Union Budget 2022-23: Key highlights of Union Budget

Hello Dear Aspirants

Union Budget 2022-23: Union Finance Minister, Nirmala Sitharaman is presenting the Union Budget 2022 for the 4th time in a row. She will be presenting the financial statements and tax proposals for the fiscal year 2022-23 (April 2022 to March 2023). A Made in India tablet has replaced the traditional ‘Bahi Khata’ as Union Finance Minister Nirmala Sitharaman leaves the Finance Ministry’s office to go to the Parliament to present the Budget.

The Economic Survey 2021-22 was released on 31st January 2022 by the Chief Economic Advisor of India,  V Anantha Nageswaran. The government sees the Indian economy growing at 8-8.5 percent in the financial year 2022-23 (FY23).

Budget and Constitutional Provisions

• The Union Budget is the yearly financial report estimating the income and expenditure presented to outline future policies to be adopted by the government for sustainable growth and development.
• According to Article 112 of the Indian Constitution, the Union Budget of a year is referred to as the Annual Financial Statement (AFS). 
• It is a statement of the estimated receipts and expenditure of the Government in a Financial Year (which begins on 1^st April of the current year and ends on 31^st March of the following year).
• The Budget Division of the Department of Economic Affairs in the Ministry of Finance is the nodal body responsible for preparing the Budget.
• The first Budget of Independent India was presented in 1947.

Here are the key highlights from the Union Budget 2022-23:

Budget In Short 

DEFICIT/EXPENDITURE

• Proposes fiscal deficit of 4.5% of GDP by 2025/26
• Projects fiscal deficit of 6.4% of GDP in 2022/23
• Revised fiscal deficit for 2021/22 at 6.9% of GDP
• Total expenditure in 2022/23 seen at 39.45 trillion rupees
• States will be allowed 4% fiscal deficit to GDP in FY23
• 50 year interest free loans over and above normal borrowing allocated to states
  Scheme for financial assistance to states for capital investment outlay to be 1 trillion rupees in 2022/23

TAXATION

• Import duty on certain chemicals are being reduced
• Customs duty exemption on steel scrap to be extended for another year for small- and medium-sized businesses
• Customs duty on stainless steel, flat products, high steel bars to be revoked Unblended fuel to get additional duty of 2 rupees per litre from October 2022

FINANCE

• Emergency credit line guarantee scheme for small and medium sized businesses to be extended to March 2023
• Energy transition and climate action will be a major government priority
• Public issue of Life Insurance Corporation expected shortly
• Initiatives from last year’s budget have been provided adequate allocations in this budget
• Special Economic Zones Act to be replaced with new legislation
• To amend bankruptcy code to speed up resolution process
• Aims to lower winding up of companies to 6 months from 2 years currently
  Long term capital gain surcharge to be capped at 15%

DIGITAL CURRENCY

• To launch digital rupee using blockchain technology starting 2022/23
• To launch scheme for taxation of virtual digital assets
• Losses from sale of virtual digital assets cannot be offset against other income
• Income from virtual digital assets to be taxed at 30%

DEFENCE

• Govt committed to reducing defence imports

INFRASTRUCTURE

• 5G spectrum auctions to be conducted in 2022
• Scheme for design-led manufacturing for 5G will be part of production-linked scheme
  To award contracts to lay optical fibre in rural areas, completion in 2025
• 480 billion rupees set aside for affordable housing in 2022/23
• To allocate additional 195 billion rupees for production-linked incentives towards solar equipment manufacturing

AGRICULTURE

• Domestic scheme introduced to reduce dependence on oilseed imports
• Fund with blended capital raised under co-investment model to finance agriculture startups
• Railways to develop infrastructure for small farmers in 2022/23

TRANSPORT

• 400 energy efficient trains to be manufactured over next three years
• National highways network to be expanded by 25,000km in 2022/23
• Highways expansion to cost 200 billion rupees in 2022/23
• India to bring out battery swapping policy

Phasing out duty exemptions

• More than 350 exemptions on some agri products, chemicals, drugs, etc to be phased out
• Concessional customs duty on capital goods to be phased out, initial rate of 7.5% to be imposed

Biggest announcements for taxpayers

• Taxpayers can file an updated return on payment of taxes within two years from the end of relevant assessment year.
• The new provision will ensure voluntary tax filing and reduce litigation, says FM
• 30% tax on proceeds of virtual/digital assets with no deductions other than cost of acquisition
• No set off permitted against other income
• 1% TDS to be levied on payments made on transfer of digital assets
• Deduction for employer contribution to NPS increased to 14% from 10% earlier for State govt employees on par with central govt employees

 Budget 2022 in Details 

Focus areas of Budget

• PM Gati Shakti
• Inclusive Development
• Productivity Enhancement
• Sunrise Opportunities
• Energy Transition
• Climate Action
• Financing of investments

Important Point

• FM Nirmala Sitharaman’s 4th Budget speech begins
• GDP growth in 2021-23 expected to be 9.2%, says Nirmala Sitharaman
• PLI in 14 sectors for aatmanirbhar bharat to create 6 million jobs
• Budget seeks to set tone for the ‘Amrit kaal’ of the next 25 years
• Farm procurement value for FY23 to be Rs 2.37 trillion
• HKen-Betwa river link project to be taken at cost of Rs 44,000 cr to benefit 900,000 farmers
• Rs 2 trillion outay for MSMEs
• 38 mn households to get piped water
• 75 digital banking systems in 75 districts by scheduled commercial banks
• Contracts for implementation of multimodal logistics parks at 4 locations to be awarded in 2022-23 in PPP Mode
• IIIT-B to provide support to healthcare infrastructurem
• Divestment target for FY23 seen at Rs 65,000 crore.

2000 km of network to be brought under KAVACH, says Sitharaman

• 2000 km of network to be brought under KAVACH
• 400 new-gen Vande Bharat trains to be built over the next three years
• Gati Shakti master plan for expressways to be made this financial year
• 100 new cargo terminals to be built over the next three years

ECLGS to be extended upto March 2023, guaranteed cover extended by another Rs 50,000 crore.

• Total cover under scheme now Rs 5 lakh crore.
• Additional amount has been earmarked for hospitality sector.

For India’s farmers

• Chemical-free natural farming to be promoted in India
• Use of Kisan drones will be promoted for crop assessment, digitization of land records, spraying of insect pesticides
• Rs 2.37 lakh crore worth of MSP direct payments to wheat and paddy farmers

Seven engines of PM Gati Shakti

• Roads
• Railways
• Airports
• Ports
• Mass transport
• Waterways
• Logistics infra

FM’s Digital push

• ‘Digital ecosystem for skilling and livelihood will be launched.
• This will aims to skill, reskill, upskill citizens through online training. API based skill credentials, payment layers to find relevant jobs and opportunities
• An open platform for the national digital health ecosystem will be rolled out.

For small enterprises

• MSMEs such as Udyam, e-shram, NCS & Aseem portals will be inter-linked, their scope will be widened.
• They will now perform as portals with live organic databases providing G-C, B-C & B-B services such as credit facilitation, enhancing entrepreneurial opportunities.
• A fund with blended capital raised under co-investment model facilitated through NABARD to finance startups in agriculture & rural enterprises for farm produce value chain

Financial inclusion

• 100% 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 inter operability, and financial inclusion.

For the education sector

• States will be encouraged to revise syllabi of agricultural universities to meet needs of natural, zero-budget & organic farming, modern-day agriculture
• One class, one TV channel’ program 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 to 12.

Rs 48, 000 crore is allotted for PM Awas Yojana

• In 2022-23, 80 lakh houses will be completed for identified beneficiaries of PM Awas Yojana; 60,000 houses will be identified as beneficiaries for PM Awas Yojana in rural & urban areas.
• 60,000 crore allocated for providing access to tap water to 3.8 crore households
• In 2022-23, 80 lakh households will be identified for the affordable housing scheme

Rs 1,500 crore allocated for development of the Northeast in FY23

•  Rs 48,000 crore allocated to housing projects under PM Housing Scheme for FY23
•  Rs 1,500 crore allocated for development of the Northeast in FY23
• Desh stack e-portal to be launched to promote digital infra

Rs 60,000 crore allocated for tapwater supply to 38 million households

• Rs 60,000 crore allocated for tapwater supply to 38 million households
•  India aims to focus on all-inclusive growth
•  Indian economic recovery benefitting with a multiplier effect

200,000 Anganwadis to be upgraded for improving child health

• 200,000 Anganwadis to be upgraded for improving child health
• Natural farming will be promoted along Ganga river corridor
• Recognising the importance of ‘Nari Shakti’, 3 schemes were launched to provide integrated development for women and children

A self reliant defence sector

• Defense R&D will be opened up for industry, startups and academia with 25% of defense R&D budget.
• Private industry will be encouraged to take up the design and development of military platforms and equipment in collaboration with DRDO and other organizations through SPV model.
• 68% of capital procurement budget in defence will be earmarked for domestic industry in 2022-23

One class, one TV channel’ program of PM eVIDYA will be expanded from 12 to 200 TV channels

• States to be urged to revise syllabi of agricultural universities to meet needs of natural, zero-budget & organic farming, modern-day agriculture
• One class, one TV channel’ program 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 to 12

India to launch sovereign green bonds

• Funds will be used for projects that will help reduce carbon intensity of the economy.
• Sovereign green bonds will be part of government’s borrowing programme in FY23.
• Proceeds to be deployed in public sector projects.

Capital expenditure is being stepped up to Rs 7.5 lakh crore.

• FY23 capex seen at 2.9% of GDP
• FY23 effective capex seen at Rs 10.7 lakh crore

Fiscal Deficit target set at 6.4% for FY23

• FY23 total expenditure seen at Rs 39.45 lakh crore.
• Total Receipts other than borrowing seen at Rs 22.84 lakh crore.
• Revised Fiscal Deficit 6.9% of GDP in FY22 as against 6.8% in Budget estimates

Tax breather for co-ops

• Alternate minimum tax for cooperative societies down from 18.5% to 15%.
• Proposal will reduce surcharge on cooperative societies to 7%, for those whose income is between Rs 1 crore and Rs 10 crore.

Biggest announcements for taxpayers

• Taxpayers can file an updated return on payment of taxes within two years from the end of relevant assessment year.
• The new provision will ensure voluntary tax filing and reduce litigation, says FM
  30% tax on proceeds of virtual/digital assets with no deductions other than cost of acquisition
• No set off permitted against other income
• 1% TDS to be levied on payments made on transfer of digital assets
• Deduction for employer contribution to NPS increased to 14% from 10% earlier for State govt employees on par with central govt employees

Chemical free farming to boost exports, as per experts

• The promotion of chemical-free natural farming in India will likely help exports in the coming time, said experts.
• “Chemical free natural farming is a big announcement for exports as well as health of the nation,” said Rajat Wahi, partner, Deloitte India

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Some History and Facts about Budget

Here are some interesting points of budget:

The Budget was first introduced in India on April 7, 1860. The first budget was introduced by Scottish economist and politician James Wilson who is from the East India Company delivered it to the British Crown.

Independent India’s first budget was presented on November 26, 1947, by the then Finance Minister RK Shanmukham Chetty.

Sitharaman bears the record for presenting the longest speech when she spoke for 2 hours and 42 minutes while presenting the Union Budget 2020-21 on February 1, 2020.

MOST WORDS IN BUDGET SPEECH:

Manmohan Singh delivered the longest Budget speech in terms of words in 1991 at 18,650 words under the Narasimha Rao government.

SHORTEST BUDGET SPEECH:

Only 800 words budget was introduced by then finance minister Hirubhai Mulljibhai Patel in 1977.

MOST NUMBER OF BUDGETS:

Former Prime Minister Moraraji Desai bears the record of presenting the most number of budgets in the history of the country. He had introduced 10 budgets during his stint as finance minister during 1962-69, followed by P Chidambaram (9), Pranab Mukherjee (8), Yashwant Sinha (8) and Manmohan Singh (6).

TIME of presentation:

The Union Budget was introduced at 5 pm on the last working day of February as per British-era practice but former Finance Minister Yashwant Sinha in 1999 had changed the budget presentation timing to 11 am.

Arun Jaitley started presenting the Union Budget on February 1 in 2017, departing from the colonial-era tradition of using the last working day of that month.

LANGUAGE:

The Union Budget was presented in English until 1955. However, the Congress-led government later decided to print the Budget papers in both Hindi and English.

PAPERLESS:

Covid-19 pandemic has inspired the Budget for 2021-22 paperless which was a first in Independent India.

FIRST WOMAN:

In 2019, Sitharaman became the second woman who has introduced the budget after Indira Gandhi, who had presented the budget for the financial year 1970-71.

That year, Sitharaman had changed the tradition of ‘budget briefcase’ into the traditional ‘bahi-khata’ with the National Emblem to contain the speech and other documents.

RAILWAY BUDGET:

The railway budget and Union Budget was presented separately till 2017. After being presented separately for 92 years, the railway budget was merged into the Union Budget in 2017 and introduced together.

Once-in-a-Century Budget:

The previous year’s budget which was presented by Nirmala Sitharaman on February 1, 2021, was considered as a ‘once-in-a-century budget’ as it looked to accelerate Asia’s third-largest economy via investing in infrastructure and healthcare while depending on an aggressive privatization strategy and robust tax collections.

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Question & Answer:

Q1. For which financial year Nirmala Sitharaman is going to present Budget 2022?

Ans. 2022-2023

Q2. Which numbered budget will be presented by Nirmala Sitharaman this year?

Ans. Fourth

Q3. In which year and by whom the first budget of Independent India was presented?

Ans. On 26^th November 1947 by then FM RK Shanmukham Chetty

Q4.In which year Railway budget was merged into the Union budget?

Ans. 2017

Q5. Who recorded the number of times to present the Union Budget till date?

Ans. Moraraji Desai (10 budgets have been presented by him)