2 in 3 Indians surveyed believe Budget 2022 will have positive impact on economy though no personal tax relief is upsetting to many

February 6, 2022, New Delhi: Finance Minister of India Nirmala Sitharaman deliberated the Union Budget 2022 in Parliament on February 1st. There were a host of measures announced for several sectors. Though many citizens had pinned hopes for some sort of relief in times of pandemic, there were only a few changes made to the personal income tax structure, none that provide relief. The Union Government of India has increased the Capex target by 35.4%, from INR 5.54 lakh crore to INR 7.50 lakh crore. While the Government revised the fiscal deficit for 2021-22 at 6.9% of GDP, it proposed a fiscal deficit of 6.4% of GDP in 2022-23 and 4.5% of GDP by 2025-26. The health sector has been allocated INR 86200.65 crore in the Union Budget, a hike of 0.2% over the revised budget INR 86,000 crore in 2021-22. However, the spending on “medical and public health” has been reduced from INR 74,820 crore in 2021-22 to INR 41,011 crore in 2022-23, due to "lower requirement of vaccination", according to Budget documents. The Government has announced customs duty exemption on steel scrap to be extended for another year for MSMEs. It also announced to extend Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023, with an aim to create 60 lakh jobs in the next 5 years.

Among the host of announcements, the decision to tax sales of digital assets caught some serious attention. The Government has announced to provide a specific tax regime on any income from transfer of any virtual digital asset at the rate of 30%. Also, to capture the transaction details of such assets, the minister proposed to deduct 1% TDS on transaction in virtual digital assets above a certain monetary threshold. The finance minister said that there has been a phenomenal increase in transactions in virtual digital assets and that it was imperative to provide for a specific tax regime to issue a “Digital Rupee”, or Central Bank Digital Currency (CBDC), in the fiscal year 2022-23, using blockchain and other technologies, to be issued by the Reserve Bank of India (RBI). Many citizens had demanded these 2 policy interventions via LocalCircles in November 2021 and the same was escalated for action thereafter.

With a lot of citizens sharing their inputs on the budget, LocalCircles has conducted a study to understand from citizens how Budget 2022 will benefit India and asked them to rate the budget against their expectations on an overall basis. It also sought to understand if the increased allocation to healthcare by INR 200 crores for FY 2022-23 is sufficient given the pandemic. With the Government via Budget 2022 announced that the RBI will launch its own digital currency and gains from the sale of any digital assets will be taxed along with TDS to track all digital sales transactions, the survey sought to understand if citizens still supported these moves. The survey received more than 40,000 responses from citizens residing in 342 districts of India. 66% of respondents were men while 34% of respondents were women. 42% of respondents were from tier 1, 33% from tier 2 and 25% respondents were from tier 3, 4 and rural districts.

24% citizens thrilled with the Budget and see many benefits, 42% believe it will drive progress in one area at least; 29% see no impact of it

The first question in the survey asked citizens, “What is the top benefit according to you that Budget 2022 is likely to drive for India?” In response, 14% said “Will create new infrastructure”, 5% said “Will boost spending”, 13% said “Will boost both spending and employment”, 5% said “Will spur consumer spending”, 5% said “Will spur innovation”, and 24% said “will do all of the above”. 29% of citizens see no impact of it, and 5% did not have an opinion. On an aggregate basis, 24% of citizens are thrilled with the Budget and see many benefits, 42% believe it will drive progress in one area atleast, while 29% do not see any impact. This question received 9,960 responses.

42% citizens find Budget 2022 meeting or exceeding expectations while 56% find it below expectations

The next question asked citizens “How do you rate Budget 2022 on an overall basis?” In response, 7% said “Far above expectations”, 10% said “Above expectations”, and 25% said “Met expectations”. 30% said it is “Below expectations”, 26% said “Far below expectations”, and 2% did not have an opinion. On aggregate, 42% of citizens find Budget 2022 meeting or exceeding expectations while 56% find it below expectations. This question received 10,461 responses. When comments from citizens were analysed, no relief given in personal taxes was the top reason why many are rating budget as below expectations

48% citizens believe that the Budget 2022 allocation to health is not sufficient to handle the pandemic while 40% believe it is

The following question asked citizens, “The Government via Budget 2022 increased allocation to healthcare by INR 200 crores for FY 2022-23 (from INR 86,000 revised amount in FY 2021-22). Do you believe this increase in Budget is sufficient to handle the pandemic?” In response, 40% said “Yes” and 48% said “No” while 12% did not have an opinion. This question received 9,927 responses. Once again, analysis of public feedback indicates that people believe that while India may need lower allocation for vaccination, there is a critical need to upgrade India’s health infrastructure in districts. From the need for isolation centers to the upgradation of community and primary health centers and from ensuring that at least each district has one fully equipped hospital, people believe this is critical in preparation for a future COVID wave or otherwise.

74% citizens support Government on 1 or more of its plans to tax digital assets and cryptocurrency transactions or RBI launching India’s digital currency

The next question asked citizens, “The Government via Budget 2022 has announced that RBI will launch its own digital currency and gains from the sale of any digital assets will be taxed along with TDS to track all digital sales transactions. Do you support these moves?” In response, 15% said “(1) support launch of RBI digital currency”, 8% said “(2) support taxation of gains on digital asset sales”, 5% said “(3) support 1% TDS on digital asset sales transactions”. Breaking down the poll, 8% said they “support 1 & 2” moves from the aforementioned options, 2% support “2 & 3”, while 36% “Support 1, 2 & 3” moves. There were only 18% of citizens who “Support none of the above” and 8% did not have an opinion. On an aggregate basis, 74% of citizens support Government on 1 or more of its plans to tax digital assets and cryptocurrency transactions or RBI launching India’s digital currency. This question received 9,726 responses.

58% support launch of RBI’s digital currency while 54% support taxation of digital assets

If responses given by citizens are aggregated in the order of priority, the findings indicate that 59% of citizens “Support launch of RBI digital currency”, 54% “Support taxation of gains on digital asset sales”, and 43% “Support 1% TDS on digital asset sales transactions”.

In summary, 24% of citizens are thrilled with the Budget and see many benefits ranging from infrastructure growth to boosting spending and creating employment while 42% believe it will drive progress in one area at least. However, 29% do not see any impact of such spending. 42% of citizens find Budget 2022 meeting or exceeding expectations while 56% find it below expectations with lower rating largely driven by no personal tax relief. 48% of citizens believe that the Budget 2022 allocation to health is not sufficient to handle the pandemic while 40% believe it is. 58% of citizens support the launch of RBI’s digital currency while 54% support taxation of digital assets.