The Budget began as usual, almost like a tradition, with the FM telling us about the achievements made in the fiscal though this time around, poetry was sadly missing though there was a quote from the Mahabharata.
Thankfully, despite so many important states going into election, it did not have giveaways, loan waivers and sops. It stayed on course and one can even call it ‘non-populistic.’ It’s a bold and pragmatic budget.
The message sent out – the Govt was spending big time and giving a huge push to infra build and consumption. The FY23 capex budget has been hiked by over 35%, which is around 2.9% of the GDP.
The other BIG announcement – the Govt has given its go-ahead to digital currency or what we know as cryptocurrency. The FM said that RBI will introduce Digital Rupee using blockchain and other technology in FY23.
The huge mass of tax paying middle class though, which was expecting a tax relief got nothing. For majority of salary earning India, there will be thus be disappointment and all this hullabaloo about capex, growth, consumption will not be a soothing balm. The feeling that they have never been rewarded throughout the pandemic will remain.
The Budget pushed all the right buttons – growth, energy, climate change, infrastructure, agriculture, sunrise opportunities, digitization, transport, logistics, North East. The proposals in the Budget are well thought of but we just hope and pray that implementation will also be speedy.
And the Budget laid out the ambitious plan - to bring out a blueprint to steer the economy over the next 25 years from India at 75 to India at 100. This is how every developed country works – a really long-term plan and taking steps to get to that goalpost. First time ever we have seen this kind of long-term vision; we only hope that there is a proper roadmap to get there and does not remain as a mere feel-good factor.
This is also the first time that a Budget has talked about urban planning; the focus is always on rural with some tax sops given to cities. But with a 25 years vision, with majority of India becoming more urban than rural, it is good to see this intent. The FM said a high-level committee of urban planners, economists will be formed to make recommendations for urban capacity building, planning implementation and governance. Urban planning is an urgent requirement just as the rethink of SEZ and recognizing the need for quick corporate exit time under IBC.
The FM spelt out seven focus areas of the Budget:
- PM Gati Shakti
- Inclusive Development
- Productivity Enhancement
- Sunrise Opportunities
- Energy Transition
- Climate Action
- Financing of investments
Highlights of Direct Tax:
- Fiscal deficit to be 6.4% of the GDP in FY23 v/s 6.9% in FY22 – a prudent fiscal management.
- Co-op housing society (CHS) MAT reduced from 18% to 15%; reduction of surcharge to 7% for those CHS’s whose income is between Rs 1 crore and Rs 10 crore.
- Tax relief for differently abled
- Extension of tax incentives to start-ups
- Any income from transfer of virtual digital asset to be taxed at 30% - in simple language - Gift of cryptocurrencies to be taxed at receiver's end
- 1% TDS to be levied on payments made on transfer of digital assets
- Tax deduction limit increased to 14% on employers contribution to NPS account of state govt employees
- To allow taxpayers to file an updated return within 2 years from the end of the relevant assessment year.
- To cap surcharge on long term capital gains on any asset at 15%
- 15% lower tax rate for new manufacturing units extended to 2024
- National Highway network will be expanded by 25,000 kms in 2022-23
- 400 new-generation Vande Bharat trains to be developed and manufactured in next 3 years
- One station, one product' concept to help local businesses
- India plans 100 cargo terminals in 3 years
- To pay Rs.2.71 lakh crore as MSP to farmers in FY23.
- Emergency Credit Line Guarantee Scheme (ECLGS) to be extended to March 2023 and credit line extended to Rs.5 lakh crore
- Use of Kisan drones will be promoted for crop assessment, digitization of land records, spraying of insect pesticides
- Rs 60,000 crore allocation for ‘Har Ghar Jal’ Mission in FY23
- Rs 48,000 crore provided for PM Awas Yojana in FY23
- To get all Post Offices on core banking network
- In 2022-23, 80 lakh houses will be completed for identified beneficiaries of PM Awas Yojana
- To bring about necessary amendments to Insolvency and Bankruptcy Code
- A battery-swapping policy to be brought out with interoperability standards to boost EV ecosystem
- To launch PLI schemes for 5G equipments
- SEZs to be replaced via legislation
- Spectrum auction will be conducted in 2022 for the rollout of 5G mobile services
- Allocation of additional Rs 19,500 crore in the PLI scheme for the manufacturing of high-efficiency solar modules
- Contracts to be given for laying of optical fibre under BharatNet via PPP in 2022 and 2023, completion expected by 2025
- To issue sovereign bonds for funding green infrastructure
- 68% of the capital procurement budget for Defence to be earmarked for domestic industry