Budget gives massive push for capex to revive demand, create jobs

Tribune News Service

New Delhi, February 1

The Union Budget has proposed Rs 2 lakh increase in Government capital expenditure and extended a Rs 1 lakh interest-free loan to states in order to target growth of 8.2 per cent in 2022-23.

With anticipated growth of 9.2 per cent in the current fiscal, the economy would have recovered 101.3 per cent of the pre-pandemic output of 2019-20 by March 31, 2022.

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Hoping to evoke a matching response from the private sector to spur job creation, the Government extended the production linked scheme (PLI) to manufacturing of solar modules. The allocation of Rs 19,500 crore will add to the PLI announced for Rs 3,46,827 crore on these 14 PLI schemes. The Budget also extended for one year the concessional corporate tax of 15 per cent on newly incorporated manufacturing companies.

Presenting the Budget in Lok Sabha, the Union Finance Minister left personal income tax rates untouched, increased tax deductions for investments in national pension schemes for government employees but imposed a 30 per cent tax on income from virtual digital assets.

In an attempt to enthuse the real estate sector, long term capital gains tax has been capped at 15 per cent instead of the earlier band of 15 to 35 per cent.

There was little room for concession as the fiscal deficit for 2021-22 slipped by 0.1 per cent to 6.9 per cent and is projected at 6.4 per cent in 2022-23. Moreover, interest payment and servicing of debt rose by Rs 1.26 lakh crore to nearly Rs 9.5 lakh crore in 2022-23.

While sops for the middle class were few, the big picture from the Rs 39.50 lakh crore Budget was the increase in outlay for capital expenditure by 35.4 per cent to Rs 7.5 lakh crore in 2022-23 with Sitharaman claiming that the effective capital expenditure will be Rs 10.68 lakh crore, or 4.1 per cent of GDP.

As joblessness became a concern and privatisation its subtext, the target from disinvestment for 2022-23 is a scaled down Rs 65,000 crore and instead of the Rs 1.75 lakh crore budgeted for 2021-22 , the realisation was Rs 78,000 crore.

Of this, a hike of Rs 1 lakh crore is for extending National Highways by 25,000 km, an extra Rs 20,000 crore in capital expenditure for the railways and Rs 1.5 lakh crore for the defence sector. And, a Gati Shakti masterplan will guide big private investment in seven sectors of the Rs 100 lakh crore National Infrastructure Pipeline. These are roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure.

In a nod to the difficulties faced by the industry, the Budget announced the scrapping of anti-dumping duty on certain steel products from China.

All talk of 100 smart cities in the earlier Budgets was replaced by the announcement of a high-level panel to be set up for urban planning, new and modern building by-laws and increased promotion of public transport in urban areas. Similarly, there was no mention of doubling farmers’ income. Instead the Budget spoke of “a wave of technology in agri sector” such as kisan drones, natural farming along the Ganga river corridor and interlinking of six rivers including the Rs 44,605 Ken-Betwa project.

In the social sector, Rs 60,000 crore will be allocated for access to tap water to 3.8 crore households and 80 lakh houses will be completed in 2022-23 under PM Awas Yojana. The allotment for MNREGA remained nearly equal that of last year’s Rs 73,000 crore despite revised estimates for the current year coming at Rs 98,000.

The newly-minted Ministry of Cooperation under Amit Shah received Rs 900-crore while the Alternate Minimum Tax (AMT) on cooperative societies was cut to 15 per cent and surcharge to 7 per cent. 

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