Budget 2022 - What Is It And What To Expect

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Budget 2022 - What Is It And What To Expect

29 January, 2022



The Fiscal year is soon coming to a close and while many are only speculating about the new budget, inner finance circles are already buzzing with what can be expected. With recent years throwing unexpected challenges at the government, this year’s Union Budget is being eyed well. 

Amid the Omicron variant waves recently, our Union Minister Nirmala Sitharaman is all set to announce the Budget 2022 on February 1st. But are you still someone who is wondering what the Union Budget is?

What is the Union Budget?

To start with, understanding the major financial decisions for the country coming your way, let’s know the basics of what it is. In simplest terms, the Union Budget records the government's financial planning for the fiscal year, which will run from April 1, 2022 to March 31, 2023. There are two types of budgets in the Union: revenue and capital.

(i) The revenue budget accounts for the government's income and expenses. Tax and non-tax revenue are the two types of revenue. Revenue expenditures are the costs of the government's day-to-day operations and the multiple services provided to residents.

(ii) The government's capital receipts and payments are included in the capital budget. The government's capital receipts are largely made up of loans from the public, foreign governments, and the RBI. The term refers to money spent on the development of machinery, equipment, buildings, health care facilities, and education, among other things.

What to expect for Budget 2022?

President Ram Nath Kovind will address both houses of Parliament at the start of the Budget session on Monday, January 31, 2022. The meeting will be split into two parts, with the first ending on February 11, 2022. Part two of the session would start on March 14, 2022, and end on April 8, 2022, following a month-long recess.

With only a few days till India's most important financial event, the Budget session, various industry analysts, economists, and financial specialists are pinning their hopes on it. With various sectors being affected by the budget, here’s what we may expect from the budget announcement.

 

  • Education sector

 

The pandemic caused a paradigm shift in the industry, necessitating an immediate move from old training methods to more current online education methods. The pandemic made education impossible for many people due to a lack of Infrastructure and internet connection. 

This time around, the government may make certain changes to make education more accessible for all, such as improving internet access, making investments for improved education, and considering reduced borrowing costs on loans for educational institutions.

 

  • Taxations

 

Several large tax reductions could be sought to accomplish broader goals to benefit the country.

The inclusion of REITs and InvsITs in the budget, with the goal of putting long-term capital gains treatment on par with other asset classes, could also be mentioned. Custom duty reductions could also be considered to help balance the demand and supply flows. This could also help the hospitality industry by lowering procurement costs. 

The housing industry is the least reliant on imports, and a small boost can have a big impact on the economy. For example, if the government reduces stamp duty, it may effectively quicken home purchases and aid in the liquidation of stocks. A range of ideas might be considered to assist housing in the budget, which may help with a multiplier effect and also provide employment to those at the bottom of the hierarchy in this sector.

 

  • Environmental strategies

 

With companies trying to be more and more green with things like sustainable packaging, recycling products or parts of their manufacturing process items or something as simple as using energy-efficient appliances, the government might consider sharing some insights and benefits for the sector. The Budget is expected to emphasize how India is encouraging Environmental, Social, and Governance (ESG) across the board, not just in its business entities.

 

  • Natural Gas Sector

 

Considering that natural gas is expected to play a significant role in India's energy economy and growth, the government may place a heavy emphasis on promoting domestic natural gas producers, which have made little progress as a sector.

 

  • EV Sector

 

India is witnessing a tremendous electric vehicle revolution, which might gain even more traction in 2022 as charging infrastructure and advanced EV models expand. Consumers expect the government to announce additional actions to support local electric vehicle manufacturing, simplify financing, and nurture an innovative electric vehicle ecosystem.

In recent years, India has had to contend with COVID and severe lockdowns leading to highs and lows in the financial sector in one or the other way. Whilst this, the new budget announcement may bring some relief and also have everyone begin navigating through their income and expenses for the coming year. As you keep preparing to do so, you may need a funding friend to make your ends meet. Download our app on your phone to avail a quick Loan Against Securities when you need it. We won't let your plans or spirits down, no matter how challenging, or good the budget is.

 

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