There was happiness, hope, excitement, projections, suspense, shock and disappointment in the 90- minute budget speech presented by Finance Minister Nirmala Sitharaman. FM presented her 4th successive Union Budget. Of the four budgets tabled by Nirmala Sitharaman, this one is the shortest. Her longest budget speech was in 2020 which was for 160 minutes. Before I give my opinion on the Budget.
Let us look at the top highlights from the Union Budget 2022.
- The Budget was focusing on 4 pillars – Productivity, Climate action, Financing Investments and PM Gati Shakti Plan
- Capital expenditure outlay being stepped up sharply by 35.4% from Rs 5.54 lakh crore in CY to Rs 7.50 lakh crore in 2022-23. The outlay in 2022-23 will be 2.9% of the GDP
- 400 new generation Vande Bharat trains with better efficiency to be brought in and 100 PM Gati Shakti Cargo terminals to be developed during next 3 years
- ECLGS to be extended till March 2023. The guaranteed cover will be expanded by Rs 50,000 crores to the total cover of Rs 5 lakh crores to aid MSME sector financing needs
- 5G spectrum auction to be conducted in 2022 for the rollout of 5G telecom services by private players in FY 2022-23
- Digital rupee to be issued using blockchain and other technologies; to be issued by RBIstarting 2022-23. This will give a big boost to the economy
- Income tax relief to cooperative societies with a reduction in the rate of surcharge from 12% to 7% for income up to Rs 10 crores
- Taxpayers can now file an updated return within 2 years from the relevant assessment year
- Income from virtual digital assets brought under the tax net. Gaines taxable at 30% without any deduction except the cost of acquisition
Analysing the Union Budget 2022:
Naturally, the people from different strata’s had expected something that will benefit them. But once again, the middle-class families are left disappointed as there was no tax rate cut or increase in the exemption limits. Also, from the experience, there was a chance of a populist budget because of the election season.
But it was not to be.
This kind of gives us a hint that the BJP is confident of doing well in the upcoming assembly elections. That said, BJP for the second time running has come up with a budget that is Capital Expenditure driven. As you see in the highlights, the Capital Expenditure of 7.5 lakh crore for FY 2022-23 is huge. Capital expenditure is all about the money spent by the government on various developmental and infrastructure activities. A jump from 5.54 lakh crore to 7.50 lakh crore is a real booster for the economy. The Gati Shakti plan composes of all that is required to build a better economy.
Another important factor for me from this budget is the taxing of virtual assets. With the introduction of 30% taxes on virtual assets i.e. Cryptocurrencies, the Indian government has answered the banning of cryptos. Now it’s clear that Cryptos won’t be banned, but they will be taxed. With the government giving a green signal for Digital Currency, it is understood that foreign Cryptos will not be made a legal tender.
There are other announcements like PM Awas Yojana, Credit Guarantee scheme increased by 50,000 crore to 5 lakh crore. E passports, 5G, River linking, Solar energy, Electric Vehicles are the other important announcements in the budget. Taxpayers were looking for a tax cut or increase in deductions due to higher health expenditure due to the ongoing pandemic. But nothing of that sort was announced. The only saving grace was the option to file an updated return within 2 years from the relevant assessment year.
Finally, is it a pro-socialist or a pro-capitalist budget?
A socialist budget consists of free soaps. Like increased tax deductions, higher tax for the wealthier, subsidies on the products and services, free loans, loan waivers, cash transfers, etc. In reality, there was nothing that came closer to being called a socialist budget. The increased capital expenditure, loan guarantee scheme, reduced tax for cooperative societies, gati shakti plan is a sign of a true capitalist budget.
Even though there were many things left untouched, the government has done an excellent job to come up with a budget that will boost the economy. Every new kilometre added to the national highway will bring development to every stakeholder. This is the best way to bring in the multiplier effect of development in the economy.
The ultimate target of the Government of India is to take India’s GDP to $5 Trillion. This goal is only possible through heavy consumption and that is exactly what the government is trying to do indirectly. In simple words, the difference between the capitalist ideology and a socialist ideology is like a seed and a fruit. The capitalist economy helps the individuals by sowing the seeds and expects them to deliver results that are fruits. Whereas the socialist economy believes in giving the people the fruits which will motivate them to produce more fruits.
Both the ideologies cannot go hand in hand and only one ideology will prevail in the end. We all know that the BJP is a right centre party that believes in capitalism and that is fully reflected in the Budget 2022. All of this will have to result in a better economy and good economic growth!
