In the absence of any vision document (e.g., 5 Year Plan) put out by the government, the annual budget is expected to provide direction to the country – to government departments, to industry and financial institutions – towards the priorities of the government and policy makers. This direction becomes more important when the economy is facing difficulties due to economic slowdown. Amidst such expectations and difficulties the budget for financial year 2022-23 was presented by Finance Minister in the Parliament on 1st Feb. The budget was expected to be accompanied with some major policies to get the economy out of slowdown and boost the domestic aggregate demand. Not many expectations seemed to be realised when the details about the budget were presented.
The budget can be mainly summed up under a few major goals and themes, such as, capital formation, sustainability, boosting infrastructure and digitalisation. The proposed expenditure for the financial year 2022-23 stands at Rs 22.84 lakh crore and anticipated revenue stands at Rs 22.84 lakh crore, meaning deficit budgeting continues to be 6.4% despite the slogan of Atmanirbhar Bharat. The Budget stated no changes in Income Tax but there is a sort of tax rebate for central government employees and surcharge limit (cap) of 15% on long-run capital gain. Custom duties on capital goods will be decreased to 5%. Infrastructure has been given special attention with a capital expenditure of 20,000 crore. Under infrastructure enhancement, national highways are proposed to be developed and inland waterways proposed connecting the major rivers of the country. Connecting rivers is expected to help in solving the problem of irrigation and water scarcity in different parts of the country.
For the purpose of sustainability, enhancement of E-Vehicles and blended fuels will be the focus. In the way of digitalisation, RBI will launch the digital rupee. Besides, digital infrastructure will be developed and spread with the proposed launch of 5G in the country in 2022. Crypto is expected to be considered as a digital asset. 30% tax rate will be charged on all digital assets (including crypto). In order to promote blended fuels, normal fuels like petrol, diesel will be taxed @ 2 Rs/liter from October 2022. Drones will be introduced in agriculture for spraying and other purposes. There are some incentives for MSMEs in the budget. Leather ornaments, clothes, electronic accessories are among the products which are going to be cheaper in the next year. Government proposes to create 6 million jobs in next 5 years, a figure which seems quite small as compared to 25 million new workers (mostly educated) which are expected to enter the labour market in the same period of next 5 years.
Coming to the budget of J&K UT, the proposed expenditure for financial year 2022-23 stands at Rs 35,581.44 crore, which is more than the previous budget allocation by Rs 877 crore. Bulk of the allotted budget as such, Rs 33,923 crore, has been given to J&K UT under central assistance. From the allotted budget, Rs 500 crore will be capital expenditure.
This distributional pattern of expenditure makes it clear that focus of this budget is on capacity building with special attention on the development of infrastructure and capital formation. The budget has been framed keeping in view long-term objectives. Although the target for fiscal deficit has been set at 6.4%, it seems that this target is hardly going to be achieved keeping in view the sources of revenue generation and proposed expenditure. The pattern of income distribution (inequality) has been left unattended and such, inequality is expected to get more tilted towards the richer section in the coming years.
—The writer is a research scholar in Economics. [email protected]