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Union Budget 2022-23: Key Highlights

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At the Union Budget announcement on February 1, 2022, Finance Minister Nirmala Sitharaman said that India has entered ‘Amrit Kaal’—being only 25 years away from achieving 100 years of independence. The announcements of the Union Budget 2022 are aimed at ushering growth and development that lay a solid foundation for the years to come.

The Union Budget 2022 comprises four key elements that boost the growth of the Indian economy. These are PM GatiShakti, inclusive development, ease of doing business, and investment financing. 


Here are some of the key highlights from Budget 2022 for the next financial year.

Launch of digital rupee
One of the key Budget 2022 highlights was the announcement of the launch of the digital rupee. The digital currency will be launched by the RBI by 2023. It will be based on blockchain technology and will help reduce the country’s dependency on cash. Hence, the digital rupee will lower the cost of currency management and take India a step closer towards becoming a digital economy. The digital rupee is said to be an avatar of the country’s fiat currency.

Changes in custom duties
The government has reduced the customs duties levied for certain chemicals such as acetic acid, methanol and heavy feed stocks that are used for petroleum refining. However, the custom duties are also being raised for chemicals, like sodium cyanide, which are sufficiently available in the country. Furthermore, the exemption of customs duty on steel scrap has been extended for one more year for MSMEs. 

The customs duty on stainless steel import has also been revoked by the government. Additionally, the customs duty levied on unblended fuel will see a rise of Rs 2 per litre from October 2022. Fortunately, the Union Budget offers custom duty concessions on the import of raw materials that are used for manufacturing certain consumer electronics such as clothes and specific mobile phone components.

Proposed fiscal deficit
Fiscal deficit is the difference between the expenditure of the government and its revenue. Thus, one of the most crucial Union Budget 2022 updates each year is the fiscal deficit that is projected by the Finance Ministry of India. The proposed Union Budget document projects a fiscal deficit of 6.4% of GDP in the financial year 2022-2023. Finance Minister Nirmala Sitharaman has projected the total expenditure of the government in the fiscal year 2022-2023 at Rs 39,44,909 crore.

Growth in infrastructure 

The proposed Union Budget for 2022 also focuses on infrastructural development in the country. The government has declared it will award contracts to lay optical fibres in rural areas. Additionally, 5G spectrum auctions are going to be held in 2022 and design-led manufacturing for 5G will be a part of the production linked scheme (PLI). 

The Budget also gives importance to affordable housing by allocating Rs 48,000 crore for the development of about 80 lakh new affordable houses. Furthermore, the government has also declared the manufacture of 400 new energy-efficient trains over the next three years. The Budget also proposes to expand the current network of national highways by 25,000 km in 2022-2023. 

Taxation on investments
The capital gains earned from the transfer of digital assets will now be taxed at 30%. In addition, the losses incurred due to public investments that are made in digital assets will not be eligible to offset against other income. However, the surcharge levied on private equity investments is now capped at 15%. This has effectively bought down the long-term capital gains that are payable by a private investor from 28.5% to 23.95%.

Ease of doing business
The proposed Union Budget also launched the second stage of Ease of Doing Business and Ease of Living in India. In the first stage, around 25,000 compliances were reduced and about 1,486 union laws were repealed. The second stage is a step in the same direction and will be guided by the active involvement of the state governments. Ease of Business 2.0 is aimed at the digitisation of manual processes and the removal of overlapping compliances. 

Read more on which sectors are getting the most investment in budget 2022.

The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.

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