The Union Budget 2022 introduces digital cryptocurrency, gives incentives to farmers, industry and leaves out the wage workers high and dry as direct income tax remain untouched, giving no relief to the common man or salaried class.  

Union Finance Minister Nirmala Sitharaman expects to create 60 lakh jobs under the productivity-linked-incentive (PLI) scheme in 14 sectors. The Government hopes that it has the potential to create additional production Rs 30 lakh crore, a bit high of an expectation amid a subdued Economic Survey that does not show much enthusiasm for “spend and enjoy”.

The MSMEs, who are in a critical stage, get into about Rs 2 lakh crore largely credit support. But it is to be seen whether they would be able to have the benefit and thrive at all. What is being offered is not enough.

Sitharaman’s expenses rise marginally to Rs 39.44 lakh crore from Rs 37.70 lakh crore in 2021-22. Her borrowings increase to Rs 16.61 lakh crore from Rs 15.91 lakh crore. Fiscal deficit at 6.9 per cent, reduced from budgeted 9.2 per cent, in 2021-22; has come down to 6.4 per cent.

The growth figures projected at 9 per cent, though coincides with the International Monetary Fund projections has a catch of minus seven per cent growth two years back. Still the actual has to come back to the 2019 level.

The roadmap is to be created through capital expenditure, the introduction of 5G communication technology, the Central Bank Digital (crypto) Currency, massive purchase of paddy and wheat from farmers and the master plan for roads and highways. The FM says she is setting the pace for India’s ‘Amrit Kal’ -75^th year of Independence  — and eyed economic growth for India over the next 25 years.

Of course, she has extended a number of tax benefits to the lowering or rationalizing of many rates for different industry players. She says that there was a discrepancy in rates and she has just brought it to the realistic level.

The government has massively increased the capital expenditure target to Rs 7.5 lakh crore from Rs 5.5 lakh crore in the last Budget for FY23. It is expected to give an overall boost to the economy and create jobs. The basic thrust of job creation would be through investment in infrastructure creation. It works as per the psyche that more the infrastructure prospecting finances from banks more would be the need for employing people. This year’s expenses were at 2.48 lakh crore.

Along with the Budget, Finance Minister Nirmala Sitharaman announced that the Reserve Bank of India will roll out the Central Bank Digital Currency (rupee) using blockchain and other technologies. “This will give a big boost to the economy”, she says. It makes the international transfer of money, capital, easy. This can have many businesses done without touching the formal transaction routes. Capital inflow and outflow become simpler. In a way, it integrates the country with the international cryptocurrency, whose pros and cons are being studied. Many governments are yet to accept crypto but in the parallel market, it is becoming an accepted currency.

Keeping an eye on the elections and the recent farmers’ agitation, that led to the withdrawal of three farm bills, she announced the higher allocation of procurement of wheat and paddy under MSP operations. She spends Rs 2.37 lakh crore and hopes this would have a better impact on the farmers’ lives. The question is whether it will? Stressing on the international year of millet, she hopes to diversify the food habits and give the farmers more options for growing different crops. However, the expected rise of the PM Kisan pension has not happened.

The Finance Minister’s hope to have 60 lakh jobs in a year, a reminiscence of the days of Atal Behari Vajpayee, in an economy that has yet to come out of the Covid-19 syndrome, is an optimistic move. It, however, requires that much consumption and manufacturing recovery. The industry has a weightage of 28 per cent in GDP calculation. Still, the income recovery is at a low, and a sudden boost to consumption is a highly placed expectation.

Proposing some minor direct tax reforms, Finance Minister Nirmala Sitharaman on Tuesday quoted Mahabharata’s Shanti Parva while presenting the Union Budget 2022-23. “The king must make arrangements for the welfare of the populace by way of abandoning any laxity and by governing the state in the line of Dharma,” Sitharaman said.

Her assessment of having a mere 3.8 crore income tax payee is also not correct. In this country, everyone pays a high indirect tax of approximately 40 per cent even the 82 per cent who are not in the income tax net. She knows that the tax by individuals is at a high of 30 per cent plus cess against the corporate tax of 22 per cent. The mismatch is truly illogical. The only levy as of now for taxpayers is that they will be able to file an Updated Return on payment of additional tax. This updated return can be filed within two years from the end of the relevant assessment year. Further, if the person misses out on reporting any form of income, there is a window to correct this mistake.

The earning salaried classes are about 3.75 crores and they all are in the tax net. The compliance is full specially in a situation where there has been income contraction in the private sector and corporate are paying low taxes compared to individuals. Tax evasion, as she says is more a myth. Interestingly they also pay GST, which brings Rs 1.40 lakh crore in January 2022.

Overall the budget has dreams, euphoria, indirect aspirations at growth like the stress on drinking water projects, 28,000 crores to housing projects, national digital health system, railway projects and the like.

Vast sections of the population are excluded. In the sections struck by extreme poverty, migrant labourers do not have a strong prescription.  It was expected to be a dream real job generating budget with lots of gifts for the citizens. As the budget is, it would be moderate on consumption, average on growth and the pace would be possibly as good as it was this year.

Courtesy: INFA