Budget 2022 : Courageous Move
In the prevailing backdrop of elections taking place in five major states viz. Uttar Pradesh, Uttarakhand, Punjab, Goa and Manipur, it was prediction of many Political –cum- Economics pandits that the Budget-2022 would be a populist one pleasing majority of the people looking forward to free soaps. Finance Minister (FM) Nirmla Sitaraman surprised so called experts presenting an investment budget on the floor of Parliament. FM has a clear vision of developing the Indian economy in the long run.
The greatest surprise came from the Economic Survey (ES) presented one day ahead of the Budget day. The ES has revealed that India has registered growth in its GDP at a rate of 9.2%. It was at all unexpected that the Indian economy will grow at this pace. No country in the world has registered this much high rate of growth during the pandemic times. Moreover, it is expected that the economy will keep on growing with such higher rate in the financial year 2022-2023 also. The projected GDP growth rate for FY 2022-2023 is 8.4%.
It is a common fashion that news channels and media create a hype about budget expectations. Electronic media keeps long discussion sessions from the budget. Relief in direct taxes is one of the common subject of discussion as well as expectation too. But FM dared to confront direct tax payers by not allowing any relief or tax rebate in direct taxes. The logical reason behind it is that the Income Tax payers are very less in number. The number of taxpayers in India is reportedly 1.46 crore, as confirmed by the Central Board of Direct Taxes in a tweet. This is a small number when you take the total population of 135 crore into perspective (just over 1% of the total population of India). This appears quite unrealistic figure but it is a fact. It shows reluctance of Indian citizen towards their tax paying responsibility. In others words, only salaried class people are paying direct taxes and that too when their income is traceable. Hence, FM was hard in not giving any relaxation in Income Tax slabs and rates.
The Budget 2022 is a great document in terms of boosting Indian economy. The budget speaks about giving great relief to the Indian companies in their tax liabilities. The Government has slashed Corporate Tax from 18% to 15%; and surcharge has been reduced from 17% to 12%. This courageous move hit the Stock Exchange indices in green color. Sensex moved up by 848 points and Nifty by 237 points on the budget day. There is a continuous positive movement on Indian stock exchanges after the budget has been tabled in the Parliament. This budget talks about bringing a new set of rules to set-up new Special Economic Zones (SEZ) for housing prospective and aspirant Multinational Corporations (MNCs) in India. The present budget is for sure an economy booster.
The Union Finance Minister has increased the defence budget to a record high of Rs. 5.25 lakh crore. This figure is about 10% higher than the previous financial year 2021-2022 expenditure. Interesting part of this budget is that 68 per cent of the capital expenditure budget for the defence sector will be reserved for domestic procurement. This condition is certainly going to enhance capital investment in defence manufacturing units in India. Ultimately, it going to be a game changer in terms of making a self-reliant country in terms of defence arms and ammunition production and distribution. India has set a long term goal of exporting defence articles to foreign countries in a systematic way.
The Union Budget 2022 speaks about implantation of National Education Policy (NEP) 2020 in many ways. Some of the education sector glimpses in the budget are (i) drone operation training by ITIs, (ii) upgrading 2 lakh Anganbadis, (iii) setting up 75 virtual universities, (iv) starting DTH services for supporting education, (v) installing TVs in every school, (vi) imparting education in regional language from standard 1 to 12, (vii) launching E-Vidya Channel for students, (viii) ensuring internet facility in each and every village of the country, and (ix) starting 5G internet service from this year only. These budget provisions shows commitment of the Government towards implementation of the NEP 2020. The Government is determined to make education available to all in physical and blended mode. This budget is surely going to make a difference in the coming days in terms of quality and accessibility of education in India. The government will spend Rs 104,278 crore in the coming fiscal on education. Previous year, the actual expenditure on education was Rs 88,002 crore.
This is budget is unprecedented in a way that this is the first time when a central Government has made provisions of Rs. 2.70 lakh crore to procure food grains from the farmers as Minimum Support Price from all across the country. A new NABARD fund is proposed to finance start-ups for agri and rural enterprises, linking of bank accounts and post office accounts, financial support to promote agro forestry. Rs 45,000 crore allocation has been done for promoting scientific organic farming in north-east states.Further, enhancing rural infrastructure and connectivity to markets will support farmers in having better access to the marketplace, enabling them to increase their opportunities and command a better price for their produce. This budget talks loud about organic farming. Digital service will be made available to the farmers. Chemical-free farming zone to be developed a corridor moving along with Ganges within a range of five kilometers from the bank of the river. Provision for setting up new agricultural universities has been done. It is undoubtedly a farmer friendly budget of all times.
The Central Government has its own concerns over the illegal transactions of Crypto Currencies in India. There was long pending demand to legalize the Crypto dealings. The FM Nirmala Sitaraman made significant Cryptocurrency related announcements – including an update on the ‘central bank digital currency’ and on VDAs (Virtual Digital Assets) as defined in the Finance Bill 2022-23. The Reserve Bank of India will release the ‘digital rupee’ or ‘central bank digital currency’, built on block-chain technology. The Budget introduced a scheme to tax VDAs including cryptocurrencies, non-fungible tokens, information/code generated through cryptographic means, and any other digital assets identified by the government. It proposed a 30% tax on income earned from the transfer of VDAs, and a 1% tax deducted at source on payments. Recipients of gifts of VDAs will also be taxed It also clarified that losses from the transfer of VDAs cannot be offset against other incomes. This move is going to help the Government more revenue from unconventional sources.
This budget is unique in a way that it has not made any provision for MNREGA for the first time after its inception in the year 2005. The Government has diverted its fund to more productive and futuristic projects i.e. connecting rivers – Rs. 65,000 crore, renewable energy – Rs. 19,500 crore, Pradhan MantriAwasYojna – Rs. 48,000, highway expansion project – Rs. 20,000 crore, JalJivan Mission – Rs. 60,000 crore, Ken-BetwaPrject – 1400 crore, infrastructure– Rs. 20,000 crore, MSME – Rs. 6,000 crore, etc. As per an estimation, this budget is going put a record Rs. 7,50,000 crore investment to generate new employment opportunities of 80,00,000 jobs.
Indeed, the Government has taken a bold step by not presenting a populist budget, instead it has gone for a bold and courageous budget. This budget talks about economic growth and development. Despite huge expenditure on free-vaccine and free-food grain support to the Indian citizen, the Government was able to maintain its fiscal deficit at only 6.9% (the proposed figure was 6.8%). Further, the Central Government has proposed to keep fiscal deficit at 6.4% in the next financial year. This budget is good piece of financial engineering by the Ministry of Finance.
By Dr. Alok Chakrawal
(The writer is Vice-Chancellor, Guru Ghasidas Vishwavidyalaya, Bilaspur, Chhattisgarh)