The Union Budget 2022-23 has allocated Rs 10,667 crore for the civil aviation ministry, a considerable increase from last year.
In 2021-22, the government allocated Rs 3,224 crore for the civil aviation ministry. But several factors contributed to higher expenses last year, resulting in a revised expenditure of Rs 72,652 crore for 2021-22.
Air India divestment, especially the allocation for Air India loans, grants in aid to Air India for financial losses during the COVID period, and Air India Assets Holding Company for re-payment of past dues and borrowings of Air India, all contributed to the higher expense last year.
Similar to what was granted in 2021-22, the Union Budget 2022-23 has earmarked Rs 600.7 crore for the regional connectivity scheme UDAN. The cost of the regional connection project increased to Rs 994 crore in 2021-22, according to revised figures.
Finance Minister also announced that the e-passports would be rolled out this year. The announcement comes days after Minister of External Affairs S Jaishankar’s confirmation that talks are going on with India Security Press regarding issuing e-passports to citizens. Ministry has commenced More details of the Budget are yet to be announced.
Union Budget 2022-23 will determine the pace of recovery for the Indian aviation industry. This was the fourth Union Budget for the Union Finance Minister Nirmala Sitharaman, while it was the 10th Budget of the Narendra Modi government.
Aviation Industry pins high hope Union Budget 2022-23
Indian aviation sector has pinned high hopes on Union Budget 2022-23. The industry faced a series of highs and lows in the previous financial year, primarily due to the pandemic and high ATF price. Currently, the industry is enduring the consequences of the Omicron variant.
The previous year’s Union Budget 2021-22 had introduced a slew of reforms beneficial for the aviation sector, including announcing a tax holiday on capital gains and exemptions on payment of aircraft lease rentals and royalties paid to foreign lessors. This was primarily to promote homegrown aircraft leasing.
This year, the aviation industry was expecting measures such as lowering taxes on air turbine fuel (ATF) and reducing 18% minimum alternate tax. Besides, an increase in the threshold of the amount a passenger can spend at duty-free shops could bring liquidity to airport operators. ATF expense accounts for 25-40% of the airlines’ operational costs.
The industry also expected reconsideration of the GST levied on activities like reducing the GST on the buying aircraft and aircraft parts or eliminating the GST on re-import of aircraft and aircraft parts repaired or serviced abroad.