Budget 2022: What's in store for healthcare, rural India, income tax and more

The Indian economy is on the path to recovery. State elections are on the top of everyone's mind. Will Nirmala Sitharaman's Budget 2022 be a populist one? Or one that focuses on growth?

What do the experts have to say about the upcoming budget 2022

Speculations are rife about the upcoming budget to be presented in the Parliament on February 1. The salaried class expects tax relief, start-ups seek friendly policies, and big businesses are looking for reforms.  

With the COVID-19 scare still looming and hindering the growth of the world economy, will Finance Minister Nirmala Sitharaman rise to the challenge? Which sectors will get a boost? Which ones won't? Here's a look at some expectations and predictions for Budget 2022. 

Healthcare:

The pandemic continues to be a concern, and the healthcare sector is likely to get some concessions and relief. Experts hope that there's an increase in the government's budget allocation to healthcare. More attention should be paid to boosting investment in medical research and innovation.  

Tax relief is expected for businesses as well as individuals. A tax holiday for healthcare start-ups and tax breaks for private players might encourage them to look toward setting up facilities in rural areas and smaller towns.   

Far the salaried class, a hike in premium exemption might encourage more people to invest in health insurance policies.

Also Read: New COVID-19 cess expected in upcoming Budget 2021

Rural India:

With elections around the corner, there are likely to be announcements of policies that will benefit states like Uttar Pradesh. The focus will be on creating jobs for youth and providing opportunities for upskilling. 

Resources allocated to agriculture, infrastructure, and power in rural areas are expected to be higher. Efforts for poverty alleviation will continue.  

Capital Expenditure:

Given the high fiscal deficit and a likelihood of sops due to state elections, the question is whether the focus on capital expenditure will reduce in the upcoming Budget. While this may be tempting, it is unlikely that the government will weaken capital expenditure, given the segment's impact on economic growth. Infrastructure, transport, and railways will likely continue to witness healthy spending growth from the government.  

Taxes:

There are also speculations about a tax rationalisation measure where the tax rates might see some modification. Experts believe this is very much needed because of the vast disparity in the way taxes are collected from the public. But taxpayers might see higher rates to help bridge the fiscal deficit the central government is facing.

Another facet that might see some changes during the Budget session slated for January 31, 2022, to February 14, 2022, would be the divestment of PSUs. It has seen slow progress so far on disinvestment, which the government would want to change, especially to keep its reform credentials going. 

Exports:

Some of the experts also believe that India might take after those Asian countries who have focused on exports and gained from them. The budget session of 2022 might just see the commencement of a long-term export strategy for the manufacturing sector. The real-estate sector might also see certain relaxations for taxes and there can be a rise expected in FDI inflow.

Additionally, cryptocurrency exchanges might see a major regulation coming their way. Though cryptocurrencies are largely unregulated, the tax collection might see major modifications in the upcoming budget, with the government hoping to charge TDS for exchanges above a certain threshold and further tax those entities that make major gains from trading. Amidst these speculations, crypto trading platforms are demanding tax clarity, which might be a key factor in driving the cryptocurrency bill.

The Indian economy grew at 8.4%* in the third quarter of 2021, and the projected growth for this year is slated at 9.4%. The base assumption is that the Ministry of Finance would keep these numbers in mind before presenting the budget in Parliament. They wouldn't want the rates to slip as they did last year.

Also Read: Highlights of Union Budget 2021-22

After a sharp contraction last year due to the pandemic, the economy has been recovering steadily, with GDP rising by 8.4 per cent in the second quarter of the fiscal year. Estimates by the National Statistical Office state that annual growth by the end of the current fiscal year will likely be 9.2 per cent.

Focus on growth, privatisation, reforms, and employment will go a long way in aiding steady post-pandemic growth trends of 7 to 8 per cent (or even higher) over the medium to long term. So, all eyes will be on the Finance Minister as she unveils the fine print of the budget on February 1.    

Also Read: 2021 and financial planning: Lessons to adopt, mistakes to leave behind.

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