What makes the Union Budget 2022-23 a Growth Driven one?

The Union Budget 2022-23 increased its push on growth orientation, bringing up new opportunities while building on the confidence and optimism expressed in the economic survey. Recognizing that the economy’s recovery reflects the country’s resilience, this budget is planned around 4 strategic thrust areas:

1.) PM Gatishakti
2.) Inclusive development
3.) Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition & Climate Action
4.) Investment financing

The budget also announced Amrit Kaal, a 25-year economic growth roadmap that will enable India’s growth to move from 75 to 100 years. Amrit Kaal has a long-term outlook to

(a) focus on growth and all-inclusive welfare
(b) promote technology-enabled development, energy transition and climate action
(c) virtuous cycle starting from private investment, crowded in by public capital investment

Let’s first understand what are the ‘pillars’ and why they are crucial for India’s growth.

Gatishakti

PM Gati Shakti – National Master Plan for Multi-modal Connectivity, a digital platform that brings together 16 ministries, including Railways and Roadways, for integrated planning and coordinated implementation of infrastructure connectivity projects. People, goods, and services will be able to move seamlessly from one mode of transportation to another thanks to multi-modal connectivity. It will improve infrastructure connectivity at the last mile and reduce people’s commuting time.

Inclusive development

Empowerment in terms of access to improved quality of core public goods and merit goods, housing, early-years education, interventions to combat malnutrition, road infrastructure, ID systems, and labour market protections such as employment rights, minimum wages, and union recognition in social, political, and economic processes for increased human well-being, social and environmental sustainability.

Productivity Enhancement and Investment, Sunrise Opportunities, Energy Transition and Climate action

Now, let’s take a look at what makes this a Growth Driven Budget

• States are allowed a fiscal deficit of up to 4% of GSDP in 2022-23.
• Rs. 1 trillion in financial assistance to states to catalyse investments.
• Proposal to introduce Digital Rupee by RBI using blockchain technology
• Data centre and energy storage system to be given infrastructure status, to provide easy financing.
• International arbitration centre to be set up in GIFT city to provide faster dispute resolution.
• A world-class university to be allowed in GIFT IFSC, free from domestic regulation.
• Cryptocurrency income and transfer to be taxed at 30%
• Surcharge charge on LTCG to be capped at 15%
• Sovereign green bonds to be issued to mobilise resources as part of government’s borrowing programme.
• Effective capital expenditure will be Rs 10.68 lakh crore (4.1%) of GDP in FY23 while the total expenditure works out to Rs.39.45 trillion during the fiscal.
• The 5G spectrum auctions are slated to take place during FY23. The laying of optical fibre in rural areas to establish internet connectivity will be implemented by using private-public partnership (PPP) model and will be executed to complete by 2025.
• 400 energy-efficient Vande Bharat trains will be manufactured to add to the inventory of railways.
• Rs.48,000 crores allotted under Pradhan Mantri Awas Yojana (PMAY) scheme to build 80 lakh houses in 2022-23 and focus on infrastructure development in the North East.
• Added allocation of Rs.19500 crores for productivity linked incentives (PLI) for manufacturing in 13 sectors including high efficiency solar modules that is expected to open up 60 lakh new job opportunities while speeding up the revival of the economy.
• Emergency Credit Line Guarantee Scheme (ECLGS) increased from Rs.4.5 trillion to Rs.5 trillion with a focus on hospitality and related enterprises and the scheme will be open until it is used up or March 31, 2023.
• All post offices to be equipped with core banking system (CBS) for better interoperability and for providing bank-like services.

What about taxation?

• Taxpayers can now file an updated return within 2 years from the relevant assessment year.
• Income tax relief to cooperative societies with reduction in rate of surcharge from 12% to 7% for income upto Rs.10 crores.
• Income from virtual digital assets brought under tax net. Gaines taxable at 30% without any deduction except cost of acquisition.
• Income from Long Term Capital Gains will be taxed at 15%.

Now, answering the most awaited question…

This union budget is in line with the expectations of the New India we all dream of. If the objectives of this budget are met, the economy can bounce back onto a strong footing to achieve a $5 trillion economy within the timelines of 2025.