of public sector research and extension institutions along with private agri-tech players and stakeholders of agri-value chain, a scheme in PPP mode will be launched.
  • Kisan drones
    • Use of ‘Kisan Drones’ will be promoted for crop assessment, digitization of land records, spraying of insecticides, and nutrients.
  • Revise syllabi of agricultural universities
    • States will be encouraged to revise syllabi of agricultural universities to meet the needs of natural, zero-budget and organic farming, modern-day agriculture, value addition and management.
  • Financing startups for agriculture
    • A fund with blended capital, raised under the co-investment model, will be facilitated through NABARD. This is to finance startups for agriculture & rural enterprise, relevant for farm produce value chain. The activities for these startups will include, inter alia, support for FPOs, machinery for farmers on rental basis at farm level, and technology including IT-based support.  
• Ken Betwa project and Other River Linking Projects
  • Implementation of the Ken-Betwa Link Project will be taken up. This is aimed at providing irrigation benefits to farmers’ lands, drinking water supply, generation of Hydro and solar power.
• Food Processing
  • For farmers to adopt suitable varieties of fruits and vegetables, and to use appropriate production and harvesting techniques, our government will provide a comprehensive package with participation of state governments.
• MSME:
  • Udyam, e-Shram, NCS and ASEEM portals will be interlinked. Their scope will be widened. They will now perform as portals with live, organic databases, providing G2C, B2C and B2B services.
  • These services will relate to credit facilitation, skilling, and recruitment with an aim to further formalise the economy and enhance entrepreneurial opportunities for all.
  • Emergency Credit Line Guarantee Scheme (ECLGS) has provided much-needed additional credit to more than 130 lakh MSMEs. This has helped them mitigate the adverse impact of the pandemic.
  • Raising and Accelerating MSME Performance (RAMP) programme. This will help the MSME sector become more resilient, competitive and efficient.
• Skill Development:
  • Skilling programmes and partnership with the industry will be reoriented to promote continuous skilling avenues, sustainability, and employability.
  • The National Skill Qualification Framework (NSQF) will be aligned with dynamic industry needs.
  • Digital Ecosystem for Skilling and Livelihood (DESH-Stack eportal)
    • This will be launched to empower citizens to skill, reskill or upskill through on-line training.
    • It will also provide API-based trusted skill credentials, payment and discovery layers to find relevant jobs and entrepreneurial opportunities.
  • ‘Drone Shakti’:
    • Startups will be promoted to facilitate ‘Drone Shakti’ through varied applications and for Drone-As-A-Service (DrAAS).
    • In select ITIs, in all states, the required courses for skilling, will be started.
• Universalization of Quality Education
  • ‘One class-one TV channel’ programme
    • Due to the pandemic-induced closure of schools, our children, particularly in the rural areas, and those from Scheduled Castes and Scheduled Tribes, and other weaker sections, have lost almost 2 years of formal education. Mostly, these are children in government schools.
    • We recognise the need to impart supplementary teaching and to build a resilient mechanism for education delivery.
    • For this purpose, ‘one class-one TV channel’ programme of PM eVIDYA will be expanded from 12 to 200 TV channels.
    • This will enable all states to provide supplementary education in regional languages for classes 1-12.
  • Vocational education:
    • In vocational courses, to promote crucial critical thinking skills, to give space for creativity, 750 virtual labs in science and mathematics, and 75 skilling e-labs for simulated learning environment, will be set-up in 2022-23.
    • High-quality e-content in all spoken languages will be developed for delivery via internet, mobile phones, TV and radio through Digital Teachers.
    • A competitive mechanism for development of quality e-content by the teachers will be set-up to empower and equip them with digital tools of teaching and facilitate better learning outcomes.
• Digital University
  • 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.
  • This will be made available in different Indian languages and ICT formats.
  • The University will be built on a networked hub-spoke model, with the hub building cutting edge ICT expertise.
  • The best public universities and institutions in the country will collaborate as a network of hub-spokes.
• Ayushman Bharat Digital Mission
  • An open platform, for the National Digital Health Ecosystem will be rolled out.
  • It will consist of digital registries of health providers and health facilities, unique health identity, consent framework, and universal access to health facilities. 
• National Tele Mental Health Programme
  • The pandemic has accentuated mental health problems in people of all ages.
  • To better the access to quality mental health counselling and care services, a ‘National Tele Mental Health Programme’ will be launched.
  • This will include a network of 23 tele-mental health centres of excellence, with NIMHANS being the nodal centre and International Institute of Information Technology-Bangalore (IIITB) providing technology support.  
• Mission Shakti, Mission Vatsalya, Saksham Anganwadi & Poshan 2.0
  • Recognizing the importance of Nari Shakti as the harbinger of our bright future and for women-led development during the Amrit Kaal, the government has comprehensively revamped the schemes of the Ministry of Women & Child Development.
  • Accordingly, three schemes, namely, Mission Shakti, Mission Vatsalya, Saksham Anganwadi and Poshan 2.0 were  launched recently to provide integrated benefits to women and children.
  • Saksham Anganwadis are a new generation anganwadis that have better infrastructure and audio-visual aids, powered by clean energy and providing improved environment for early child development.  Two lakh anganwadis will be upgraded under the Scheme.
• Har Ghar, Nal Se Jal
  • 8.7 crores of households will be provided with tap water.
• Housing for All
  • In 2022-23 >> 80 lakh houses will be completed for the identified eligible beneficiaries of PM Awas Yojana, both rural and urban.
  • The Central Government will work with the state governments for reduction of time required for all land and construction related approvals, for promoting affordable housing for middle class and Economically Weaker Sections in urban areas.
  • We shall also work with the financial sector regulators to expand access to capital along with reduction in cost of intermediation.
• Prime Minister’s Development Initiative for North East Region (PMDevINE):
  • A new scheme, Prime Minister’s Development Initiative for NorthEast, PM-DevINE, will be implemented through the North-Eastern Council.
  • It will fund infrastructure, in the spirit of PM GatiShakti, and social development projects based on felt needs of the North-East.
  • This will enable livelihood activities for youth and women, filling the gaps in various sectors.
• Aspirational Blocks Programme
  • It aims to improve the quality of life of citizens in the most backward districts of the country
  • 95 per cent of those 112 districts have made significant progress in key sectors such as health, nutrition, financial inclusion and basic infrastructure.
• Vibrant Villages Programme
  • Border villages with sparse population, limited connectivity and infrastructure often get left out from the development gains. Such villages on the northern border will be covered under the new Vibrant Villages Programme.
  • The activities will include construction of village infrastructure, housing, tourist centres, road connectivity, provisioning of decentralized renewable energy, direct to home access for Doordarshan and educational channels, and support for livelihood generation.
• Anytime – Anywhere Post Office Savings
  • 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  net banking, mobile banking, ATMs, and also provide online transfer of funds between post office accounts and bank accounts.
  • This will be helpful, especially for farmers and senior citizens in rural areas, enabling interoperability and financial inclusion. 
• Digital Banking:
  • In recent years, digital banking, digital payments and fintech innovations have grown at a rapid pace in the country.
  • To mark 75 years of our independence, it is proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks. 
• Digital Payments:
  • The financial support for digital payment ecosystem announced in the previous Budget will continue in 2022-23.
  • This will encourage further adoption of digital payments. There will also be a focus to promote use of payment platforms that are economical and user friendly.

3. Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, and Climate Action

• Ease of Doing Business 2.0 & Ease of Living
  • In recent years, over 25,000 compliances were reduced and 1486 Union laws were repealed.
  • This is the result of our government’s strong commitment for ‘minimum government & maximum governance’, our trust in the public, and ease of doing business (EODB).
  • For the Amrit Kaal, the next phase of Ease of Doing Business EODB 2.0 and Ease of Living, will be launched.
  • In our endeavour to improve productive efficiency of capital and human resources, we will follow the idea of ‘trust-based governance’.
  • This 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.
  • Crowdsourcing of suggestions and ground level assessment of the impact with active involvement of citizens and businesses will be encouraged. 
• Green Clearances
  • A single window portal, PARIVESH, for all green clearances was launched in 2018.
  • It has been instrumental in reducing the time required for approvals significantly.
  • The scope of this portal will now be expanded, to provide information to the applicants. Based on location of units, information about specific approvals will be provided. It will enable application for all four approvals through a single form, and tracking of the process through Centralized Processing Centre-Green (CPC-Green).
• e-Passport
  • 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. 
• Urban Development
  • By the time of India @ 100, nearly half our population is likely to be living in urban areas.
  • To prepare for this, orderly urban development is of critical importance. This will help realize the country’s economic potential, including livelihood opportunities for the demographic dividend.
  • For this, on the one hand we need to nurture the megacities and their hinterlands to become current centres of economic growth. On the other hand, we need to facilitate tier 2 and 3 cities to take on the mantle in the future. This would require us to reimagine our cities into centres of sustainable living with opportunities for all, including women and youth.
  • For this to happen, urban planning cannot continue with a business-as-usual approach. We plan to steer a paradigm change.
  • A high-level committee of reputed urban planners, urban economists and institutions will be formed to make recommendations on urban sector policies, capacity building, planning, implementation and governance.
  • Urban Planning Support to States
    • For urban capacity building, support will be provided to the states.
    • Modernization of building byelaws, Town Planning Schemes (TPS), and Transit Oriented Development (TOD) will be implemented. This will facilitate reforms for people to live and work closer to mass transit systems.
    • For developing India specific knowledge in urban planning and design, and to deliver certified training in these areas, up to five existing academic institutions in different regions will be designated as centres of excellence. In addition, AICTE will take the lead to improve syllabi, quality and access of urban planning courses in other institutions.
  • Clean and Sustainable Mobility
    • We will promote a shift to use of public transport in urban areas.
    • This will be complemented by clean tech and governance solutions, special mobility zones with zero fossil-fuel policy, and EV vehicles.
  • Battery Swapping Policy
    • Considering the constraint of space in urban areas for setting up charging stations at scale, a battery swapping policy will be brought out and inter-operability standards will be formulated.
    • The private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service’. This will improve efficiency in the EV ecosystem. 
• Land Records Management
  • Efficient use of land resources is a strong imperative. States will be encouraged to adopt Unique Land Parcel Identification Number to facilitate IT-based management of records.
  • The facility for transliteration of land records across any of the Schedule VIII languages will also be rolled out.
  • 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. 
• Insolvency and Bankruptcy Code
  • Necessary amendments in the Code will be carried out to enhance the efficacy of the resolution process and facilitate cross border insolvency resolution.
• Accelerated Corporate Exit
  • Centre for Processing Accelerated Corporate Exit (C-PACE) with process re-engineering, will be established to facilitate and speed up the voluntary winding-up of these companies from the currently required 2 years to less than 6 months.     
• Government Procurement
  • To enhance transparency and to reduce delays in payments, a completely paperless, end-to-end online e-Bill System will be launched for use by all central ministries for their procurements.
  • The system will enable the suppliers and contractors to submit online their digitally signed bills and claims and track their status from anywhere.
  • To reduce indirect cost for suppliers and work-contractors, the use of surety bonds as a substitute for bank guarantee will be made acceptable in government procurements.
• AVGC Promotion Task Force
  • The animation, visual effects, gaming, and comic (AVGC) sector offers immense potential to employ youth.
  • An AVGC promotion task force with all stakeholders will be set-up to recommend ways to realize this and build domestic capacity for serving our markets and the global demand. 
• Telecom Sector
  • Telecommunication in general, and 5G technology in particular, can enable growth and offer job opportunities.
  • Required 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. 
  • To enable affordable broadband and mobile service proliferation in rural and remote areas, five per cent of annual collections under the Universal Service Obligation Fund will be allocated. This will promote R&D and commercialization of technologies and solutions.
  • The contracts for laying optical fibre in all villages, including remote areas, will be awarded under the Bharatnet project through PPP in 2022-23. Completion is expected in 2025.
  • Measures will be taken to enable better and more efficient use of the optical fibre.   
• Export Promotion
  • The Special Economic Zones Act will be replaced with a new legislation that will enable the states to become partners in ‘Development of Enterprise and Service Hubs’.
  • This will cover all large existing and new industrial enclaves to optimally utilise available infrastructure and enhance competitiveness of exports.
• AtmaNirbharta in Defence
  • Our Government is 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.
  • Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organizations through SPV model.
  • An independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements. 
• Sunrise Opportunities
  • Artificial Intelligence, Geospatial Systems and Drones, Semiconductor and its eco-system, Space Economy, Genomics and Pharmaceuticals, Green Energy, and Clean Mobility Systems have immense potential to assist sustainable development at scale and modernize the country.
  • They provide employment opportunities for youth, and make Indian industry more efficient and competitive.  
  • Supportive policies, light-touch regulations, facilitative actions to build domestic capacities, and promotion of research & development will guide the government’s approach. For R&D in these sunrise opportunities, in addition to efforts of collaboration among academia, industry and public institutions, government contribution will be provided.
• Energy Transition and Climate Action
  • The risks of climate change are the strongest negative externalities that affect India and other countries.
  • The low carbon development strategy as enunciated in the ‘panchamrit’ that Prime Minister announced in COP26 summit in Glasgow is an important reflection of our government’s strong commitment towards sustainable development.
  • This budget proposes several near-term and long-term actions accordingly.
• Solar Power
  • Facilitate domestic manufacturing of solar PV modules.
• Circular Economy
  • The action plans for ten sectors such as electronic waste, end-of-life vehicles, used oil waste, and toxic & hazardous industrial waste are ready.
  • The focus now will be on addressing important cross cutting issues of infrastructure, reverse logistics, technology upgradation and integration with informal sector.
  • This will be supported by active public policies covering regulations, extended producers’ responsibilities framework and innovation facilitation.
• Transition to Carbon Neutral Economy
  • Use of biomass pellets in thermal power plant:
    • Five to seven per cent biomass pellets will be co-fired in thermal power plants resulting in CO2 savings of 38 MMT annually.
    • This will also provide extra income to farmers and job opportunities to locals and help avoid stubble burning in agriculture fields.
  • Energy savings
    • Energy Service Company (ESCO) business model.
      • It will facilitate capacity building and awareness for energy audits, performance contracts, and common measurement & verification protocol.
  • Clean coal:
    • Four pilot projects for coal gasification and conversion of coal into chemicals required for the industry will be set-up to evolve technical and financial viability.
  • Agro-forestry:
    • The policies and required legislative changes to promote agro forestry and private forestry will be brought in. In addition, financial support will be provided to farmers belonging to Scheduled Castes and Scheduled Tribes, who want to take up agro-forestry.

4. Financing of Investments

• Public Capital Investment
  • Capital investment holds the key to speedy and sustained economic revival and consolidation through its multiplier effect.
  • Capital investment also helps in creating employment opportunities, inducing enhanced demand for manufactured inputs from large industries and MSMEs, services from professionals, and help farmers through better agri-infrastructure.
  • The economy has shown strong resilience to come out of the effects of the pandemic with high growth. However, we need to sustain that level to make up for the setback of 2020-21.
  • The virtuous cycle of investment requires public investment to crowd-in private investment.  At this stage, private investments seem to require that support to rise to their potential and to the needs of the economy.
  • Public investment must continue to take the lead and pump-prime the private investment and demand in 2022-23.
  • Considering the above imperative, the outlay for capital expenditure in the Union Budget is once again being stepped up sharply by 35.4 per cent from 5.54 lakh crore in the current year to 7.50 lakh crore in 2022-23.
• Effective Capital Expenditure
  • With this investment taken together with the provision made for creation of capital assets through Grants-in-Aid to States, the ‘Effective Capital Expenditure’ of the Central Government is estimated at 10.68 lakh crore in  2022-23, which will be about 4.1 per cent of GDP.  
• Green Bonds
  • 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
  • The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.  
• GIFT-IFSC
  • World-class foreign universities and institutions will be allowed in the GIFT City to offer courses in Financial Management, FinTech, Science, Technology, Engineering and Mathematics free from domestic regulations.
  • An International Arbitration Centre will be set up in the GIFT City for timely settlement of disputes under international jurisprudence
  • Services for global capital for sustainable & climate finance in the country will be facilitated in the GIFT City.
• Infrastructure Status
  • Data Centres and Energy Storage Systems including dense charging infrastructure and grid-scale battery systems will be included in the harmonized list of infrastructure. This will facilitate credit availability for digital infrastructure and clean energy storage.
• Venture Capital and Private Equity Investment
  • Scaling up Venture Capital and Private Equity investment requires a holistic examination of regulatory and other frictions. An expert committee will be set up to examine and suggest appropriate measures.  
• Blended Finance
  • Government backed Funds NIIF and SIDBI Fund of Funds have provided scale capital creating a multiplier effect.
  • For encouraging important sunrise sectors such as Climate Action, Deep-Tech, Digital Economy, Pharma and Agri-Tech, the government will promote thematic funds for blended finance with the government share being limited to 20 per cent and the funds being managed by private fund managers.  
• Financial Viability of Infrastructure Projects
  • For financing the infrastructure needs, the stepping-up of public investment will need to be complemented by private capital at a significant scale.
  • Measures will be taken to enhance financial viability of projects including PPP, with technical and knowledge assistance from multi-lateral agencies.
  • Enhancing financial viability shall also be obtained by adopting global best practices, innovative ways of financing, and balanced risk allocation.
• Digital Rupee
  • Introduction of Central Bank Digital Currency (CBDC) will give a big boost to digital economy.
  • Digital currency will also lead to a more efficient and cheaper currency management system. It is, therefore, proposed to introduce Digital Rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23. 
• Financial Assistance to States for Capital Investment
  • Outlay of ‘Scheme for Financial Assistance to States for Capital Investment’ is enhanced.
  • In 2022-23, in accordance with the recommendations of the 15th Finance Commission, the states will be allowed a fiscal deficit of 4 per cent of GSDP of which 0.5 per cent will be tied to power sector reforms, for which the conditions have already been communicated in 2021-22.   
• Fiscal Management
  • The Fiscal Deficit in 2022-23 is estimated at 6.4 per cent of GDP.
  • It is consistent with the broad path of fiscal consolidation announced by the government last year to reach a fiscal deficit level below 4.5 per cent by 2025-26.

TAXATION

• Direct Taxation:
  • Introducing new ‘Updated return’:
    • Presently, if the tax department finds out that some income has been missed out by the assessee, it goes through a lengthy process of adjudication.
    • Instead, with new system >> there will be a trust reposed in the taxpayers that will enable the assessee herself to declare the income that she may have missed out earlier while filing her return
  • Reduced Alternate minimum tax rate and Surcharge for Cooperatives
    • Currently, cooperative societies are required to pay Alternate Minimum Tax at the rate of eighteen and one half per cent. However, companies pay the same at the rate of fifteen per cent. To provide a level playing field between co-operative societies and companies, Budget propose to reduce this rate for the cooperative societies also to fifteen per cent.
    • Budget also propose to reduce the surcharge on co-operative societies from present 12 per cent to 7 per cent
  • Incentives for Start-ups:
    • Start-ups are provided with a tax incentive for three consecutive years out of ten years from incorporation.
  • Incentives for newly incorporated manufacturing entities under concessional tax regime
    • A concessional tax regime of 15 per cent tax for newly incorporated domestic manufacturing companies.
  • Scheme for taxation of virtual digital assets
    • There has been a phenomenal increase in transactions in virtual digital assets.
    • Any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent.
  • Deterrence against tax-evasion: 
    • In order to bring certainty and to increase deterrence among tax evaders, Budget propose to provide that no set off, of any loss shall be allowed against undisclosed income detected during search and survey operations.
• Indirect taxes
  • Remarkable progress in GST: 
    • GST has been a landmark reform of Independent India showcasing the spirit of Cooperative Federalism.
    • GST revenues are buoyant despite the pandemic.
  • Project imports and capital goods
    • National Capital Goods Policy, 2016 aims at doubling the production of capital goods by 2025.
    • This would create employment opportunities and result in increased economic activity.
    • However, several duty exemptions, even extending to over three decades in some cases, have been granted to capital goods for various sectors like power, fertilizer, textiles, leather, footwear, food processing and fertilizers.
    • These exemptions have hindered the growth of the domestic capital goods sector.
    • Accordingly, Budget is proposed to phase out the concessional rates in capital goods and project imports gradually and apply a moderate tariff of 7.5 per cent.
  • Tariff measure to encourage blending of fuel
    • To encourage the efforts for blending of fuel, unblended fuel shall attract an additional differential excise duty of 2 per litre from October 2022.

PRACTICE QUESTION:

Q. One of the intended objectives of Union Budget 2022-23 is to ‘promote digital economy and fintech, technology enabled development, energy transition, and climate action’. Analyse the measures proposed in the Budget 2022-23 to achieve the objective?