Author: Sriram Gutta, Deputy Head, India and South Asia, World Economic Forum, Viraj Mehta, Head of Regional Agenda – India and South Asia, Member of the Executive Committee, World Economic Forum Geneva & Suchi Kedia, Community Specialist, Regional Agenda – India and South Asia, World Economic Forum
- Finance Minister, Nirmala Sitharaman, has presented the Union Budget 2022-2023 as part of the 25-year lead-up to India’s 100-year independence.
- India’s 2022 budget aims to harness the momentum that has made India the fastest-growing large economy, targeting new growth opportunities in the green economy and tech industries.
- The government is pushing forward with its citizen empowerment agenda, promising jobs, inclusive development, healthcare transformation and female empowerment.
India has grand ambitions for the next 25 years, with the nation looking to be a global economic powerhouse by its 100th year of independence in 2047. The new Union Budget 2022-2023 presents a roadmap for the economy from India@75 to India@100 which is focused on four key pillars of development: inclusive development, productivity enhancement, energy transition and climate action.
India 2022 budget highlights
While keeping in mind what the government aims to achieve, here are five takeaways from India’s 2022 budget.
India is the fastest-growing large economy
While the COVID-19 Delta-variant cost Indian lives and livelihoods dearly in 2021, the country has done remarkably well to show firm resolve and economic resilience. At 9.2% for 2021-2022, India’s GDP growth will be the fastest of all the large economies.
With the economy rebounding to a size greater than pre-pandemic levels, the government aims to create 6 million jobs in 14 key sectors over the next five years through its Productivity Linked Incentive. While household spending and consumer spending still lag behind pre-pandemic levels, and industries like hospitality and tourism still suffer from the pandemic, the government hopes to rally momentum through new avenues like the green and digital economies.
Launching a digital currency
Indian minister’s 2022 budget speech focused on various incentives to boost India’s digital economy, including the launch of a digital rupee within 2022. Minister Sitharaman noted that the central bank digital currency will “give a big boost to the digital economy and lead to a more efficient and cheaper currency management system.”
2021 was a remarkable year for India’s tech industry, with a record 42 unicorns ($1 billion valued tech-based startups) added to the burgeoning digital economy. It is also gearing up for the rollout of 5G within the year. Digital banking, fin-tech and e-government platforms are earmarked as drivers for financial inclusivity and simplifying governmental bureaucracy.
While tech enthusiasts may be excited at these prospects, the caveat to the digital-first budget is the introduction of a specific tax regime for digital transactions. The 2022 India budget provides for 30% taxation on any income from the transfer of any virtual digital asset. https://platform.twitter.com/embed/Tweet.html?dnt=false&embedId=twitter-widget-0&features=eyJ0ZndfZXhwZXJpbWVudHNfY29va2llX2V4cGlyYXRpb24iOnsiYnVja2V0IjoxMjA5NjAwLCJ2ZXJzaW9uIjpudWxsfSwidGZ3X2hvcml6b25fdHdlZXRfZW1iZWRfOTU1NSI6eyJidWNrZXQiOiJodGUiLCJ2ZXJzaW9uIjpudWxsfSwidGZ3X3NwYWNlX2NhcmQiOnsiYnVja2V0Ijoib2ZmIiwidmVyc2lvbiI6bnVsbH19&frame=false&hideCard=false&hideThread=false&id=1488510815145578497&lang=en&origin=https%3A%2F%2Fwww.weforum.org%2Fagenda%2F2022%2F02%2F5-things-to-know-about-india-2022-budget-speech%2F&sessionId=fb949da6fbbbbdbdcfb6d0b38ac4c1d5da1e155d&theme=light&widgetsVersion=0a8eea3%3A1643743420422&width=550px
India is going green
The inhabitants of India’s major cities are already living up to the realities of extreme weather conditions. The effects of climate change may balloon infrastructure and public health costs in years to come – and decrease labour productivity and workable hours.
Calling climate change one of the highest external risks facing the country and the green economy a sunrise economy, the finance minister presented multiple proposals and pathways to climate action across different sectors. These include raising climate finance and developing greener public transportation. Key highlights under this section from India’s 2022 budget include 280 GW of installed solar energy capacity by 2030, promotion of clean tech and clean governance solutions, and special mobility zones with zero fossil-fuel policies.
In a push for electric vehicle (EV) adoption, the Minister introduced a battery swapping policy along with inter-operability standards to improve efficiency in the EV ecosystem. This will allow drivers to replace depleted battery blocks for freshly charged ones at swap stations, a faster option than charging stations. It also incentivises the private sector to develop sustainable and innovative business models for ‘Battery or Energy as a Service’.
India set a 2070 net-zero emissions target at COP26. This will require massive investments in climate change adaptation and mitigation programs in years to come to transform the economy into a low carbon one while maintaining its impressive growth.
Emphasizing inclusive development
The pandemic financially hurt millions of Indian families and analysts have warned against the threat of growing inequality amidst the pandemic. Prime Minister Modi’s government has, since 2014, laid a strong focus on citizen empowerment. India 2022 budget aims to expand its support for Indians, particularly vulnerable groups such as girls, women, senior citizens and farmers. The budget expands social welfare support, while economically empowering marginalised groups through job creation.
The government sees inclusive development working in concert with the digital- and green economic agenda, while multimodal transport and logistics projects target better connectivity. Infrastructure and economic connectivity plans include construction of 25,000km worth of new highways and 100 cargo terminals.
Expanding education and mental health care
The pandemic has meant that many Indian school children have lost up to 2 years of valuable schooling. Major educational programs include expanded digital tools for schools in remote regions.
So too, it launches a Digital University which will provide youth across the nation with access to quality education, particularly in ICT subjects. This initiative hopes to birth the next generation of entrepreneurs.
As the nation continues to fight the effects of COVID-19, it looks to boost the resilience of its public healthcare system. Alongside a digital platform to create better synergies among different healthcare stakeholders, the government is working toward universal access to healthcare facilities for all Indians.
In a significant move, Minister Sitharaman announced the launch of a National Tele-Mental Health Programme, which, built around 23 core health centres, will provide citizens with access to quality mental health counselling and care services.