Booster Jab For Indian Economy? FM Sitharaman All Set To Present Budget 2022, Focus on Post Covid Expectations
New Delhi: Finance Minister Nirmala Sitharaman is all set to present the fourth budget of Modi government 2.0. Experts believe that the Budget 2022 will aim at accelerating India’s pace of recover
New Delhi: Finance Minister Nirmala Sitharaman is all set to present the fourth budget of Modi government 2.0. Experts believe that the Budget 2022 will aim at accelerating India’s pace of recovery from the pandemic shock. While Indian corporates are expecting some key announcements which will enable them to reset their growth agenda, individual taxpayers are expecting some more disposable income in their hands to invest and consume more.
The government is also likely to continue to spend more to aid the recovery and put India back on a trajectory of higher growth. It is important to note that with covid curbs to contain the spread of the omicron variant of Covid-19 fanning unemployment and inequalities, the Finance Minister will be under pressure to step up spending on everything from infrastructure projects to health care in a bid to create jobs and pull people out of poverty.
You may like to read
Income tax relief, standard deduction hike, and tax relief for saving for kids’ education are some of the expectations of the salaried class from finance minister Nirmala Sitharaman.
- 80C deduction available up to Rs 1.5 lakh a year be revised upwards significantly
- To make the optional concessionary tax regime, which came into effect from April 2021, more acceptable, raise the threshold Rs 15 lakh income for laying peak 30% tax rate
- As Web 3.0 unfolds, crypto assets encompassing a wide array of digital assets like non fungible tokens, wrapped asset token etc, will gain tremendous traction. it is being expected that a specialised regime for taxation of cryptocurrency will be introduced in the budget.
- The burden of the long-term capital gains tax (LTCG), introduced vide Finance Act 2018, has somewhat dented investor confidence. Major economies do not have LTCG tax. In India too, it is expected that LTCG on the sale of Indian-listed equity shares will be exempted as it would boost investment through the stock exchange.
- Corporates are expecting that the entire amount, or an appropriate proportion of expenditure incurred for helping the society and employee welfare during COVID-19 will be allowed as deductible expenditure. Also, the government is expected to reduce the tax rates for companies engaged in R&D activities to 15 per cent or less and allow weighted deduction on in-house R&D expenditure.
- Rationalisation of Customs duty structure for EV and ancillary components, renewable energy generation devices and related components is likely.
- Sector specific concessions for semi-conductor manufacturers with focus on exports is expected.
- Budget allocations for the expansion of the PLI scheme for sectors such as leather and laminates; additional incentive schemes will also lure companies into setting up additional manufacturing in sectors that were not the focus in previous budgets and help reverse the impact of the pandemic.
- The government is already reviewing 400 customs duty exemptions (as announced in the previous budget). The final list is expected to be proposed as part of the 2022 budget and industry is awaiting it so that there is no adverse impact on trade as a result of this exercise.
- Extension of customs duty exemption on goods imported for testing, and setting up of a customs dispute resolution forum, ease compliances under customs, and integration of the current ICEGATE, DGFT and SEZ online portal into a common digital platform.
Here’s what the salaried class expects from the budget:
- The upcoming Budget is likely to provide tax incentives to salaried individuals in the form of enhanced deductions from salary income and tax savings on schemes qualifying under Section 80C.
- Employees Provident Fund: In the last Budget, the Centre proposed to tax income on Provident Fund (PF) contributions above ₹2.5 lakh in a year. This limit was further increased to ₹5 lakh for PF accounts having no contribution from employers.
- The Union budget 2022-23 may focus on raising the standard deduction of the salaried class by Rs 50,000, according to the Bank of Baroda (BoB) FY23 budget preview.
The Budget for the fiscal year starting April 1, 2022 is likely to raise spending on infrastructure to set the economy on a firmer footing.
The stage for the Budget presentation was set by the Economic Survey stating that the government has the fiscal space to do more to support the economy that is forecast to grow at a healthy 8-8.5 per cent growth in the 2022-23 fiscal.
The budget comes days before the first phase of voting in Uttar Pradesh, which along with four other states is going to the polls to elect a new state government. And naturally, it is expected to contain measures for higher rural and agriculture spending.
Here are some of the key takeaways from the Economic Survey:
- According to the Economic Survey, the GDP growth rate is projected in the range of 8-8.5% for the next fiscal 2022-23 (FY23)
- Growth projections based on oil price projection of $70-75 per barrel next fiscal, against current price of $90
- There has been a revival in economic activities to pre-pandemic levels in the year 2021-22.
- The economy is estimated to have grown by 9.2% this year after a contraction of 7.3% in the previous year
- The segment (of services sector) which includes tourism, travel, and hotels is still 8.5% below where it was before the pandemic.
- The services sector was the most affected by the lockdowns
- Agriculture least hit by pandemic, sector to grow by 3.9% in 2021-22 after growing 3.6% the previous year
- Disruptions in the global container market not yet over; will continue to impact the global sea trade.
- Crop diversification towards oilseeds, pulses and horticulture needs to be given priority
- Agriculture sector, not surprisingly, was least affected by lockdowns of various kinds. This sector grew in even 2020-21 & again in 2021-22.
- Government finances to witness consolidation in 2021-22, after uptick in deficit and debt indicators in the previous year
- “Climate finance will remain critical to successful climate action by developing countries, including India,” says the Survey
- Industrial sector did go through a contraction & now it is about 4.1% above pre-pandemic levels
- Industrial sector likely to grow at 11.8%.
- India’s total exports are expected to grow by 16.5% in 2021-22 surpassing pre-pandemic levels.
- Imports are expected to grow by 29.4% in 2021-22
- Consumption has grown 7% in 2021-22 with a significant chunk of it thanks to government spending.
- Middle-class borrowing to own houses well below the 21.1% growth year-on-year; also below the level of the last four years
- Railways: Rs 65,157 crore capital expenditure from April to November 2021; capex outlay in the ongoing financial year is at Rs 2.15 lakh crore, which is five times the 2014 level.
- India has third largest startup ecosystem in the world after US and China.
- India sees 44 unicorns in 2021, a new record.
- In April-November 2021 Rs 89,066 crore was raised via 75 IPO issues versus 29 companies which raised Rs 14,733 crore in the same period in 2020
- Share of individual investors in total NSE turnover increases to 44.7%
For breaking news and live news updates, like us on Facebook or follow us on Twitter and Instagram. Read more on Latest Business News on India.com.