The Union Budget 2022-23 - An Overview

The Finance Minister, Nirmala Sitaraman, presented the Union Budget-2022-23, paperless for the 2nd time that looked to set the blueprint for the next 25 years focusing India@75 to India @ 100. As per experts, the Union budget 2022-23 reflects a keen focus would be given in areas such as Infrastructure building and financing, Manufacturing, and Productivity via tech & digital expansion, making them the key drivers of economic growth.     

Key Highlights:

• Through the PM GatiShakti National Master Plan, logistics, mobility, and connectivity will be improved. In mobility, the focus is on clean and sustainable mobility, including battery swapping policies and EV interoperability standards. Furthermore, connectivity will be enhanced, and employment opportunities will be created by the 5G spectrum auction in 2022, followed by the roll-out of 5G services in 2022-23.

• A huge expansion suggested with 25,000 km of highways, the introduction of Unified Logistics Interface platform, 100 multi-modal cargo terminals, and 400 Vande Bharat Trains.

• Other new initiatives include the launch of E-passports, multiple Interlinking portals, DESH-Stack, Kisan drones, expanding PM E-VIDYA program, setting up Multilingual Digital University, Supporting MSME sector through ECLGS scheme, etc.

• RBI to introduce Digital Rupee using block-chain and other technologies. 

As per the budget, the Capex outlay for 2022-23 steeped up by 35.4% to 7.5 trillion(2.9% of GDP), taking to an outlay of 2 trillion.

Investment Options, Tax Regime, NPS

The Finance minister spoke of another fixed-income investment option in the form of ‘Green Bonds.’ Fixed Income securities are a good option for investors with a low-risk appetite as these securities provide comparatively low returns but are guaranteed. Another advantage of Fixed income securities is that they will diversify your portfolio and give returns through market ups and downs. Several of these securities also provide tax-saving options; another added advantage of taking them.

While each investment component has its own importance in the Investment portfolio, only careful analysis and a well-thought-out portfolio as per your needs can reap the desired results. 

• While there has been no change in the tax slabs, the budget gave leverage by exempting the payment of the annuity or lump sum to a differently-abled person after the parent turns 60.

• The NPS deduction for employer contributions for the state government employees has been raised from 10% to 14%.

As per the experts, the budget is growth-oriented while simultaneously inflationary too. The equity markets have backed it with key indices ending up by almost 1-1.5%. The experts say the interest rates will continue to be under pressure due to rising inflation fears and extensive govt—borrowing plans. However, the path for equity investors remains bright and progressive, with strong perpetual expansion anticipated in the coming years. 

 Why investing in Equities is always an option for growth?

The budget has projected a positive future for equity investors; it is also important to know why choosing to put money in equity mutual funds can be a great strategy for wealth creation. Also, the time horizon and risk-bearing capacity are two key drivers in this. Let’s see a few points below that show equity mutual funds as a growth investment option:

• Growth of capital- Investment in Equities can provide returns that beat inflation, thus helping to accumulate wealth over a long period of time.

• Easy on the pocket - One doesn't need a lot of accumulated money to invest in Equities. The investment route of Systematic Investment Plan (SIP) is available where an investor can start from as low as Rs 500.

• Diversification of portfolio -Portfolio diversification happens with exposure to various stocks, and growth remains perpetual, as even if some stocks are not performing well, others will.

• Tax benefits -With investment in ELSS, i.e., Equity Linked savings scheme, the investor gets to experience growth as well as tax efficiency.

• Professionally managed -These funds are managed by professional experts who study the market and accordingly invest in the best performing funds.

As per the experts, timely re-balancing of portfolio and right asset allocation will remain the key to producing returns over a long period. A goal-based investing with a major focus on Equity investing can be the strategy to get a minimal negative return from these investments. For assistance to choose new investment avenues and stride forward to initiate the path to Secure your Financial Future, it is advisable to consult an expert.