India’s budget aims to increase spending to support growth

Commuters travel on a train in Mumbai, India, February 1, 2022. REUTERS/Francis Mascarenhas

NEW DELHI, Feb 1 (Reuters) – Indian Finance Minister Nirmala Sitharaman on Tuesday unveiled the budget for the financial year 2022/23 which aims to boost growth amid continued disruption from COVID-19 and rising inflation.

Here are the highlights:

DEFICIT/GDP

* Proposes a budget deficit of 4.5% of GDP by 2025/26

* Projects a fiscal deficit of 6.4% of GDP in 2022/23

* Revised budget deficit for 2021/22 to 6.9% of GDP

* Revenue gap estimated at 3.8% of GDP in 2022/23

* Nominal GDP is expected to grow by 11.1% in 2022/23

LOAN

* Revises 2021/22 gross borrowing to Rs 10.46 trillion against budget estimate of Rs 12.05 trillion

* Gross borrowing in FY23 estimated at Rs 14.95 trillion

* Net borrowing seen at Rs 11.59 trillion in FY23

RECEIPTS

* Projects gross tax revenue of Rs 27.6 trillion in 2022/23

* Estimated net tax revenue of Rs 1.93 trillion in FY23

* Divestment revenue set at Rs 650 billion

* Divestment receipts for FY22 revised to Rs 780 billion from Rs 1.75 trillion

* Estimated total revenue revenue of $22.040 billion in FY23

* Fixes dividend and profit at Rs 1.14 trillion for 2022/23

* Government to swap bonds worth Rs 1 trillion in FY23

* Aims to obtain a dividend of Rs 739.48 billion from the Reserve Bank of India and financial institutions in FY23

SPENT

*Total expenditure in 2022/23 estimated at Rs 39.45 trillion

* Fertilizer subsidy estimated at Rs 1.05 trillion in 2022/23

* Food subsidy estimated at Rs 2.07 trillion in 2022/23

* To borrow Rs 4.25 trillion through the National Small Savings Fund

* Projects interest payments, public debt service at Rs 9.4 trillion in 2022/23

DUTY

* Import duties on certain chemicals are reduced

* The exemption from customs duties on scrap steel will be extended for one year for small and medium-sized enterprises

* Customs duty on stainless steel, flat products, high steel bars to be repealed

* Unmixed fuel to obtain an additional duty of Rs 2 per liter from October 2022

* Duties on cut and polished diamonds at 5%

* Proposes reduction of import duties on coal, coke and coal gas to 5% from 10% from May 1

* Proposes to remove 10% import duty on aviation gasoline from May 1

* Proposes reduction of import duties on jet fuel to 5% from 10% from May 1

* Proposes reduction of import duties on LNG, propane and butanes to 2.5% from 10% from May 1

* Proposes a reduction of import duties on LPG to 5% against 10% from May 1

FINANCE

* The Emergency Line of Credit Guarantee Program for Small and Medium Enterprises will be extended until March 2023

* Energy transition and climate action will be a major government priority

* Life Insurance Corporation public offering expected shortly

* Initiatives from last year’s budget received adequate allocations in this budget

* The law on special economic zones will be replaced by new legislation

* Amend the bankruptcy code to speed up the resolution process

* Aims to reduce the liquidation of companies to 6 months against 2 years currently

* Supplement for long-term capital gains capped at 15%

STATES

* States will be allowed a budget deficit of 4% to GDP in FY23

* Interest-free loans over 50 years in addition to the normal loans allocated to the States

*State Financial Assistance Scheme for Capital Investment Expenditure at Rs 1 Trillion in 2022/23

DIGITAL CURRENCY

* To launch digital rupee using blockchain technology from 2022/23

* Launch a virtual digital asset taxation scheme

* Losses resulting from the sale of virtual digital assets cannot be compensated by other income

* Income from virtual digital assets will be taxed at 30%

INFRASTRUCTURE

* 5G spectrum auction will be conducted in 2022

* Design Driven Manufacturing Program for 5G will be part of the Production Related Program

* Award of contracts for laying optical fiber in rural areas, completion in 2025

* 480 billion rupees earmarked for affordable housing in 2022/23

* Allocate additional Rs 195 billion for production related incentives for manufacturing solar equipment

AGRICULTURE

* National program put in place to reduce dependence on oilseed imports

* Funds with mixed capital raised under a co-investment model to finance agricultural startups

* Railways will develop infrastructure for small farmers in 2022/23

TRANSPORT

* 400 energy efficient trains will be manufactured in the next three years

* The national road network will be extended by 25,000 km in 2022/23

* Expressway expansion will cost Rs 200 billion in 2022/23

*India budget: to implement battery exchange policy

DEFENSE

* The government has pledged to reduce defense imports

Compiled by Alasdair Pal; Editing by Euan Rocha

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