1. 5G services to roll out in FY23: Sitharaman

TRAI setting auction terms: Vaishnaw

Union Finance Minister Nirmala Sitharaman on Tuesday said the government would auction telecom spectrum in 2022, which will facilitate private players to roll out 5G services before March 2023.

“Telecommunication in general, and 5G technology in particular, can enable growth and offer job opportunities,” the Minister said in her Budget speech. “Required spectrum auctions will be conducted in 2022 to facilitate roll-out of 5G mobile services within 2022-23 by private telecom providers,” she added.

Speaking to reporters later, Telecom and IT Minister Ashwini Vaishnaw said the Telecom Regulatory Authority of India was deciding its recommendations for the spectrum auction and these were expected by March. “As soon as the recommendations come, we can go ahead with the auction.”

Ms. Sitharaman said to enable affordable broadband and mobile service proliferation in rural and remote areas, 5% of annual collections under the Universal Service Obligation Fund (USOF) would be allocated. This would promote R&D and commercialisation of technologies, she added.

BSNL to get ₹44,720 cr.

The government will make a capital infusion of ₹44,720 crore in state-owned BSNL in 2022-23 — the majority of the telecom ministry’s estimated capital expenditure, Budget documents show. “The provision is for capital infusion for 4G spectrum, technology upgradation and restructuring in BSNL,” the Finance Ministry said.

What will 5G do?

1. Improve broadband connectivity.
2. Autonomous vehicles – 5G will help in faster communication between vehicles on the road.
3. Improve public infrastructure and safety – Cities will be able to function efficiently, it will improve the surveillance, sensors will be able to notify the public works department when the streetlights stop functioning when the drains flood, utility companies can track usage remotely.
4. Remote control of Machinery – Heavy machinery can be remotely controlled from anywhere in the world, reducing the risks involved in working in hazardous environments.
5. Healthcare – Surgeries can be carried out remotely.

What is 5G?

5G is the generation next in mobile broadband. It will eventually replace the current 4G LTE mobile broadband connection.

1. Exponentially faster download
2. Higher upload speeds
3. Latency will decrease drastically. (Latency is the time taken by wireless devices to communicate with a wireless network).

5G operates on 3 different spectrum bands.

1. Low-band spectrum – It offers great coverage area and wall penetration. Lower speed compared to other spectrum bands is its disadvantage.
2. Mid-band spectrum – The advantage it provides over the low-band spectrum is, it provides faster speed and lower latency. However, building penetration is lower than  Low-band spectrum.
3. High-band spectrum – It offers the highest speed, but the coverage area and building penetration are greatly compromised compared to other spectrums.

Who invented 5G?

Research and Development on the 5G network were done with great vigour in many countries like US, UK, South Korea, China, and Japan.

2. Firms’ exit process to get shorter

 The Union Budget 2022-23 has proposed to establish the Centre for Processing Accelerated Corporate Exit (C-PACE) for speedy winding-up of companies.

“Several information technology-based systems have been established for accelerated registration of new companies. Now the Centre for Processing Accelerated Corporate Exit (C-PACE), with process re-engineering, will be established to facilitate and speed up the voluntary winding-up of these companies from the currently required 2 years to less than 6 months,” Finance Minister Nirmala Sitharaman said in her speech.

The Budget has also proprosed to carry out necessary amendments in the Insolvency & Bankruptcy Code to enhance the efficacy of the resolution process and facilitate cross-border insolvency resolution.

The main aim of the Code is resolving corporate debtors in distress.

“Necessary amendments in the Code will be carried out to enhance the efficacy of the resolution process and facilitate cross-border insolvency resolution,” Ms. Sitharaman said.

3. Battery-swapping policy on anvil

Move to address issue of space constraints in urban areas for charging stations

The Centre is planning to come out with a battery swapping policy with interoperability standards for Electric Vehicles (EVs).

Finance Minister Nirmala Sitharaman said that considering space constraints in urban areas for charging stations at scale, a battery swapping policy will be brought out and inter-operability standards will be formulated. The private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service’. This will improve efficiency in the EV ecosystem, she said.

The Budget aimed at strengthening the EV industry ecosystem, which will spur the demand for green vehicles, such as electric 2-wheelers and 3-wheelers, cars and buses, said Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV).

He added that these announcements would help to develop EV infrastructure and increase the use of EVs in public transportation. It would motivate businesses engaged in delivery and in car aggregation to incorporate EVs into their fleet.

Mr. Gill added this would spur companies to venture into the battery-swapping business. Shamsher Dewan, VP & Group Head – Corporate Ratings, ICRA, said if implemented efficiently, these steps were likely to go a long way in reducing range anxiety with regard to EV adoption while also aiding economies of scale in battery production.

“The inclusion of energy storage in the harmonised List of Infrastructure will facilitate cheaper finance for EV battery makers,” Mr. Dewan said.

4. Budget gives MEA funds for Taliban-ruled Afghanistan

It will also dedicate ₹600 crore for Myanmar

The Budget has allocated funds for projects related to Afghanistan. The Ministry of External Affairs will have ₹200 crore to spend on Afghanistan.

The MEA will also dedicate ₹600 crore for Myanmar which is currently reeling from a civil war since the military coup of February 2021. Bhutan, as usual has received the biggest allocation of ₹2,266.24 crore.

India does not have a diplomatic presence in Kabul where its embassy has remained shuttered since the Taliban took over the country in August. 

India has showcased its assistance to Afghanistan as aid-oriented and focused on development projects. 

Over the last two months India had sent several consignments of medicine and humanitarian assistance to Afghanistan. A large scale wheat consignment is expected to be delivered to Afghanistan in the coming weeks. The allocation for Afghanistan is expected to be spent on similar assistance during the year.

The allocation for Myanmar continues unchanged as the Ministry of External Affairs (MEA) had received similar allocation last year for the country. India has maintained diplomatic contacts with the trouble-torn country. MEA’s allocation for Mongolia, the northern neighbour of China had significantly increased from ₹2 crore to ₹12 crore.

The second highest recipient of the allocation will be Mauritius which has an allocation of ₹900 crore. The MEA, which is aiming to open new embassies in several locations in Africa, has an increased budget of ₹250 crore for the continent. The Ministry will get ₹300 crore and ₹750 crore respectively for Bangladesh and Nepal.

5. ‘Green bonds’ target carbon neutrality

To help India achieve net zero by 2070

Union Finance Minister Nirmala Sitharaman on Tuesday announced plans to issue sovereign ‘green bonds’, a concept catching up globally, to move towards carbon neutrality.

“As part of the government’s overall market borrowings in 2022-23, sovereign ‘green bonds’ will be issued for mobilising resources for green infrastructure,” she said.

“The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy,” Ms. Sitharaman said. “The ‘green bond’ market is globally expanding at a fast pace, and this will help India access long-term funds at competitive rates. This will also improve the ESG climate in the country,” said Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.

Industry reactions

Reacting to the provision in the Budget, Sumant Sinha, Chairman & CEO, ReNew Power Pvt. Ltd. said, with this India has laid the groundwork for its ambition to be a net zero country by 2070. “It is great to see that the government has very firmly put energy transition and clean energy at the heart of India’s economic growth and looks to address some of the most challenging aspects of this transition,” he said.

“Sovereign ‘green bonds’ are also very welcome, which can help mobilise financial resources for distribution companies as well as for clean energy investors,” he added.

6. Digital rupee to arrive in new fiscal, to use blockchain tech.

‘It will lead to a cheaper currency management system’

In a big ‘no’ to cryptocurrencies, the digital rupee will be introduced in India during the financial year 2022-23, Union Finance Minister Nirmala Sitharaman said on Tuesday while presenting the Union Budget.

“Introduction of Central Bank Digital Currency will give a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system,” Ms. Sitharaman said.

“It is, therefore, proposed to introduce the digital rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23.”

“Digital rupee is one of the most-awaited announcements. It is important to understand how other crypto assets will be taxed and whether there will be any specific benefit given to the digital rupee,” said Pranay Bhatia, partner and leader, tax and regulatory services, BDO India.

“With no deduction for cost, tax rate at 30%, tax on mining/gifting and no offset of loss against income from other sources, the Finance Minister has given the much-needed clarity on crypto transactions. However, tracking such transactions in the absence of a central regulator may be challenging,” he noted.

7. E-passports to be rolled out soon

A digital passport project will be rolled out in 2022-23, Union Finance Minister Nirmala Sitharaman announced on Tuesday.

This comes weeks after the Ministry of External Affairs sealed a deal with Tata Consultancy Services for the Passport Seva Programme V2.0.

“The issuance of e-Passports, using embedded chip and futuristic technology, will be rolled out in 2022-23 to enhance the convenience of citizens in their overseas travel,” she said. The announcement was welcomed by Union External Affairs Minister S. Jaishankar.

8. Push for promotion of drones through start-ups

Special purpose vehicle for Air India’s debts gets ₹9,259 crore; allocation slashed for Civil Aviation Ministry

The Union Budget pushed for promotion of drones through start-ups and skilling at Industrial Training Institutes (ITIs).

“Start-ups will be promoted to facilitate ‘Drone Shakti’ through varied applications and for Drone-As-A-Service (DrAAS),” Union Finance Minister Nirmala Sitharaman said.

Courses for skilling will also be started in selected ITIs across all States. Drones will also be promoted for crop assessment, digitisation of land records, spraying of insecticides and nutrients.

Barring the mention about drones, there were no new schemes or initiatives announced for the aviation sector. With Air India now privatised, the budgetary allocation for the Ministry of Civil Aviation was slashed to more than half of the current fiscal. It has been allocated ₹4,574 crore for the next fiscal.

The special purpose vehicle (AI Assets Holding Ltd.), set up by the government in 2019 to clean up Air India’s balance sheet to attract private investors, has been allocated ₹9,259 crore.

“The provision is made for repayment of past government guaranteed borrowings, sale and lease back rentals and past dues and liabilities of AI Ltd.” The Minister said ₹51,971 crore for Air India debts was part of its revised estimate of capital expenditure of ₹6.03 lakh crore for last fiscal. This was for the purpose of “settlement of outstanding guaranteed liabilities of Air India and its other sundry commitments”.

Expectations not met

Budget carrier IndiGo’s CEO Ronojoy Dutta rued that expectations of “tax concession to aviation industry in the forms of cut in aviation turbine fuel excise duty and allocation of concessional finance to airlines to help us come of the pandemic” were not met.

The Ministry of Tourism received 18.42% higher allocation at ₹2,400 crore. A major portion of the outlay — ₹1,644 crore — has been earmarked for development of infrastructure for tourism development, while ₹421.5 crore has been set aside for promotion and publicity activities.

A new Loan Guarantee Scheme for COVID–affected Tourism Service Sector has been started during the current financial year with an allocation of ₹62.5 crore for five years. It provides guarantee-free loan up to ₹10 lakh each for government-approved travel and tourism stakeholders such as tour operators and travel agents and up to ₹1 lakh to regional-level tourist guides approved by the government.

9. Agri-tech: drones, start-up fund in focus

A scheme through public-private partnership to be launched for farmers

The emerging agri-tech sector has been enthused by the abundance of digital farming references in the Union Budget speech on Tuesday.

“For delivery of digital and hi-tech services to farmers with the involvement of public sector research and extension institutions along with private agri-tech players and stakeholders of agri-value chain, a scheme through PPP [public-private partnership] mode will be launched,” said Finance Minister Nirmala Sitharaman.

She added that a fund with blended capital, raised under the co-investment model, would be facilitated through NABARD. “This is to finance start-ups for agriculture and rural enterprise, relevant for farm produce value chain. The activities for these start-ups will include, inter alia, support for FPOs, machinery for farmers on rental basis and technology, including IT-based support,” said Ms. Sitharaman.

With a wider focus on drone technology, the Minister promised to promote the use of “kisan drones” for crop assessment, digitisation of land records, and spraying of insecticides and nutrients on fields. In fact, the Budget speech emphasised the efficient use of land resources via technology. “States will be encouraged to adopt Unique Land Parcel Identification Number to facilitate IT-based management of records. The facility for transliteration of land records across any of the Schedule VIII languages will also be rolled out,” she said.

“The adoption or linkage with National Generic Document Registration System (NGDRS) with the ‘One-Nation One-Registration Software’, will be promoted as an option for uniform process for registration and ‘anywhere registration’ of deeds and documents,” said Ms. Sitharaman.

“The expansion of technology focus from just tractors and agri-machinery to ‘kisan drones’ shows a rising interest in the application of IOT in the sector,” said AgroStar CEO Shardul Sheth.

10. Govt. proposes new SEZ law

Reform to help States become partners in development: Minister

The government on Tuesday proposed to replace the existing law governing special economic zones (SEZs) with a new legislation to enable States to become partners in ‘Development of Enterprise and Service Hubs’.

The existing SEZ Act was enacted in 2006 with an aim to create export hubs and boost manufacturing in the country. However, these zones started losing their sheen after imposition of minimum alternate tax and introduction of sunset clause for removal of tax incentives.

These zones are treated as foreign entities in terms of provisions related to customs. Industry has time and again demanded continuation of tax benefits provided under the law. Units in SEZs used to enjoy 100% income tax exemption on export income for the first five years, 50% for the next five years and 50% of the ploughed back export profit for another five years.

Presenting the Budget 2022-23, Finance Minister Nirmala Sitharaman said: “The Special Economic Zones Act will be replaced with a new legislation that will enable the states to become partners in Development of Enterprise and Service Hubs.” This will cover all large existing and new industrial enclaves to optimally utilise available infrastructure and enhance competitiveness of exports, she noted.

The government, she said, will also undertake reforms in customs administration of SEZs with a view to promote ease of doing business.

“We will also undertake reforms in Customs Administration of SEZs and it shall henceforth be fully IT driven and function on the Customs National Portal with a focus on higher facilitation and with only risk-based checks,” the Minister said.

This reform will be implemented by September 30, 2022.

11. MGNREGS allocation cut by 25% to ₹73,000 cr.

Move comes even as high rural unemployment prevails; grassroots activists highlight huge pending payments

The Centre’s ₹73,000-crore allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in 2022-23 is 25% lower than the ₹98,000 crore Revised Estimate for the scheme in the current year, reverting to the same insufficient amount allocated in the last Budget. In fact, the MGNREGS did not find any mention during the Union Finance Minister’s Budget speech on Tuesday.

Rural employment activists and non-BJP State governments reacted with outrage, accusing the government of crippling a key safety net during an employment crisis.

The MGNREGS is a demand-driven scheme, guaranteeing 100 days of unskilled work to any rural household that wants it. During the first COVID-19 lockdown in 2020, when the scheme was ramped up and given its highest-ever budget of ₹1.11 lakh crore, it provided a lifeline for a record 11 crore workers. In the next financial year, 2021-22, the budget allocation dropped to ₹73,000 crore, resulting in the scheme running out of funds. Supplementary allocations then pushed up the Revised Estimates to ₹98,000 crore, but workers say they paid the cost in delayed wage payments and artificial suppression of demand, while some State governments were forced to dip into their own coffers to meet costs.

“The cut comes at a time when the country is going through its worst-ever employment crisis. With the current allocation, we will have a repeat of last year, when the funds ran out mid-way through the year, and many crucial works will have to be stalled,” said Kerala Finance Minister K.N. Balagopal.

“It is a terrible thing to do. But this is the Modi model of development,” added Amit Mitra, the Principal Chief Adviser to the West Bengal Chief Minister and a former Finance Minister of the State.

Grassroots activists said the reduction in funding would have a disastrous impact on workers.

‘Wages unpaid’

“Approximately ₹12,300 crore — ₹1,464 crore as wages and ₹10,900 crore as material — is yet to be paid, which is going to eat up the next year’s Budget,” said Debmalya Nandy of the NREGA Sangharsh Morcha.

“The government is using the Budget to kill the law,” said Nikhil Dey, a founder of the Mazdoor Kisan Shakti Sangathan.

“This will hit the rural economy quite badly,” said Himanshu, a rural economist at the Jawaharlal Nehru University. “MGNREGA had saved the economy during the lockdown. The hope now is that with the economy slowly limping back to normalcy, demand for MGNREGA work may not be as high,” said D.K. Pant, chief economist at India Ratings. “However, rural wage growth is not keeping pace with inflation, and if the demand for work remains high, the government must be quick to provide supplementary funds,” he added.