Feb 2, 2022

Budget 2022 - Key Takeaways

Most of the predictions/asks by the industry pre-budget did not happen. Here are a few of the key takeaways from the budget:

Legitimizing digital currency:

The govt made 2 big policy changes to legitimize digital currency or cryptocurrency. 

1. Digital Rupee : The RBI will be issuing a Digital Rupee using blockchain. In effect this means that a blockchain ledger will be kept for the Rupee, but I do not think there will be any crypto mining. 

2. Digital Tax : There will be a tax of 30% on other virtual digital assets. Though the tax is very high, what it also means is that the cryptocurrencies like bitcoin , etherium etc will be legalized. You cannot tax something which is not legal. I also think that since they mention "virtual digital assets" this will also apply to NFTs. Further if you transfer the digital assets, there will be 1% TDS. Add to that - if you gift such an asset, the receiver will be taxed (which I think is not correct as the receiver may not be in a situation to pay the tax - e.g. in the case of a NFT gift) . 

Environmental impacts

1. Green bonds : A "Sovereign Green Bonds" scheme has been setup to fund "Green infrastructure". I just hope it does not end up like the Election Bonds where there is no transparency and there is just no idea who has given the money or where the money has gone. 

2. Solar cells and Solar modules are more expensive: This makes no sense as the govt is very bullish on renewable sources of energy and moving towards an Electric Vehicle future and reducing environmental pollution. 

3. Battery Swapping: Again I fail to understand why the govt needs to come up with specific policies. This should be just another item under the policies for green transport. Let the innovations decide whether it should be going towards the faster charging or battery swapping modes. If there was a need for policy it should be about standardizing the charging infrastructure so that all car chargers can charge any car. 

4. Anti-dumping duties on steel products revoked. This is a curious change as on the one hand the govt is talking about reducing pollution and on the other hand we will allow such dumping from steel imports (mostly from China).

5. Chemical free farming : This is such a mixed bag. On the one hand chemical free farming is a step in the right direction, but there is hardly any existing infra around it. I know a few enthusiasts are doing it - but that is. For a large scale push, there is nothing existing. On top of that, the fertilizer subsidy has been drastically reduced to a fourth of what it was last year. I doubt farmers are going to jump on the non-chemical bandwagon. I also wonder why the govt has reduced fertilizer subsidies - wont it have been better to say that subsidies will now apply to non-chemical fertilizers if that's where the govt wants to push the farmers ? 

6. Linking of Rivers : This budget saw another push in this direction. I am not sure why the govt is keen on doing this while experts have always pointed out that the risks in this case are more than the rewards which are being thought of. 

Infrastructure push

The govt has announced multiple schemes for infrastructure and connectivity.

1. 25,000 km of national highways. Point to note here is that the govt measures each lane individually. So say you are covering a distance of 250kms , but since its a 4 lane highway, the govt measures it as 1000kms of road building. As such, the actual distance connectivity will be much less than 25,000kms. 

2. 100 new cargo terminals. This will help the supply chains. 

3. 8 Ropeway projects. I assume this will be done at tourist destinations. Apart from this, there was nothing to help the Hospitality/Tourism industries to recover from the impact of Covid to their businesses. 

4. 400 new Vande Bharat trains. I am very iffy about this one. Do we have the railway line infrastructure to add new trains ? Or are these trains going to replace existing and aging trains ? 

5. Rs 19,130 cr allocations for metro projects

6. Rs 2,600 cr for Central Vista

Startups

1. Defense research will be opened up for startups. I think there should be a collaboration with the colleges also (I am not sure if there is). If you look at the USA, colleges get funding from the defense forces. 

2. There is a focus on drones. I personally think this is detrimental as most startups will start looking at drones. Instead the govt should be putting policies in place which help in the startup ecosystem as a whole. e.g. the Economic Survey calls out specifically the long time it takes to get the patents in India. Govt policy should be towards simplifying such things. 

Health

1. X Ray machines are costlier. Why ? Has the govt learnt nothing from the pandemic ? We should be improving our medical facilities by leaps and bounds. 

Others

1. Defense Sector : 68% of procurement budget of defense will be for the local industries. i.e. Buy/Build stuff indigenously. 

2. E-Passport to be introduced. 

3. 5G network : This will start to be rolled out in the next financial year. This is just catching up to the global networks. Even without mention in the budget it will need to be done. 

4. Archeological Survey of India budget increase: I am happy about this. We have some really great cultural artifacts from the years gone by and they are in shambles. A part of this budget should also go into training the ASI staff on how to properly restore buildings. Too often I have seen patchwork cement work done on buildings and that takes away all the charm of these magnificent structures. My only comment here is that historical structures be treated as historical structures from any culture/religion and be preserved as such. Deleting history to suit the political viewpoint should not be done. 

5. No new Taxes comment: Also out of sync is the statement from the FM that the PM was very clear about no new taxes, and yet the budget has many different taxes imposed on different things. 

6. No relief for the salaried class

New lingo from the Budget: 

  • Amrit Kaal
  • One Station One Product
  • GatiShakti
  • Kavach
  • Parvatmala


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