The Union Budget is set to be announced on February 1, 2022, and various industries, individuals, and others throughout the country are anticipating changes in their particular fields.
Union budget 2022 expectations include measures to promote foreign investment, tax relief for the real estate and infrastructure sectors, and other tax-related issues that could get focussed. Increased adoption of digital tools could get used to promote investor confidence, attract international investment, and rationalise compliance.
What are the expectations from the Union Budget 2022?
Economic Growth Plan – While preparing Budget 2022, the government’s primary focus will be on developing a powerful growth strategy to rebuild the economy hit by COVID-19. According to the Indian government’s economic adviser, the growth will be between 7% and 7.5%. However, the council cautioned the administration not to set unrealistic income expectations. Budget 2022 will also feature plans to use the extra revenue to build more assets.
MSMEs to get compliance relief – It’s no secret that the pandemic has taken a heavy toll on the small business sector. MSMEs are India’s second-largest job creators, employing over 11 crore people. Nitin Gadkari, Union Minister of Micro, Small, and Medium Enterprises (MSME), said that they account for 48% of our country’s exports and MSMEs account for 30% of GDP. It is expected that the government may lower the compliance burden in all areas, including taxes, loans, audits, and licensing.
Agriculture – Rural communities are having lukewarm hopes for the upcoming Union Budget 2022. The explanation could be the sheer magnitude, diversity, complexity, and character of externalities affecting the rural sector, particularly agriculture, and the combination of ongoing agricultural issues. Limited economic opportunities outside of agriculture in rural areas and Covid providing a mix of complexity add to this. If the government does not include it in the budget, it may be too little, too late.
Stock market– The scope of the Indian stock market is expanding, and it is predicted that the government may adopt regulatory initiatives to make the Indian market more investor-friendly than other emerging markets. With the COVID 19 2nd and 3rd waves wreaking havoc on the Indian economy and affecting millions of people, investors and consumers alike are anticipating a strong Budget 2022. To increase investor sentiment, retail investors would prefer STT to be decreased or even abolished and long-term investments to once again be tax-free.
Start-ups – With young entrepreneurs entering this ecosystem, expectations are that the government will develop a simple regulatory structure, regulations, and norms for start-ups, allowing organisations to operate without administrative barriers.
Taxation – Budget 2022 expectation to phase out income tax deductions, exclusions, and direct tax benefits. It will also rationalise the tax rate. The Finance Ministry is seeking suggestions for ways to improve compliance, tax predictability, and conflict resolution. The ministry also indicated that it has not looked into GST-related issues because the GST Council is responsible for them. It is doubtful that the basic exemption limit or tax rates would see a change in the Union Budget 2022. The deduction limitations, on the other hand, may increase. One such deduction limit that is expected to increase is Section 80D, which covers paid medical insurance premiums.
Healthcare – Because a section of our population has yet to be immunised, the government will continue to devote resources to healthcare, which will impact the health insurance industry. With new variants emerging worldwide, our fight against COVID-19 will continue throughout the fiscal year. We may also see a road map for universal health care coverage.
Infrastructure – Most likely focus of Budget 2022 will be on developing infrastructure. It could include a thorough inventory of assets ranging from public roads to railways that the government intends to monetize throughout the fiscal year 2022-23. According to reports, it may prioritise motorways and expressways in particular.
Hospitality industry – The repercussions of the pandemic are still being felt in the industry. Budget 2022 India expectations may see plans to encourage tourism and additional incentives such as interest-free loans, subsidies, and tax reductions.
Crypto industry – The crypto sector has long awaited the passage of the Cryptocurrency Bill, which would clarify the regulatory compliances around cryptocurrency and their taxability under direct and indirect tax rules.
Do check out our detailed analysis on ‘Budget 2022’ here –
Who is in charge of the budget?
The Ministry of Finance prepares the budget after consulting with all other ministries about their financing requirements. The finance minister presents the yearly financial statement to the Lok Sabha on Budget Day. While the presentation portion of the procedure is the quickest, the budgeting phase takes several months.
What is the definition of stagflation?
Stagflation is an unfavourable condition characterised by chronically high inflation, high unemployment, and demand stagnation. Simply put, it is an economic trend characterised by rising inflation and declining GDP growth.
What is deficit financing?
Deficit financing is the process of raising funds to cover a deficit caused by an excess of spending over revenue. The shortfall gets filled by borrowing from the public, either through bond sales or the creation of new money.