During the presentation of Budget 2022-23, Finance Minister Nirmala Sitharaman noted that the overall, sharp rebound and recovery of the economy in the midst of the pandemic is reflective of the country’s strong resilience. India’s economic growth in the current year is estimated to be 9.2%, the highest among all large economies.
Sitharaman said the government recognises the need to nurture growth through increased public investment, and to become stronger and sustainable. She said the government aims to attain the vision by complementing the macro-economic level growth focus with a micro-economic level all-inclusive welfare focus.
- 100% of 1.5 lakh post offices to come on the core banking system.
- Scheduled commercial banks to set up 75 Digital Banking Units (DBUs) in 75 districts.
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.
- 60 lakh new jobs to be created under the productivity linked incentive scheme in 14 sectors. PLI Schemes have the potential to create an additional production of Rs30 trillion.
- Entering Amrit Kaal, the 25 yearlong lead up to India @100, the budget provides an impetus for growth along four priorities: PM GatiShakti, inclusive development, productivity enhancement and investment, sunrise opportunities, energy transition, and climate action as well as financing of investments.
PM GatiShkati National Master Plan
Rs 200 billion to be mobilized for National Highways Network expansion by 25,000-kms in 2022-23. As many as 400 new-generation Vande Bharat trains to be manufactured during the next three years. National Ropeways Development Program, Parvatmala to be taken up on PPP mode. Contracts to be awarded in 2022-23 for 8 ropeway projects of 60 Km length.
As against a total expenditure of Rs 34.83 trillion projected in the budget estimates 2021-22, the revised estimate is Rs 37.70 trillion. The revised estimate of capital expenditure is Rs 6.03 trillion. This includes an amount of Rs 519.71 billion towards the settlement of outstanding guaranteed liabilities of Air India and its other sundry commitments.
Coming to the Budget Estimates, the total expenditure in 2022-23 is estimated at Rs 39.45 trillion, while the total receipts other than borrowings are estimated at Rs 22.84 trillion. The revised fiscal deficit in the current year is estimated at 6.9% of GDP and the fiscal deficit in 2022-23 is estimated at 6.4% of GDP, which is consistent with the broad path of fiscal consolidation announced by me last year to reach a fiscal deficit level below 4.5% by 2025-26.
- Rs 2.37 trillion direct payment to 1.63 crore farmers for procurement of wheat and paddy.
- NABARD to facilitate funds with blended capital to finance startups for agriculture and rural enterprise.
- ‘Kisan Drones’ for crop assessment, digitization of land records, spraying of insecticides and nutrients.
- ECLGS for MSMEs to be extended up to March 2023. Guarantee cover under ECLGS to be expanded by Rs 50,000 Crore to a total cover of Rs 5 trillion. Rs 2 trillion additional credit for Micro and Small Enterprises to be facilitated under the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE). Raising and Accelerating MSME performance (RAMP) programme with an outlay of Rs 6,000 Crore to be rolled out.
Housing for All
Rs 480 billion allocated for completion of 80 lakh houses in 2022-23 under PM Awas Yojana.
- An initial allocation of Rs15 billion made to enable livelihood activities for youth and women under the new scheme PM-DevINE launched to fund infrastructure and social development projects in the North-East.
Financing of investments: Public capital investment
Capital investment holds the key to speedy and sustained economic revival and consolidation through its multiplier effect. 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% from Rs5.54 trillion in the current year to Rs7.50 trillion in 2022-23. This has increased to more than 2.2 times the expenditure of 2019-20. This outlay in 2022-23 will be 2.9% of GDP.
Effective capital expenditure
With this investment taken together with the provision made for the creation of capital assets through Grants-in-Aid to States, the ‘Effective Capital Expenditure’ of the Central Government is estimated at Rs10.68 trillion in 2022-23, which will be about 4.1% of GDP.
Support to states
For urban capacity building, support will be provided to the states. Modernization of building bylaws, Town Planning Schemes (TPS), and Transit Oriented Development (TOD) will be implemented.
The ‘Scheme for Financial Assistance to States for Capital Investment’ has been extremely well received by the states. The outlay for this scheme will be enhanced from Rs 100 billion in the Budget Estimates to Rs 150 billion in the Revised Estimates for the current year.
For 2022-23, the allocation is Rs 1 trillion to assist the states in catalysing overall investments in the economy. These fifty-year interest-free loans are over and above the normal borrowings allowed to the states.
This allocation will be used for PM GatiShakti related and other productive capital investments of the states. In 2022-23, in accordance with the recommendations of the 15th Finance Commission, the states will be allowed a fiscal deficit of 4% of GSDP of which 0.5 % will be tied to power sector reforms, for which the conditions have already been communicated in 2021-22.
For developing India-specific knowledge in urban planning and design, up to five existing academic institutions in different regions will be designated as centres of excellence, with endowment funds of Rs 250 crore each.
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.
The scope of a single window portal, PARIVESH, for all green clearances will now be expanded, to provide information to the applicants. It will enable application for all approvals through a single form, and tracking of the process through Centralized Processing Centre-Green (CPC-Green).
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, except those by IFSCA to facilitate the availability of high-end human resources for financial services and technology.
An International Arbitration Centre will be set up in the GIFT City for the timely settlement of disputes under international jurisprudence.
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
Venture Capital and Private Equity invested more than Rs5 .5 trillion last year facilitating one of the largest startup and growth ecosystems. An expert committee will be set up to examine and suggest appropriate measures. Crowdsourcing of suggestions and ground-level 12 assessment of the impact with the active involvement of citizens and businesses will be encouraged.
Ease of Doing Business, Ease of Living
The next phase of Ease of Doing Business EODB 2.0 and Ease of Living, will be launched in the financial year 2022-23. “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 the active involvement of the states, digitisation of manual processes and interventions, integration of the central and state-level systems through IT bridges, single-point access for all citizen-centric services, and standardization and removal of overlapping compliances,” the FM said.
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.
By the time of India @100, nearly half the population of the country is likely to be living in urban areas. 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.
Digital skill development
Digital Ecosystem for Skilling and Livelihood (DESH-Stack e-portal) will be launched to empower citizens to skill, reskill or upskill through online training. Startups will be promoted to facilitate ‘Drone Shakti’ and for Drone-As-A-Service (DrAAS).
An open platform for National Digital Health Ecosystem to be rolled out. ‘National Tele Mental Health Programme’ for quality mental health counselling and care services to be launched.
Clean and sustainable mobility
The government will promote a shift to the use of public transport in urban areas. This will be complemented by cleantech and governance solutions, special mobility zones with zero fossil-fuel policy, and EV vehicles.
Land records management
States will be encouraged to adopt Unique Land Parcel Identification Number to facilitate IT-based management of records. The adoption or linkage with National Generic Document Registration System (NGDRS) with the ‘One-Nation One-Registration Software’ will be promoted.
Accelerated corporate exit
The 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.
The modernised rules allow the use of transparent quality criteria besides cost in the evaluation of complex tenders. Provisions have been made for payment of 75% of running bills, mandatorily within 10 days and for encouraging settlement of disputes through conciliation. As a further step 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. Businesses such as gold imports may also find this useful. IRDAI has given the framework for the issue of surety bonds by insurance companies.
AVGC promotion task force
The animation, visual effects, gaming, and comic (AVGC) sector offer 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.
Required spectrum auctions will be conducted in 2022 to facilitate the rollout of 5G mobile services within 2022- 23 by private telecom providers.
To enable affordable broadband and mobile service proliferation in rural and remote areas, 5% of annual collections under the Universal Service Obligation Fund will be allocated. 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.
The Special Economic Zones Act will be replaced with new legislation that will enable the states to become partners in ‘Development of Enterprise and Service Hubs’ and enhance the competitiveness of exports. To incentivise exports, exemptions are being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes that may be needed by bonafide exporters of handicrafts, textiles and leather garments, leather footwear and other goods. Duty is being reduced on certain inputs required for shrimp aquaculture to promote its exports.
AtmaNirbharta in defence
The FM stated that the government is committed to reducing imports and promoting AtmaNirbharta in equipment for the Armed Forces. About 68% of the capital procurement budget will be earmarked for the domestic industry in 2022-23, up from 58% in 2021-22. Defence R&D will be opened up for industry, startups and academia with 25% of the defence R&D budget earmarked. 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 the SPV model.
Artificial Intelligence, geospatial systems and drones, semiconductor and their 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.
For the ambitious goal of 280 GW of installed solar capacity by 2030, an additional allocation of Rs 195 billion for Production Linked Incentive for the manufacture of high-efficiency modules, with priority to fully integrated manufacturing units from polysilicon to solar PV modules, will be made.
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 %and the funds being managed by private fund managers.
Financial viability of infra projects
Measures will be taken to enhance the 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.
The finance minister has proposed a number of indirect taxes in the Budget:
Progress in GST
Reforms will be undertaken in customs administration of SEZs and it shall henceforth be fully IT-driven and function on the Customs National Portal with a focus on higher facilitation and with only risk-based checks. This reform shall be implemented by September 2022.
Project imports, capital goods
It Is proposed to phase out the concessional rates in capital goods and project imports gradually and apply a moderate tariff of 7.5%. Certain exemptions for advanced types of machinery that are not manufactured within the country shall continue. A few exemptions are being introduced on inputs, like specialised castings, ball screws and linear motion guides, to encourage domestic manufacturing of capital goods.
Customs duty rates are being calibrated to provide a graded rate structure to facilitate domestic manufacturing of wearable devices, hearable devices and electronic smart meters. Duty concessions are also being given to parts of the transformer of mobile phone chargers and camera lens of mobile camera module and certain other items.
Gems and jewellery
To give a boost to the gems and jewellery sector, customs duty on cut and polished diamonds and gemstones is being reduced to 5%. Simply sawn diamond would attract nil customs duty. To facilitate the export of jewellery through e-commerce, a simplified regulatory framework shall be implemented by June this year. To disincentivise the import of undervalued imitation jewellery, the customs duty on imitation jewellery is being prescribed in a manner that a duty of at least Rs 400 per kg is paid on its import.
Other measures include Rs 600 billion allocated to cover 3.8 crore households in 2022-23 under Har Ghar, and Nal se Jal.