Greeting the Union Budget 2022 as “progressive” and “people friendly”, Indian Prime Minister Narendra Modi on Tuesday stated that the Budget brings with it the latest strength and energy to the development trajectory of India, primarily at the time when this country is fighting with the pandemic. He said,
The Prime Minister stated that the youth of this nation see this Union Budget 2022 as one that will provide wings to their dreams, and further added that the emphasis on advanced technologies in all aspects is noteworthy and will offer the advantage to a cross section of our citizens. The Union Budget 2022 date was scheduled on 01.02.2022.
Addressing a press conference after the proposition of the Union Budget, Nirmala Sitharaman, the Finance Minister of India stated a conscious decision was made on not to raise taxes as various people have been facing hardships because of the prevailing pandemic. Sithraman, while offering the Union Budget 2022, stated that the nation is expected to evolve at 9.27% in the upcoming year. With the emphasis on the four pillars of development that include productivity enhancement, development, climatic condition, and energy transition. This latest budget offers an economic blueprint of India at 75 to India at 100.
As per the budget, the estimated capital expenditure of the central government is at INR 10.68 lakh crore in 2022-23, making up nearly 4.1% of the total GDP (Gross Domestic Product). The collection of gross GST for January 2022 is Rs 1,40,986 crore which is the highest since the inception of tax in 2017 as per Sitharaman. This is the total budget of India 2022.
Union Budget 2022: The Green Bonds
In the speech of the Union Budget 2022 and 2023, the Finance Minister, Nirmala Sitharam declared that the government will be issuing green bonds that will mobilize resources for green infrastructure.
What Is Green Bond And Why Do We Need It?
Projects are sponsored through two sources that are bonds and equity. In green finance, equity has always played a constraint role as the number of firms in green business has always been very small. But green bonds have been famous with both investors and issuers. The issuer prefers green bonds as it is a clean way to increase funds for a particular project, and the investors like this because there is a fixed return and clarity in design.
Climate change has evolved as an important concern for the policymakers. The relationship between financial markets and climate change operates in both directions asymmetrically. On the one hand, climate change affects financial markets unfavorably as climate shocks can result in losses on financial institutions and banks. On the contrary, financial markets can highlight climate change favorably by creating financial items to lower the risks.
What Has Become Cheaper And Expensive As Per The Latest Union Budget For 2022-23?
A huge sector of commonly used items that includes headphones, loudspeakers, smart meters, earphones, and many more will be more expensive because of the hike in customs duties on imported items as stated by the Finance Minister.
The items in this list will see a hike in their price:
- Unblended petrol and diesel
- Imitation Jewelry
- Single/Multiple Loudspeakers
- Earphones & Headphones
- Smart Meters
- Solar Cells
- Solar Modules
- X-Ray Machines
- Parts of Electronic Toys
The items in this list will see a decrease in their price:
- Frozen mussels
- Frozen squids
- Cocoa beans
- Methyl alcohol
- Acetic acid
- Cut and polished diamonds
- Chemicals needed for petroleum products
- Camera lens for cellular mobile phones
- Steel scrap
Union Budget 2022: Equities
The Budget day action scarcely proves to be this effective. The Nifty 50 index jumped 1.4% even after giving up all of its profits a little after Nirmala Sitharaman, the Finance Minister, completed her shortest speech ever.
The profits were the third-best for a Budget day in the last 10 years as investors cheered in the idea that the government will take up the wrap of boosting capital creation in the economy for another year provided that private sector CAPEX still stays comatose.
Outlay on capital expenditure jumped more than 35% to Rs 7.5 lakh crore and compared to the revised prediction for the present financial year it increased by 24.5%. These are numbers that surplus even the optimists on the Street provided that consensus hoped for a 20% growth in public CAPEX.
Union Budget 2022 On Farmers Income, MSME
The Union Budget 2022 that has been proposed for the financial year 2022-23, offered by Finance Minister Nirmala Sitharaman on February 1, will result in the doubling of the income of the farmers and will offer the advantage to the medium, micro, and small enterprises (MSMEs), as stated by the Prime Minister Narendra Modi. The fiscal road map revealed by Sitharaman will benefit all sectors of the economy, “with a special focus on agriculture”, Modi claimed.
The declaration of “over Rs 2.25 lakh crore MSP (minimum support price)” is focused at helping the farmers as the amount is “being directly transferred” to them, he stated. This “Union Budget 2022 will double farmers’ income,” a news agency further quoted him as stating. Prime Minister Narendra Modi said,
Budget 2022: Builders To Welcome Rs 48,000 Crore PMAY
The developers of real estate on February 1 greeted the decision of the government to allocate Rs 48,000 crore in Budget under the PMAY (Pradhan Mantri Awas Yojana) and quicker approvals for feasible housing in urban plots but grieved that no added tax deduction was permitted on interest paid on home loans. According to CREDAI President Harshvardhan Patodia,
He also greeted the focus of the government on urban planning, mainly in tier II and III cities.
Boman Irani – President, CREDAI-MCHI, stated that there has been an initiation of a revolutionary reform that is one land and one registration system, which is of advantage for the real estate ecosystem. He further added that,
Union Budget 2022: Lack Of Private Capex That Resulted In Spending Push In Budget
Hurdles posed by the several waves of the prevailing pandemic have resulted in a situation where the private capital expenditure is left to pick up in a big way, and the government has admitted this fact while issuing higher spending in the budget, as stated by the bankers on Tuesday.
The more than 35% increase in public capex for FY23 that has been proposed in the Union Budget 2022 with thrust on the hard framework will also lead to a rise in the sagging domestic demand, as stated by the industry lobby Indian Banks’ Association’s chairman and state-owned lender UCO Bank’s chief executive AK Goel.
Listing out other starting proposals in the Budget of Finance Minister Nirmala Sitharaman, Goel claimed when the development is broad-based, the banking sector will have more ways to lend.
Budget 2022 On The Health Care Sector
The proposed expenditure of the government on public and medical health in the upcoming fiscal is going to witness a drastic decrease of over 45 percent from the revised Budget estimate for 2021-22, the original print of the Union Budget 2022 document portrays. The Center aims to spend Rs 41,011 crore on public and medical health in 2022-23, while this expenditure was Rs 74,820 in the present financial year. The sharp decrease in the head is because of the lower need for COVID vaccination, the document illustrates. Union Finance Minister Nirmala Sitharaman has also promised Rs 5,000 crore as support to all the states for COVID vaccination in 2022, which is Rs 33,000 crore lesser compared to the Union Budget 2021-22 allocation. The government, according to the revised Union Budget 2022 predicts, had committed Rs 39,000 crore for COVID-19 vaccination this year.
Cryptocurrency Gets A Backdoor Entry In This Country
On 01.02.2022, while declaring the Union Budget 2022, Nirmala Sithraman, the Union Finance Minister declared something that was completely unexpected. Sithraman stated that income from digital assets’ will be taxed at 30 percent and 1% Tax Deducted at Source (TDS) will be taxed on these investments. The government illustrates virtual assets as any tool, developed via cryptographic form offering a digital portrayal. In easy words, it includes all privately owned digital currencies. This is the most shocking Union Budget 2022 income tax regulation that has been released in this year’s budget.
True, that the 30% taxation is a harsh tax, a punitive levy that could discourage many who are dealing in such assets. But, for a sector which was fearing a nationwide ban at one point, permitting it to exist even with a huge tax rate is a blessing. The biggest takeaway from this Union Budget 2022 statement is not the taxation rate but the fact that crypto assets have finally received recognition in India. By identifying crypto as a taxable asset, the Indian Government has acknowledged its presence along with other digital assets. The legality of the crypto asset is still a debate. But logically how can any government levy tax on something that is illegal? Secondly, by doing so, the government has also not taken into consideration the repeated public warnings that have been issued by the RBI on crypto assets.
The Bottom Line
The Union Budget 2022 arrives at a time when the employment rate of this country has decreased. Flattering growth and historic unemployment not only worsened inequalities of wealth and income but also resulted in an increase in the absolute number of poor citizens of India which is an embarrassing reversal in poverty alleviation. The Economic Survey that was tabled just one day before Sitharam announced the Union Budget for 2022-23, focused on the requirement for the government to offer a buffer against stress like the uncertainty in the global space, the cycle of the withdrawal of liquidity by big central banks, and many more.
For the consumers, the Union Budget 2022 cut off all the import duty on polished and cut diamonds and gemstones to 5% which was previously 7.5%. Along with that, the duty on swan diamonds was brought nil. This is a good thing for the purchasers of these items. And for the taxpayers, they will be provided 3 years from the end of the relevant fiscal year to update their tax return and also pay added tax if there is any. Also, there will be extensions as well if they cannot pay their tax as per the deadline. Also, payment that is received from employer or other sources for the purpose of Covid treatment will not be taxable.