Union Budget 2022-23

The Union Budget was presented by Finance Minister Hon. Nirmala Sitharaman on February 1, 2022. To begin, it was a paperless budget presented on a tablet made in India.

The Union Budget for 2022-23 will lay the groundwork for India's economic growth and expansion over the next 25 years.

Second, it was a budget that placed a greater emphasis on capital expenditure. We can see the increasing importance of capital expenditure in the recent few years. Let’s see what the government has planned for the upcoming financial year.

We have split the budget into 5 major heads. Let us see the allocation and proposals for each of the segment:

Government Expenditure:

• The Central Government’s Capital Expenditure is estimated to be 10.68 lakh crore in 2022-23, or about 4.1 percent of GDP, when Grants-in-Aid to States for capital asset creation are factored in.
• The total expenditure in 2022/23 is estimated to be 39.45 trillion rupees which is much higher than the previous year budgeted expenditure
• The national highway network will be expanded by 25,000 kilometres in 2022/23, at a cost of ₹200 billion
• ₹5.25 Lakh Crore Allocated for Defence Budget, 9.7% Rise Than Last Year

Deficits:

• India’s fiscal deficit in the current year will rise to 6.9% and the estimated target is to cut it down to 6.4% in the next financial year. Many disinvestments from PSU have been initiated in order to raise funds and targets for the same are usually unrealistic.
• However, the budgeted receipts from the disinvestments are set to an achievable target of Rs. 78,000 crore in the current fiscal year. This budget seeks to steer the economy from the slump induced by the pandemic, as it lays the foundation of growth in the coming 25 years. The total receipts realized during the current year stand at about ₹22.84 lakh crore while the expenditures amounted to ₹39.45 lakh crore.
• In the next financial year, the CAPEX spending is to be increased to Rs. 7.5 lakh crore from ₹5.54 lakh crore i.e., about 35% increase. This is to accelerate the nascent economy’s recovery. The central government’s total capital expenditure is expected to be ₹10.86 lakh crore in 2022-23.

Ministry Allocation:

• The budget for the Ministry of Rural Development has risen by 3.36 % to ₹135,944 crore. The budgetary allocation for the rural employment guarantee scheme is at ₹73,000 crore.
• The NREGA Sangharsh Morcha sought a budget allocation of Rs 3.62 lakh crore, the largest ever.
• The Union Budget for 2022-23 allotted ₹5020.50 crore to the Ministry of Minority Affairs.
• A total of ₹491 crores have been set aside for skill development and livelihood projects.
• The Union Budget 2022-23 has allocated ₹16,893 crore to the Ministry of Labour and Employment.
• The MSME sector has been allocated ₹21,422 crores for this year FY 22-23.

Agriculture:

• Kisan Drones for crop assessment, land records and spraying of insecticides would be promoted.
• Direct payments for minimum support price (MSP) to wheat and paddy farmers totalling ₹2.37 lakh crore.
• ₹44,000 crore to be spent on project connecting the Ken-Betwa rivers.

Digital Assets:

• The Reserve Bank of India will launch a central bank digital currency in 2022-23, according to Union Finance Minister Nirmala Sitharaman. This is the first formal declaration from the Union government on the much-anticipated digital currency.
• TDS @1% for transactions over and above a certain limit will be charged on crypto assets. Also, gifts in the form of crypto will be taxable in the hands of the recipient. Digital assets like cryptocurrencies will now be charged tax at a flat rate of 30% and no deductions except for the cost of acquisition shall be allowed. Also, there will no set off against any other income in case of losses.
• In order to encourage investments in capital assets it has been decided that the surcharge on LTCG (Long Term Capital Gain) will be limited to 15%.

Experts had conflicting feelings about this budget. There were high compliments for "Gati Shakti" and other capital expenditures, but there was a disconnect between middle-class expectations and budget estimations. The administration has focused more on the economic growth storey, and now that the economy has recovered, a bold budget with capital expenditure has become more of a need, which has been largely met.

Thank you.

Regards,

Ashwin R.,

Kautilya,

IBS Mumbai.