Daily Current Capsules 02^nd February 2022

UNION BUDGET 2022-23 - Part I

• India is celebrating Azadi ka Amrit Mahotsav and it has entered into Amrit Kaal, the 25-year-long leadup to India@100

This budget lays a parallel track of

• a blueprint for the Amrit Kaal, which is futuristic and inclusive, which will directly benefit our youth, women, farmers, the Scheduled Castes and the Scheduled Tribes.
• big public investment for modern infrastructure, readying for India at 100 and this shall be guided by PM GatiShakti and be benefited by the synergy of multi-modal approach.

Four priorities

• PM GatiShakti
• Inclusive Development
• Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, and
• Climate Action Financing of Investments

•
PM GatiShakti

• It is a transformative approach for economic growth and sustainable development.
• The approach is driven by seven engines, namely, Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure.
• All seven engines will pull forward the economy in unison.
• These engines are supported by the complementary roles of Energy Transmission, IT Communication, Bulk Water & Sewerage, and Social Infrastructure.
• The approach is powered by the efforts of the Central Government, the state governments, and the private sector together

• PM GatiShakti Master Plan for Expressways will be formulated in 2022-23 to facilitate faster movement of people and goods.
• The National Highways network will be expanded by 25,000 km in 2022-23 and Rs 20,000 crore will be mobilized through innovative ways of financing to complement the public resources.

 

Contracts for implementation of Multimodal Logistics Parks at four locations through PPP mode will be awarded in 2022-23.

Railways

• In Railways, ‘One Station-One Product' concept will be popularized to help local businesses & supply chains.
• As a part of Atmanirbhar Bharat, 2,000 km of network will be brought under Kavach, the indigenous world-class technology for safety and capacity augmentation in 2022-23.
• Four hundred new-generation Vande Bharat Trains with better energy efficiency and passenger riding experience will be developed and manufactured and one hundred PM GatiShakti Cargo Terminals for multimodal logistics facilities will be set up during the next three years.

Agriculture

• Chemical-free Natural Farming will be promoted throughout the country, with a focus on farmers' lands in 5-km wide corridors along river Ganga, at the first stage.
• Use of ‘Kisan Drones' will be promoted for crop assessment, digitization of land records, spraying of insecticides, and nutrients.
• To reduce dependence on import of oilseeds, a rationalised and comprehensive scheme to increase domestic production of oilseeds will be implemented.

• As 2023 has been announced as the International Year of Millets, the government announced full support for post-harvest value addition, enhancing domestic consumption, and for branding millet products nationally and internationally.

Inter-linking of Rivers

• Implementation of the Ken-Betwa Link Project, at an estimated cost of Rs 44,605 crore will be taken up aimed at providing irrigation, drinking water supply ,Hydro and solar power.
• Moreover, Draft DPRs of five river links, namely Damanganga- Pinjal, Par-TapiNarmada, Godavari-Krishna, Krishna-Pennar and Pennar-Cauvery have been finalized and once a consensus is reached among the beneficiary states, the Centre will provide support for implementation.

Emergency Credit Line Guarantee Scheme (ECLGS)

• The Emergency Credit Line Guarantee Scheme (ECLGS) has provided much-needed additional credit to more than 130 lakh MSMEs to help them mitigate the adverse impact of the pandemic.
• The hospitality and related services, especially those by micro and small enterprises, are yet to regain their pre-pandemic level of business
• The ECLGS will be extended up to March 2023.
• Its guarantee cover will be expanded by Rs 50,000 crore to total cover of Rs 5 lakh crore, with the additional amount being earmarked exclusively for the hospitality and related enterprises.

• Similarly, Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme will be revamped with required infusion of funds.
• This will facilitate additional credit of Rs 2 lakh crore for Micro and Small Enterprises and expand employment opportunities.
• Raising and Accelerating MSME Performance (RAMP) programme with outlay of Rs 6,000 crore over 5 years will be rolled out to make the MSME sector more resilient, competitive and efficient.
• Udyam, e-Shram, NCS and ASEEM portals will be interlinked and their scope will be widened.

Education
Skill development and Quality Education

• Startups will be promoted to facilitate ‘Drone Shakti' through varied applications and for Drone-As-A-Service (DrAAS).
• In select ITIs, in all states, the required courses for skilling will be started.
• In vocational courses, to promote crucial critical thinking skills, to give space for creativity, 750 virtual labs in science and mathematics, and 75 skilling e-labs for simulated learning environment, will be set-up in 2022-23.

One class-one TV channel programme

• To impart supplementary teaching and to build a resilient mechanism for education delivery, ‘one class-one TV channel' programme of PM eVIDYA will be expanded from 12 to 200 TV channels
• This will enable all states to provide supplementary education in regional languages for classes 1-12.
• Digital University
• A Digital University will be established to provide access to students across the country for world-class quality universal education with personalised learning experience at their doorsteps.
• This will be made available in different Indian languages and ICT formats.
• The University will be built on a networked hub-spoke model, with the hub building cutting edge ICT expertise.
• The best public universities and institutions in the country will collaborate as a network of hub- spokes.

Health

• Under Ayushman Bharat Digital Mission, an open platform for the National Digital Health Ecosystem will be rolled out and it will consist of digital registries of health providers and health facilities, unique health identity, consent framework, and universal access to health facilities.
• A ‘National Tele Mental Health Programme' will be launched for better access to quality mental health counselling and care services.
• This will include a network of 23 tele-mental health centres of excellence, with NIMHANS being the nodal centre and International Institute of Information Technology-Bangalore (IIITB) providing technology support.

PM-DevINE

• A new scheme, Prime Minister's Development Initiative for NorthEast, PM-DevINE, will be implemented through the North-Eastern Council to fund infrastructure, in the spirit of PM GatiShakti, and social development projects based on felt needs of the North-East.
• An initial allocation of Rs 1500 crore will enable livelihood activities for youth and women, filling the gaps in various sectors.
  

Financial Inclusion

• In 2022, 100 per cent of 1.5 lakh post offices will come on the core banking system enabling financial inclusion and access to accounts through 11 net banking, mobile banking, ATMs, and also provide online transfer of funds between post office accounts and bank accounts.
• This will be helpful, especially for farmers and senior citizens in rural areas, enabling interoperability and financial inclusion.
• To mark 75 years of independence, the government has proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks to ensure that the benefits of digital banking reach every nook and corner of the country in a consumer-friendly manner.

e-Passports

• 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.

Telecommunication

• Required spectrum auctions will be conducted in 2022 to facilitate rollout of 5G mobile services within 2022- 23 by private telecom providers.
• A scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme

Defence

• The Government reiterates committed to reducing imports and promoting AtmaNirbharta in equipment for the Armed Forces.
• 68 per cent of the capital procurement budget will be earmarked for domestic industry in 2022-23, up from 58 per cent in 2021-22.
• Defence R&D will be opened up for industry, startups and academia with 25 per cent of defence R&D budget earmarked.

Sunrise Opportunities

• Artificial Intelligence, Geospatial Systems and Drones, Semiconductor and its 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.

Renewable energy

• To facilitate domestic manufacturing for the ambitious goal of 280 GW of installed solar capacity by 2030, an additional allocation of RS 19,500 crore for Production Linked Incentive for manufacture of high efficiency modules, with priority to fully integrated manufacturing units from polysilicon to solar PV modules, will be made.

• Public investment must continue to take the lead and pump- prime the private investment and demand in 2022-23 and therefore the outlay for capital expenditure in the Union Budget is once again being stepped up sharply by 35.4 per cent from Rs 5.54 lakh crore in the current year to Rs 7.50 lakh crore in 2022-23.
• This has increased to more than 2.2 times the expenditure of 2019-20 and this outlay in 2022-23 will be 2.9 per cent of GDP.

Sovereign Green Bonds

• 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.

Digital Rupee

• The Government proposed to introduce Digital Rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23 for more efficient and cheaper currency management system.
• Reflecting the true spirit of cooperative federalism, the Central Government enhanced the outlay for the ‘Scheme for Financial Assistance to States for Capital Investment' from Rs 10,000 crore in the Budget Estimates to Rs 15,000 crore in the Revised Estimates for the current year.

• In 2022-23, in accordance with the recommendations of the 15th Finance Commission, the states will be allowed a fiscal deficit of 4 per cent of GSDP of which 0.5 per cent will be tied to power sector reforms

• The revised Fiscal Deficit in the current year is estimated at 6.9 per cent of GDP as against 6.8 per cent projected in the Budget Estimates.
• The Fiscal Deficit in 2022-23 is estimated at 6.4 per cent of GDP, which is consistent with the broad path of fiscal consolidation to reach a fiscal deficit level below 4.5 per cent by 2025-26.

Direct tax

• On the Direct Tax side, the budget allows taxpayers to file updated income tax return within 2 years for correcting errors.
• The budget also reduces Alternate minimum tax rate and surcharge for cooperatives.
• As an incentive for startups, period of incorporation of eligible startups has been extended by one more year.
• The budget proposes to increase tax deduction limit on employer's contribution to NPS account of state government employees to bring parity with central government employees.
• Newly incorporated manufacturing entities will be incentivized under concessional tax regime.
• Income from transfer of virtual assets will be taxed at 30%.

Indirect tax

• On the Indirect tax side, the Union budget says that Customs administration in Special Economic Zones will be fully IT driven.
• It provides for phasing out of concessional rates in capital goods and project imports gradually and apply a moderate tariff of 7.5%.
• The budget underlines review of customs exemptions and tariff simplification, with more than 350 exemptions proposed to be gradually phased out.
• It proposes that customs duty rates will be calibrated to provide a graded structure to facilitate domestic electronics manufacturing.
• Rationalization of exemptions on implements and tools for agri sector manufactured in India will be undertaken.
• Customs duty exemption to steel scrap will be extended. Unblended fuel will attract additional differential excise duty.

• The budget proposes a new provision permitting taxpayers to file an Updated Return on payment of additional tax.
• This updated return can be filed within two years from the end of the relevant assessment year.
• This proposal, there will be a trust reposed in the taxpayers that will enable the assessee herself to declare the income that she may have missed out earlier while filing her return. It is an affirmative step in the direction of voluntary tax compliance.

Co-operative societies and companies

• To provide a level playing field between co-operative societies and companies, the budget proposes to reduce Alternate Minimum Tax for the cooperative societies also to fifteen per cent.
• The Finance Minister also proposed to reduce the surcharge on co-operative societies from present 12 to 7 per cent for those having total income of more than Rs 1 crore and up to Rs 10 crores.

National Pension System (NPS)

• The Central Government contributes 14 per cent of the salary of its employee to the National Pension System (NPS) Tier-I.
• This is allowed as a deduction in computing the income of the employee.
• However, such deduction is allowed only to the extent of 10 per cent of the salary in case of employees of the State government.
• To provide equal treatment, the budget proposes to increase the tax deduction limit from 10 per cent to 14 per cent on employer's contribution to the NPS account of State Government employees as well.

Start-ups

• Eligible start-ups established before 31.3.2022 had been provided a tax incentive for three consecutive years out of ten years from incorporation.
• The budget provides for extending the period of incorporation of the eligible start-up by one more year, that is, up to 31.03.2023 for providing such tax incentive.

Virtual digital assets

• For the taxation of virtual digital assets, the budget provides that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent.
• No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition.
• Further, loss from transfer of virtual digital asset cannot be set off against any other income.
• In order to capture the transaction details, a provision has been made for TDS on payment made in relation to transfer of virtual digital asset at the rate of 1 per cent of such consideration above a monetary threshold.
• Gift of virtual digital asset is also proposed to be taxed in the hands of the recipient.

 

Budget 2022-2023 (Info-graphics)

 

  

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