The Budget comes at a time when India’s employment rate has plummeted. Historic unemployment and faltering growth not only exacerbated inequalities of income and wealth but also led to anincrease in the absolute number of poor peoplein India — an unprecedented and embarrassing reversal in poverty alleviation. In the years leading up to Covid-led technical recession, there was much disagreement about the government’s approach.
The Economic Survey, tabled just a day before Sitharaman will announce the Union Budget 2022-23, emphasised the need for the government to provide a buffer against stresses such as the uncertainty in the global environment, the cycle of liquidity withdrawal by major central banks, etc.
The Survey has pegged that in the government’s efforts to build a post-Covid economy, demand measures alone will not provide the solution. This is based mainly on the fact that a wide variety of factors such as consumer behaviour, technological developments, geo-politics, supply-chains, climate change could interact in unpredictable ways, and India will need to develop a supply-side strategy to deal with the long-term unpredictability of the post-Covid world.
Last year, the government decided to set up an asset reconstruction company that will take over the bad loans of banks, giving them the flexibility to finance the economic recovery. Just days ahead of the Union Budget 2022-23, this proposal to set up a ‘bad bank’ was cleared. State Bank of India Chairman Dinesh Khara said the proposed ‘bad bank’ has “now” received all necessary permissions including from the Reserve Bank of India. It is ready to commence operations with 15 cases worth Rs 50,335 crore to be transferred by March 31, he said.
Shweta Sastri, the Managing Director of Canadian International School in Bangalore, said: The union Budget has ushered in positive measures in the field of education which will give a boost to the sector, especially in context of the pandemic. The focus on digitization, bridging the rural-urban gap, making online education available to all children are all measures that are welcomed. The Budget rightly focuses on upskilling and digital learning. The announcement of one class one channel and expansion to 200 channels under e-vidya will enable the reach of online education to a vast body of students where online education is still not widespread.
"Introduction of a tax regime for taxation of digital assets is an important step in mainstreaming of this asset class. It is indicative of an increasing acceptance by the government of digital currencies within the economic framework," Abhay Sharma, Partner, Shardul Amarchand Mangaldas & Co. said.
The government has announced a sharp jump of 35.4 per cent in capital expenditure to fund various infrastructure projects in 2022-23. In her Budget speech, Finance Minister Nirmala Sitharaman said capital investment holds the key to speedy and sustainable revival and public spending is required to take the lead.
The government will invest Rs 7.50 lakh crore as capital expenditure next year, a sharp jump from Rs 5.54 lakh crore in the current year.
Depending upon its implementation, Capex spending will provide a big boost to investment activity and support economic growth in the next year. Read more
Suvodeep Rakshit, a senior economist at Kotak Institutional Equities, reacting to the Budget, said: “The union Budget underlined the government’s focus on longterm growth support. Focus on increasing capital expenditure as well as on future growth drivers, such as clean energy, are the key positives of the budget. The fiscal deficit targets as well as the budgeted receipts and expenditures are in line with our expectations.”
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In a move that will ease exits from startups and Unicorns, the Finance Minister announced reduction of surcharge on unlisted shares from 28.5 per cent to 23 per cent.
Impact: This will likely facilitate investor exits and investment churn. ~ Anil Sasi
Reacting after the Budget, Sundara Rajan TK, Partner at DVS Advisors LLP, said: “The clarity on tax of digital assets is long due and was expected to be provided this year. The announcement of tax at 30% on digital asset, coupled with the government launching its own digital currency, is an indication that the government intends to discourage the same and would intend that only the HNIs make such investments and that the government shall not permit cryptos as currency. The caping of surcharge at 15% is welcome and though no separate relief was given to HNIs, this would also be favourable to such HNIs with high capital gains income.”
A new digital rupee powered by blockchain technology will be issued by the Reserve Bank of India starting 2022-23. This was announced by Finance Minister Nirmala Sitharaman during the Union Budget 2022 today. Blockchain technology also powers cryptocurrency, non-fungible tokens (NFTs) and it is a distributed ledger, updated in real-time. In a blockchain, the transaction records cannot be changed at all and the ledger is transparent and authentic, which is why it is used in cryptocurrency as well. Read More
Union Finance Minister Nirmala Sitharaman introduced the Finance Bill 2022 in Parliament, following which the Lok Sabha was adjourned till tomorrow.
Customs on polished diamonds, gemstones cut to 5%. Simply sawn diamonds will be exempted. To facilitate export of jewellery through e-commerce, simplified regulations will be in place by June this year.
Adhil Shetty, the CEO of BankBazaar.com, while reacting to the Budget, said: "The taxation of virtual assets is now clearly defined. So, we now at least know what tax filers can expect this year. Individuals might have wanted lower LTCG taxes and and carry forward of losses similar to equity or housing. But this is at least a start."
The gross GST collections for the month of January 2022 are Rs 1,40,986 crore —the highest since the inception of the tax: Finance Minister Nirmala
PN Sudarshan, Partner and TMT Industry Leader, Deloitte India, said: “Deep tech is an idea whose time has come. All our focus so far has been on the application layer which provided solutions to problems and business opportunities. A focus on deep tech will provide that strategic depth. Wish the government expands and extends this.”
Reacting to the Budget, Jaideep Ghosh, COO, Shardul Amarchand Mangaldas & Co, said: “Continued emphasis on the importance of mobile connectivity and broadband for economic development, especially in rural India, will further boost the telecommunication and associated sectors. Inclusion of design-led initiatives for 5G and other technologies in PLI is a good step forward. While an announcement on implementing Bharatnet optical fibre cable contracts through PPP has been made, an expeditious approach is needed to avoid delays given that the PPP model has witnessed mixed experience in other infrastructure sectors.”
Income from Long Term Capital Gains will be taxed at 15%, the Finance Minister said.
Corporate surcharge to be reduced from 12% to 7%, says Finance Minister Nirmala Sitharaman
Income from transfer of digital assets to be charged 30% tax, plus 1% tax on transaction: FM
Rs 48,000 crores allocated for completion of construction of 80 lakh houses under PM Awas Yojana in rural and urban areas in the year 2022-23: FM Sitharaman
Both Centre and States govt employees' tax deduction limit to be increased from 10% to 14% to help the social security benefits of state government employees and bring them at par with the Central govt employees: FM Nirmala SitharamanNirmala Sitharaman made a statement with her sartorial pick for Budget 2021. (Express photo by Praveen Khanna)