What are the key takeaways from Budget 2022?

While tabling her fourth Budget, Nirmala Sitharaman said that it will lay the foundation for the next 25 year's economic growth. Let us examine what this Budget has in store for the country

Budget 2022 saw a sharp increase in capital expenditure and the government committing enhanced support for the hospitality sector and related services. There was also an announcement that a digital rupee, using Blockchain, would be issued by the RBI soon. Among other things, the government also rejigged the customs duty structure. 

The share of the Budget allocated to capital expenditure is the highest in 19 years.

Budget 2022 has allocated 7.5 trillion rupees to capital expenditure. This is 35.4 per cent higher than the previous year’s allocation of 5.5 trillion rupees. It amounts to 19.02 per cent of the Budget’s total expenditure of 39.45 trillion rupees. The last time that the capital expenditure share touched a similar figure was when it came in at 19.32 per cent for the financial year 2004-05.

U R Bhat, co-founder and director at Alphaniti Fintech, has said that the thrust of Budget 2022 has been on infrastructure modernisation, adding that this will have a multiplier effect as far as job creation and economic growth are concerned.

He emphasised that the government has refrained from doling out any kind of loan ahead of the Assembly elections in some states. The budget, he said, focuses on the next few years and not the elections.

There was also some clarity from the government on its stance on digital currencies. The Finance Minister said that a digital rupee, using Blockchain technology, would be issued by the Reserve Bank of India starting 2022-23.

Meanwhile, the Finance Minister has proposed that any income from transfer of any virtual digital asset shall be taxed at the rate of 30%.

Further, in order to capture the transaction details, it was also proposed to provide for tax deducted at source on payment made in relation to transfer of digital assets at of 1% of such consideration above a monetary threshold.

The government has extended the Emergency Credit Line Guarantee Scheme (ECLGS) by one year to March 2023, and allowed the hospitality sector to avail the benefit of the credit guarantee scheme to help small businesses mitigate the impact of the pandemic.

The guarantee cover has been expanded by Rs 50,000 crore taking the total cover to Rs 5 trillion, with the additional amount earmarked exclusively for hospitality and related enterprises.

To bring a level-playing field for local producers, the government is phasing out concessional rates in capital goods and project imports gradually. The budget proposed a moderate 7.5% tariff on all such products with some exemption advanced machineries that are not manufactured in the country.

In a push for Digital India, the government will start issuing e-Passports with embedded chips later this year. It has envisaged the launch of 5G services by telcos within the next financial year after spectrum auctions.

Further, the budget proposed to set up 75 Digital Banking Units (DBUs) in 75 districts. All post offices of the country will soon connect to the core banking system, to improve financial inclusion.   

The Finance Minister also announced plans to establish a Digital University to provide access to students across the country for a world-class quality education.


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