The Budget 2022 also gives clarity on new keys of the economic sectors. On account of cryptocurrency, it said that the income from digital assets transfer would be taxed at the rate of 30 percent and proposed TDS of 1 percent on payment transfer.
As we all know that India recently emerged from the Covid-19 pandemic shadow ebbing the third wave, the Finance Minister’s strategy on the economic recovery hinges on the sharp step-up that is expected to spur the private investment that has remained stalled for a long time.
Exclusive focus on capital spending is now in effect that leads to a continuation of the budget released in the previous year. But devoid of its reform push, the privatization of state-owned banks, and asset monetization that the government projected to position India in the world of post-pandemic.
In another way, Finance Minister Nirmala Sitharaman discussed the NDA government’s continued economic philosophy of fiscal rectitude, disinvestment, and asset monetization in her speech. Despite unprecedented distress on the economy, many surveys showed that it hurt the poor. The Budget is persisted with the government interventions on the supply side.
For ordinary payers of income tax, there are no takeaways rather than some compliances and an I-T return system. And for the pyramid bottom that suffered from job and income losses at the time of the pandemic, the Budget is not offering major support despite five states including Punjab and Uttar Pradesh going to the polls.
Explanation of Budget 2022
For the year 2022-23, Finance Minister Nirmala Sitharaman has hiked the budget of capital expenditure by 24.47% to Rs 7.5 lakh crore which is almost 2.9% of the running GDP. Together in aid for capital assets creation (including MNREGA project), the expenditure of the effective capital is budgeted for the next year at Rs 10.67 lakh crore, which is 27% more than RE of the year 2021-22 at the rate of Rs 8.40 lakh crore.
The boost in expenditure comes with the increment with the borrowing limit to 4% of GSDP. Nirmala Sitharaman has also allowed states to borrow an amount up to Rs 1 lakh crore with an interest-free loan of 50-year to make the capital investment. In the year 2021-22, the Central government allowed states to borrow an additional amount of Rs 15,000 crore for the capital investment.
At the time when the private sector is adverse or reluctant to invest given poor demand conditions, the government weighs and borrows more to spend more.
Despite offering a fillip through the capital spending, the Finance Minister kept fiscal control, a key metric to which foreign markets and investors assess the budget. She ensured that the fiscal deficit target for the current year was met (6.9% of GDP against 6.8% assumed for the Budget of 2021-22), she stayed on, bringing it down by 0.5% in the next financial year.
What is the Digital Rupee announced by the Finance Minister in the Budget?
The recently released Budget provides clarity on new economic sectors regarding cryptocurrencies. It is said the income of digital assets would be taxed at the rate of 30% and further proposed 1% of TDS on payment transfers. It is announced that it is a policy like battery swapping that would enthuse electric vehicles and provide a roadmap for the rollout of 5G to boost technology and the ecosystem.
Nirmala Sitharaman has also extended the Emergency Credit Line Guarantee Scheme which is the facility to provide loans (collateral-free) from small to medium-size enterprises and enhance the credit line by fifty thousand crores to five lakh crore. Unlike big enterprises, MSMEs banked on schemes during the period of a pandemic, when subsequent demands and the national lockdown collapse, almost wiped out of businesses.