Decoding Union Budget 2022-23: Futuristic, broad-based and strengthening digital economy
Reading Time: 7 minutes
Aligned to the principle of ‘As you sow, so shall you reap, the steps undertaken today would yield rich multiplier dividends tomorrow. Budget 2022-23 aims to introduce a slew of positive reforms during the Amrit Kaal i.e. 25 years to the lead up of India achieving 100 years post-independence. The finance minister Nirmala Sitharaman started on an optimistic note mentioning the sharp economic recovery with India estimated to achieve growth of 9.2% in FY22. We shall look at some of the key provisions of today’s Budget that have far-reaching impact to reinvigorate the economy:
Budget 2022-23 Outlining the foundation for India @ 100
The overarching theme of the budget 2022-23 were 3 core focus areas:
- Accomplish macro-economic level growth focus combined with a micro-economic level all-inclusive welfare focus
- Promotion of the digital economy and fintech, facilitating technology-enabled development with an emphasis on energy transition, and climate action
- Fast-forwarding the virtuous investment cycle as defined by public capital investment and private investment to boost growth
Health is wealth
Health remains a continued core priority area for the Government in Budget 2022-23.
• Ayushman Bharat Digital Mission:
An open platform, for the National Digital Health Ecosystem to be launched that would comprise digital registries of health providers and health facilities, unique health identity, consent framework, and universal access to health facilities.
• National Tele Mental Health Programme:
Towards improving mental health of people across age groups and facilitate better access to quality mental health counselling and care services, a ‘National Tele Mental Health Programme’ will be introduced which would 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.
Establishing India as a global manufacturing powerhouse
The Productivity Linked Incentive applicable across 14 sectors towards accelerating the progress towards AtmaNirbhar Bharat has received an overwhelming response, with the potential to create 60 lakh new jobs, and an additional production of INR 30 lakh crore during the next 5 years.
Privatization and strategic disinvestments to continue
The ownership transfer of Air India has been completed and LIC IPO is expected to happen soon.
Infrastructure remains a thrust area
Under the flagship scheme, PM GatiShakti, seven engines of growth have been identified namely Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure.
Farm sector to be further incentivised
• Best practices in farming:
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.
• Celebrating Millets:
2023 has been announced as the International Year of Millets. Towards this end, support will be provided for post-harvest value addition, enhancing domestic consumption, and for branding millet products nationally and internationally.
• AtmaNirbhar in Oil:
Oil is a key component of cooking. To reduce imports of oilseeds, a rationalised and comprehensive scheme would be implemented to proactively increase domestic production of oilseeds
• Tech edge in farming:
Use of ‘Kisan Drones’ will be promoted for crop assessment, digitization of land records, spraying of insecticides, and nutrients
• Agri-startups to get a fillip:
A fund with blended capital, raised under the co-investment model, will be facilitated through NABARD. This would earmark funds to finance startups for agriculture & rural enterprise, relevant for farm produce value chain. The activities for these startups will include, support for FPOs, machinery for farmers on rental basis at farm level, and technology including IT-based support.
• Ambitious river linking projects on the cards
MSMEs as the backbone of our economy
• Udyam, e-Shram, NCS and ASEEM portals will be suitably interlinked and scope would be expanded towards providing G2C, B2C and B2B services. These services will relate to credit facilitation, skilling, and recruitment with an aim to further formalise the economy and enhance entrepreneurial opportunities for all.
• Emergency Credit Line Guarantee Scheme (ECLGS) has provided timely credit to more than 130 lakh MSMEs that helped them tide over the pandemic crisis. To be extended to the hospitality sector.
• Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme will be revamped with required infusion of funds that would open up further INR 2 lakh crore credit line for Micro and Small Enterprises and expand employment opportunities.
Skill-building as the mantra to better livelihood opportunities
Development of a Digital Ecosystem for Skilling, reskilling and upskilling with a focus on imbibing skills as per industry needs. The National Skill Qualification Framework (NSQF) will be aligned with dynamic industry needs.
Digital Ecosystem for Skilling and Livelihood opportunities
The DESH-Stack e-portal will be rolled out that would enable citizens to skill, reskill or upskill through on-line training. It will also provide-based trusted skill credentials, payment and discovery layers to find relevant jobs and entrepreneurial opportunities.
Right to better education for all
A one of its kind 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 doorstep. This will be 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.
Empowerment of women with higher participation in the workforce, drinking water and housing for all remained the highlights of the Government’s social welfare schemes
• Har Jan ka Sapna, Ghar ho Apna:
In 2022-23, a target 80 lakh houses will be completed for the identified eligible beneficiaries of PM Awas Yojana, across both rural and urban regions. INR 48,000 crore is allocated for this purpose.
Paving the way for a digital-led economy
• Anytime – Anywhere Post Office Savings:
In 2022, 100 per cent of 1.5 lakh post offices will fall in the ambit of the core banking system enabling financial inclusion and access to accounts through net banking, mobile banking, ATMs, and also enable 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 inter-operability and boosting financial inclusion.
• Digital banking:
Recognizing the scorching pace of growth in digital banking, digital payments and fintech innovations, the Government is keen to expand these sectors to ensure that the benefits of digital touch one and all in a consumer-friendly manner. Taking this forward and to mark 75 years of our independence, it is proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks.
• Digital Payments:
The financial support of INR 1500 cr for digital payment ecosystem announced in the previous Budget will continue in 2022-23. This will encourage further adoption of digital payments. There will also be a focus to promote use of payment platforms that are economical and user friendly.
The issuance of e-Passports deploying embedded chip and futuristic technology will be rolled out in 2022-23 to enhance convenient overseas travel for the citizens.
• Roll out of Digital Rupee:
Towards effective currency management and cost savings, introduction of Digital Rupee by RBI is proposed, using blockchain and other technologies, starting 2022-23.
Clean mobility solutions
Towards reducing the carbon footprint, the FM announced the following measures:
• Encouragement of the use of public transport in urban areas:
This will be complemented by clean tech and governance solutions, special mobility zones with zero fossil-fuel policy, and EV vehicles
• Battery Swapping Policy:
Owing to space constraints in urban areas for setting up charging stations at scale, a battery swapping policy will be brought out and inter-operability standards will be formulated. The private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service’. This will improve efficiency in the EV ecosystem.
Digitization of land records
Land is a valuable asset. Thus efficient use of land resources is critical. States will be encouraged to adopt Unique Land Parcel Identification Number to facilitate IT-based management of records. The facility for transliteration of land records across any of the Schedule VIII languages will also be rolled out.
Fiscal sops towards a telecommunication boom
• The 5G spectrum auctions will be conducted in 2022 to facilitate rollout of 5G mobile services within 2022-23 by private telecom providers.
• Design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme.
• To enable affordable broadband and mobile service proliferation in rural and remote areas, five per cent of annual collections under the Universal Service Obligation Fund will be channelised. This will promote R&D and commercialization of technologies and solutions.
• Creation of a level-playing field in terms of access to digital resources by both, rural and urban areas
Special incentives for sunrise sectors comprising Artificial Intelligence, Geospatial Systems and Drones, Semiconductor and its eco-system, Space Economy, Genomics and Pharmaceuticals, Green Energy, and Clean Mobility Systems
Building Sustainable energy solutions to control climate change including solar power generation and encouragement of the circular economy
• Issuance of green bonds for mobilizing resources for green infrastructure
Development of world class human resources through GIFT City
• GIFT City would host world-class foreign universities and institutions that would offer courses in Financial Management, FinTech, Science, Technology, Engineering and Mathematics free from domestic regulations, except those by IFSCA to facilitate availability of high-end human resources for financial services and technology.
Extension of infra status tag
• Data Centres and Energy Storage Systems including dense charging infrastructure and grid-scale battery systems will be considered as part of the harmonized list of infrastructure. This will facilitate credit availability for digital infrastructure and clean energy storage.
Empowering the start-up ecosystem
• Attracting investments:
Venture Capital and Private Equity invested more than INR 5.5 lakh crore last year facilitating one of the largest start-up and growth ecosystem. Scaling up this investment requires a holistic examination of regulatory and removal of other possible bottlenecks. An expert committee will be set up to examine and suggest appropriate measures.
• Tax sops:
Eligible start-ups established before 31.3.2022 had been provided a tax incentive for three consecutive years out of ten years from incorporation. This period would be extended by 1 year with the period of incorporation of the eligible start-up being valid up to 31.03.2023 for providing such tax incentive.
• Rationalization of tax rates:
There would be a cap on surcharge on long term capital gains arising on transfer of any type of assets at 15 percent.
Blended finance – a novel concept
Government-backed Funds NIIF and SIDBI Fund of Funds have provided scale capital creating a multiplier effect for the economy. Towards promoting important sunrise sectors such as Climate Action, Deep-Tech, Digital Economy, Pharma and Agri-Tech, the government will establish thematic funds for blended finance with the government share being limited to 20 percent and the funds being managed by private fund managers. This would provide higher liquidity for such sectors.
The government’s fiscal deficit for the financial year 2022-23 was pegged at 6.4% of gross domestic product (GDP). The budget has proposed a fiscal deficit of 4.5% of GDP by 2025-26.
Concluding thoughts on Budget 2022-23
All in all, the Budget 2022-23 was a future-oriented, broad-based Budget which aims to strengthen the digital economy, encourages entrepreneurial spirit and start-up culture, emphasizes the building of a robust digital, physical, and public infrastructure, spur the investment cycle and prepare a blueprint for Atma Nirbhar India at 100 years post-independence that is ambitious, aspirational, inclusive and takes along all the citizens in India’s growth journey to be achieved through the collective efforts of all i.e. Sabka Prayas.