Steering The Economy From India@75 To India@100

Jyoti S Verma

The Union Budget 2022-23 seeks to continue India's economic recovery and gives a blueprint to steer it over the next 25 years with boosters of public capital spending and consistent funds to development schemes.

The Union Budget 2022-23, presented in the 75th year of Independence and setting the stage for economic growth in next 25 years, is primarily built around a huge increase in capital expenditure to revive growth, ways to boost domestic manufacturing and exports, inculcate technology and energy transition to help India become a less carbon-intensive, digital-focused economy.

In her fourth Budget, and the second in the pandemic era, Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman proposed the Centre's economic recovery strategy led by a sharp increase in government spending that, in good time, is expected to drive private investment, growth and employment generation. In her 90-minute address, begun with an empathy for Indians who suffered the adverse health and economic impact of Covid-19, the Finance Minister credited the overall, sharp rebound and recovery of the economy to the country's strong resilience. India's economic growth in the current year is estimated to be 9.2 per cent, highest among all large economies, she said.

The Indian industry welcomed the statement, calling "the budget a bright spot in an otherwise dark horizon." At 9.2 per cent, India is the fastest-growing, large economy with forex reserves over $630 billion. With vaccination success of 93% of eligible population with single dose and 70% fully vaccinated, it is time to look beyond the dark pandemic era.

Futuristic & Inclusive

The Union Budget 2022-23 is based on four pillars of PM GatiShakti, inclusive development, productivity enhancement and climate action, and financing investments. The budget stepped up the capital expenditure sharply by 35.4 per cent to Rs. 7.50 lakh crore. In the next fiscal, the scope of PM GatiShakti National Master Plan will encompass the seven engines for economic transformation, seamless multimodal connectivity and logistics efficiency. It will set out to build 25,000 km more of national highways, 100 new cargo terminals, four logistics parks, eight ropeway projects and 400 new Vande Bharat trains.

 The Finance Minister announced an allocation of Rs 1 lakh crore to assist states in creating overall investments in economy. These 50-year interest-free loans are over and above the normal borrowings allowed to the states, she said, and will be used for PM GatiShakti and other productive capital investment of the states. The fund allocation to states will cover additional funding of PM Gram Sadak Yojana, digitisa-tion of the economy, including digital payments and comple-tion of optical fibre cable network, and reforms related to building byelaws, town planning schemes, transit-oriented development and transferable development rights.

Agriculture continues to be a focus area for the government. The mega announcement for the sector was on Minimum Support Price (MSP). The procurement of wheat in Rabi 2021-22 and the estimated procurement of paddy in Kharif 2021-22 will cover 1,208 lakh metric tonnes of wheat and paddy from 163 lakh farmers and provide Rs.2.37 lakh crore direct payment of MSP value to their accounts.

The highlight is the use of Kisan Drones, which will promote crop assessment, digitisation of land records, spraying of insecticides and nutrients. For delivery of digital and hi-tech services to farmers with involvement of public sector research and extension institutions along with private agri-tech players and stakeholders of agri-value chain, a scheme in public-private partnership mode will be launched.

Chemical-free natural farming will be promoted throughout the country, with a focus on farmers' lands in 5-km wide corridors along river Ganga in the first stage. The Indian states are encouraged to revise syllabi of agricultural universities to meet the needs of natural, zerobudget and organic farming, modern-day agriculture, value addition and management. The budget also proposed a rationalised and comprehensive scheme to increase domestic production of oilseeds to reduce India's dependence on imported oilseeds. A fund with blended capital, raised under the coinvestment model, will be facilitated through NABARD. This is to finance startups for agriculture and rural enterprise, relevant for farm produce value chain. The activities for these startups will include, among others, support for farmer producer organi-sations, machinery for farmers on rental basis at farm level, and technology, including IT-based support.

Digital India 2.0

Being digital is a theme that is consistent throughout the Union Budget. From recognising virtual assets as a taxable asset class to issuing digital currency and chip-embedded e-passports, build-ing a digital university, emphasising digital banking and land record digitisation, facilitating payment platforms, auctioning 5G spectrum, and building optical fibre network, there are efforts to build India's digital capacity, improve efficiency and boost employment in the services sector.

In telecom, the government will auction spectrum for 5G technology, which is expected to enable growth and offer job opportunities. The auctions will be conducted in 2022 to facilitate rollout of 5G mobile services in the financial year 2022-23 by private telecom providers. A scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive (PLI) Scheme. The Finance Minister has proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks. The Reserve Bank of India has been delegated to issue digital rupee using blockchain and other technologies from the financial year 2022-23. The year will also see the launch of ePassports using embedded chip and futuristic technology for the convenience of the citizens when they travel abroad.

The government will roll out an open platform for the National Digital Health Eco-system with digital registries of health providers and health facilities, unique health identity, consent framework, and universal access to health facilities. The rising issues of mental health, especially during the pandemic, will have a helpline in the new National Tele Mental Health Programme. To be launched in 2022-23, the programme will include a network of 23 telemental health centres of excellence, with NIMHANS being the nodal centre and International Institute of Information Technology-Bangalore (IIITB) giving technology support.

The digital drive also leads the nation to opportunities in sunrise sectors of artificial intelligence, geospatial systems and drones, semicon-ductor, space economy, genomics and pharmaceuticals, green energy and clean mobility systems. The Union Budget underlined the immense potential of these sectors in not only sustainable development and modernisation, but also generating jobs and making Indian industry more efficient and competitive. Start-ups will be promoted to facilitate Drone Shakti through varied applications and for Drone-As-AService (DrAAS). In select ITIs, across states, the required courses for skilling will be started.

Green Is the Way to Go

As a part of the government's overall market borrowings in 2022-23, sovereign green bonds will be issued for mobilising resources for green infrastructure. The proceeds will be deployed in public sector projects that help in reducing the carbon intensity of the economy. The Finance Minister also expanded the scope of PARIVESH, the single-window portal for all green clearances launched in 2018. The portal has been instrumental in reducing the time required for approvals significantly. From 2022-23, based on location of units, it will provide applicants information about specific approvals. The process will be simplified by enabling application for all four approvals through a single form and tracking through Centralized Processing Centre-Green (CPCGreen).

Finance Minister Nirmala Sitharaman pushed for an array of digital technologies. She also proposed a shift to use of public transport in urban areas, which will be complemented by clean tech and governance solutions, special mobility zones with zero fossil-fuel policy, and EV vehicles.

Considering the constraint of space in urban areas for setting up charging stations at scale, a battery swapping policy will be brought out and interoperability standards will be formulated. The private sector will be encouraged to develop sustainable and innovative business models for 'Battery or Energy as a Service,' which will improve efficiency in the electric vehicle eco-system.

To facilitate domestic manufacturing for the ambi-tious goal of 280 GW of installed solar capacity by 2030, an additional allocation of Rs.19,500 crore for PLI to manufacture high efficiency modules will be made. In her address, the Finance Minister shared the centre's strategy on circular economy transition, which is expected to help in productivity enhancement and creating opportunities for new businesses and jobs. The action plans for ten sectors such as electronic waste, end-oflife vehicles, used oil waste, and toxic and hazardous industrial waste are ready, she informed. The focus now will be on addressing important crosscutting issues of infrastructure, reverse logistics, technology upgrade and integration with the informal sector. This will be supported by active public policies, extended producers' responsibilities framework and innovation.

For shifting to a carbon neutral economy, 5-7 per cent biomass pellets will be co-fired in thermal power plants resulting in annual carbon dioxide savings of 38 MMT and bringing additional income to farmers and job opportunities to locals and help avoid stubble burning in agriculture fields. Energy conservation measures, like in large commercial buildings through the Energy Service Company business model, four pilot projects for coal gasification and conversion of coal into chemicals required for the industry, and policies and required legislative changes to promote agro-forestry and private forestry will be brought in.

Record Outlays

As a sector, the maximum allocation in the Union Budget has gone to defence - Rs 5.25 lakh crore - at 13.31% of the total budget. The focus is on pushing the indigenisation in building military platforms in India. Led by the vision to reduce imports and promote Made in India equipment for the armed forces, 68 per cent of the capital procurement budget will be earmarked for domestic industry in 2022-23, up from 58 per cent in 2021-22, said the Finance Minister. The area of research and development (R&D) in the defence sector will be opened for industry, start-ups and academia with 25 per cent of the R&D budget earmarked. From 2022- 23, private industry can take up design and development of military platforms and equipment in collaboration with DRDO and other organisations through a special purpose vehicle model. The Centre will also set up an independent nodal umbrella body for meeting wide-ranging testing and certification requirements, she added.

The Jal Jeevan Mission has been allocated Rs.60,000 crore with an aim to cover 3.8 crore households in 2022-23. The year 2022-23 will also see completion of 80 lakh houses for the identified eligible beneficiaries of PM Awas Yojana, both rural and urban, for which Rs.48,000 crore has been allocated.

Two lakh anganwadis will be upgraded under Saksham Anganwadis and become new generation anganwadis with better infrastructure and audiovisual aids, powered by clean energy and providing improved environment for early child development.

The Finance Minister underlined the excellent response received on the Productivity Linked Incentive (PLI) in 14 sectors for achieving the vision of AtmaNirbhar Bharat, with potential to create 60 lakh new jobs, and an additional production of Rs.30 lakh crore during next five years.

Unflinching Support to MSMEs

 With the vision of job creation all over, the Union Budget put forth a string of measures for the micro, small and medium enterprises (MSMEs). The Finance Minister announced the extension of Emergency Credit Line Guarantee Scheme (ECLGS) launched in 2020 to mitigate the adverse impact of the pandemic and provided additional credit to more than 130 lakh enterprises. The ECLGS will be extended up to March 2023, and its guarantee cover will be expanded by Rs.50,000 crore to total cover of Rs.5 lakh crore, with the additional amount being earmarked exclusively for the hospitality and related enterprises.

The government-launched portals Udyam, e-Shram, NCS and ASEEM will be interlinked and their scope widened. These portals will now have live, organic databases, providing G2C, B2C and B2B services, which will relate to credit facilitation, skilling and recruitment to formalise the economy and boost entrepreneurial opportunities, said the Finance Minister. The Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme will be revamped with required infusion of funds. This will facilitate additional credit of Rs.2 lakh crore for micro and small enterprises and expand employment opportunities. To make the MSME sector become more resilient, competitive and efficient, the government will strengthen the Raising and Accelerating MSME Performance (RAMP) programme with an outlay of Rs.6,000 crore over five years. The Finance Minister highlighted the government's move to reduce over 25,000 compliances and repealing 1,486 Union laws in recent years as the result of the government's strong commit-ment for 'minimum government & maximum governance', trust in the public and ease of doing business (EODB). She said, India's journey from 75 years to 100 years, called the Amrit Kaal, the next phase of Ease of Doing Business EODB 2.0 and Ease of Living, will be launched.

The Turn of Updated Return

The Union Budget 2022-23 has kept income tax slabs unchanged while allowing taxpayers an additional two years to update their returns. While presenting budget proposals, Finance Minister Nirmala Sitharaman said, the government's objective was to further simplify the tax system, promote voluntary compliance by taxpayers and reduce litigation.

Based on a trust-based governance mechanism, the finance bill has allowed taxpayers to file Updated Return. The option will provide taxpayers an opportunity to correct errors while filing returns or missing out on reporting certain transactions. This return can be filed within two years from the end of the relevant assessment year. While giving the new service, the Finance Minister, to bring certainty and increase deterrence among tax evaders, proposed that no set off of any loss shall be allowed against undisclosed income detected during search and survey operations.

Newer Areas of Taxation

The most outstanding taxation announcement was for virtual digital assets, an area that has seen a phenomenal increase in transactions in recent years. In 2022-23, any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent from the coming financial year.

To bring parity between employees of state and central governments, it has been proposed to raise the tax deduction limit from 10% to 14% on employer's contribution to the National Pension System (NPS) account of state government employees as well. The increase will help in enhancing the social security benefits of state government employees and bring them at par with central government employees.

Budget 2022 introduced a new tax benefit or deduction for the parent/guardian of a disabled person. The present law provides for deduction to the parent or guardian only if the lump sum payment or annuity is available to the differently abled person on the death of the subscriber, i.e., parent or guardian. There could be situations where differently abled dependents may need payment of annuity or lump sum amount even during the lifetime of their parents or guardians. It has been proposed to allow the payment of annuity and lump sum to the differently abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardians attaining the age of 60 years.

Eligible start-ups, established before March 31, 2022, had been provided a tax incentive for three consecutive years out of ten years from incorporation. The Finance Minister has proposed to extend the period of incorporation of the eligible startup by one more year, that is, up to March 31, 2023, for providing such tax incentive. She has also proposed to extend the concessional tax regime for newly set-up, domestic manufacturing companies by one year to March 2024.

Boost to Urban Development

The Union Government in the budget pushed for better urban planning in India's megacities. The focus is on sustainable measures and public transport.

In her address, the Finance Minister pushed for orderly urban development, "to help realise the country's economic potential, including livelihood opportunities for the demographic dividend." She underlined the need to nurture the megacities and their hinterlands to become current centres of economic growth and facilitate tier-2 and tier-3 cities to take on the mantle in the future. The Centre will support States in urban capacity building, she said. Modernisation of building byelaws, town planning schemes and transit-oriented development will be implemented.

Special Mentions

Under the new Vibrant Villages Programme, border villages with sparse population, limited connectivity and infrastructure on the northern border will be covered. Here, the activities will include construction of village infrastructure, housing, tourist centres, road connectivity, provisioning of decentralised renewable energy, direct-tohome access for Doordarshan and educational channels, and support for livelihood generation. In 2022, 100 per cent of 1.5 lakh post offices will come on the core banking system enabling financial inclusion and access to accounts through 11 net banking, mobile banking, ATMs, and providing 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 interoperability and financial inclusion. In her address, the Finance Minister recognised the loss of formal education due to the pandemic, particularly in the rural areas, and those from weaker sections. With government school students affected most, the need to impart supplementary teaching and build a resilient mechanism for education delivery was underlined. To overcome this gap, 'one class-one TV channel' programme of PM eVIDYA will be expanded from 12 to 200 TV channels, enabling all states to provide supplementary education in regional languages for classes 1-12. Vocational education and digital teaching were also addressed in the budget, with 750 virtual labs in science and mathematics and 75 skilling e-labs announced for a simulated learning environment. High-quality e-content in all spoken languages will be developed and delivered through the internet, phones, TV and radio. A competitive mechanism for development of quality econtent by teachers will be set up to empower and equip them with digital tools of teaching and facilitate better learning outcomes, the Finance Minister said.

Skilling programmes and partnership with the industry will be reoriented to promote continuous skilling avenues, sustainability, and employability across sectors. Digital Ecosystem for Skilling and Livelihood - the DESH-Stack eportal - will be launched to empower citizens to skill, reskill or upskill through online training.

As a preferred ecologically sustainable alternative to conventional roads in difficult hilly areas, National Ropeways Development Programme will be taken up on PPP mode. The aim is to improve connectivity and convenience for commuters, besides promoting tourism. This may also cover congested urban areas, where conventional mass transit systems are not feasible.

In her interview to Doordarshan, Union Finance Minister Nirmala Sitharaman called the Union Budget 2022- 23, "a budget for continuity." This new phase will be guided by an active involvement of the states, digitisation of manual processes and interventions, integration of the central and state-level systems through IT bridges, a single point access for all citizencentric services, and a standardisation, removal of overlapping compliances, and preparing the country to take the road to smarter and greener 25 years.

(The author is a New Delhibased Senior Journalist. She can be reached at jyotisverma2912@gmail.com)