Finance Minister, Nirmala Sitharaman’s Union Budget 2022 is a “thoughtful” policy strategy for India, with a strong emphasis on innovation in research and development, human capital investment, and digitalization, according to IMF managing director, Kristalina Georgieva. In this article, we will share with you most important
On 1st February 2022, Finance Minister Nirmala Sitharaman released a Rs 39.45 lakh crore budget, with increased expenditure on highways and affordable housing to increase up the economy’s key engine to have a speedy recovery from the losses that happened during the pandemic.
She emphasised infrastructure spending in the budget to create jobs and stimulate economic activity.
The budget for the fiscal year starting April 2022 proposed a massive 35 percent increase in capital expenditure to Rs 75 lakh crore, as well as customs duty rationalisation, an extension of time for establishing new manufacturing companies, and plans to launch a digital currency and tax crypto assets.
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Union Budget 2022 Highlights
Expenditure: In 2022-23, the government plans to spend Rs 39,44,909 crore, increasing 4.6 percent from the revised projection for 2021-22. Total spending in 2021-22 is expected to be 8.2% more than projected in the budget.
Receipts: In 2022-23, receipts (other than borrowings) are estimated to reach Rs 22,83,713 crore, increasing 4.8 percent from the revised projection for 2021-22. Total receipts (excluding borrowings) are expected to be 10.2 percent higher in 2021-22 than projected in the budget.
GDP: In 2022-23, the government forecasts a nominal GDP growth rate of 11.1 percent (i.e., real growth plus inflation).
Deficits: Revenue deficits are expected to be 3.8 percent of GDP in 2022-23, lower than the revised forecast of 4.7 percent in 2021-22. The fiscal deficit for 2022-23 is expected to be 6.4 percent of GDP, decreasing from 6.9 percent of GDP in 2021-22. (Marginally higher than the budget estimate of 6.8 percent of GDP). Interest payments are expected to account for 43 percent of revenue revenues, or Rs 9,40,651 crore.
Extra Budgetary Resources (EBR): The budget has not relied on EBR or loans from the National Small Savings Fund for several years.
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Highlights of Policy
Legislative proposals: The Special Economic Zones Act of 2005 will be replaced with a new law that will allow states to collaborate on the “Development of Enterprise and Service Hubs,” which would cover all present and future industrial enclaves. Agro-forestry and private forestry will be promoted through legislative amendments. The Insolvency and Bankruptcy Code will be amended to make cross-border insolvency resolution easier.
Fiscal Management: In 2021-22, Rs 51,971 crore has been allocated to settle Air India’s liabilities.
MSMEs: The Emergency Credit Line Guarantee Scheme (ECLGS) will be extended until March 2023, with the guarantee cover being increased by Rs 50,000 crore, bringing the total insurance to Rs 5 lakh crore. The Financing Guarantee Trust for Micro and Small Enterprises would be restructured to allow for an additional two lakh crore rupees in credit.
River linking: The Ken-Betwa Link Project is expected to cost Rs 44,605 crore to complete. There are five other river-linking projects in the pipeline.
Health and Nutrition: The Ayushman Bharat Digital Mission would develop an open platform for the National Digital Health Ecosystem. A National Tele Mental Health Program will be launched to deliver quality mental health counselling and care services to the public.
Labour and Employment: The Stack e-portal for the Digital Ecosystem for Skilling and Livelihood (DESH) will be launched. The platform will aid residents in learning new skills, obtaining certificates, and finding relevant jobs.
Infrastructure: Projects in the National Infrastructure Pipeline linked to transportation and logistics infrastructure will be integrated with the PM GatiShakti framework, which was introduced last year. The North-Eastern Council will implement the Prime Minister’s Development Initiative for the North-East (PM-DevINE) to fund development initiatives in the region. In addition, states will receive one lakh crore rupees in the form of 50-year interest-free loans to help accelerate investment.
Roadways: In 2022-23, the expressway master plan given by PM GatiShakti will be worked upon and the network of National Highways will be expanded by 25,000 kilometres in 2022-23.
Railways: To assist local enterprises and supply chains, the one-station-one-product idea will be used. During the following three years, 400 new Vande Bharat trains will be built and manufactured. In addition, over the following three years, 100 container terminals for multimodal logistics facilities will be built.
Telecom: Spectrum auctions will be held in 2022-23 to help with the rollout of 5G mobile services. As part of the Production Linked Incentive (PLI) Scheme, a scheme for design-led manufacturing will be established in order to create a 5G ecosystem.
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Highlights of Receipts for 2022-23
Receipts (excluding borrowings) are expected to reach Rs 22,83,713 crore in 2022-23, increasing 4.8 percent from revised estimates for 2021-22.
The revised forecasts for 2021-22 project a 9.6% rise in gross tax income, which is lower than the projected nominal GDP growth of 11.1 percent in 2022-23. The main reason for this is a 15% reduction in excise duties. Other taxes are expected to rise at a faster rate than nominal GDP in the future. In 2022-23, the central government’s net tax income (excluding the states’ share of taxes) is expected to be Rs 19,34,771 crore.
In 2022-23, the devolution of tax revenue from the centre to states is expected to be Rs 8,16,649 crore. Devolution to states increased by Rs 79,222 crore in 2021-22, from a projected estimate of Rs 6,65,563 crore to Rs 7,44,785 crore at the revised stage.
In 2022-23, non-tax revenue is estimated to be Rs 2,69,651 crore. This is a reduction of 14.1% from the revised projection for 2021-22.
Capital receipts (net of borrowings) are expected to fall by 20.7 percent in 2021-22, compared to updated forecasts. This is due to disinvestments, which are estimated to be Rs 65,000 crore in 2022-23, down from Rs 78,000 crore in the revised 2021-22 forecasts.
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Highlights of 2022-23 Expenditure
Total expenditure of the year 2022-23 is estimated to be Rs 39,44,909 crore, a 4.6 percent increase above the revised estimate for 2021-22. Out of this, (i) Rs 11,81,084 crore would be spent on central sector schemes (a 1.2 percent fall from the revised estimate for 2021-22), and (ii) Rs 4,42,781 crore will be spent on government-sponsored projects (a 6.6 percent increase over the revised estimate of 2021-22).
In 2022-23, the government expects to spend Rs 2,07,132 crore on pensions, increased by 4.1 percent from the revised projection for 2021-22. In addition, interest payments are expected to cost Rs 9,40,651 crore in 2022-23, accounting for 23.8 percent of the government’s total spending.
This was the article which described the whole Union Budget 2022 in detail.
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