Budget – Well intended, will it get there?

Contrary to popular expectation, the Union Budget 2023 was not a populist budget, despite this being the last full budget before the General Elections of 2024. Rather, it was tight fisted on fiscal deficit, yet centred on development, heavily relying on capital expenditure, with an articulated intention of creating a strong and stable macro-economic environment. But will the Budget 2023 only remain a road-map?

India has maintained its position as the fastest growing major economy and the robust tax collection, which apparently was more than the budgeted amount for the current year, is also expected to keep up the trend in FY 2023-24, and serve a cushion for the huge capex

The Union Budget 2023 was presented as scheduled on the first day of February. This is the last budget before the General Elections of 2024 and hence there were many speculations about its contents. But, unlike normal election year budgets, the budget 2023 was devoid of any populist announcements. There were no freebies. The soul of the budget was development, with capital expenditure announced to the tune of Rs 13.70 lakh crores with a rise of 33%. Fiscal deficit was reduced to 5.9% as against 6.4% in the current financial year. India has maintained its position as the fastest growing major economy and the robust tax collection, which apparently is more than the budgeted amount for the current year, is also expected to keep up the trend in FY 2023-24, and serve a cushion for the huge capex.

Budget vision

The Finance Minister articulated the vision of the present budget as: Opportunities for citizens with focus on youth, growth and job creation, and strong and stable macro-economic environment.

Seven priorities named ‘Saptrishi’, were underlined under –

• Inclusive development
• Infrastructure and development
• Unleashing potential
• Green growth
• Financial sector
• Youth power
• Reaching the last mile

In a nutshell, the steps detailed to meet the priorities under various heads are:

Agriculture and co-operatives:

• Building Digital Public Infrastructure to serve as informative solution for farmers.
• Horticulture - clean plant programme to boost production of high value agricultural crop.
• Making India a global hub for millets and for this, support to be given to IIMR, Hyderabad.
• Setting-up of agriculture accelerator fund for encouraging innovative start-ups including animal husbandry, dairies and fisheries.
• Setting-up of widely available storage capacity.

Inclusive Development:

• Under the health related sector, opening of 157 nursing colleges, promoting new research programmes in pharmaceuticals, joint public and private medical research via ICMR.
• Under education and skilling, revamped teachers’ training to be undertaken and also national digital library to be set up.
• Under the big umbrella, to accommodate all nine crore drinking water connections to rural homes; constructing household toilets, providing LPG connections under Ujjwala, cash transfer of Rs 2.2 lakh crores to over 11 crore farmers under PM KISAN, insurance cover to people

"For any country, annual budget making is very difficult. There are limitations of income but many ways to spend. India is not an exception. It is more difficult for our country as we are still a developing country with a huge population to cater to "

Reaching the last mile:

• Pradhan Mantri Development Mission to be launched.
• Financial assistance to be given for sustainable micro irrigation in drought prone areas.
• More teachers to be recruited for Eklavya Model Schools.

Infrastructure and Investment:

• Increased capital investment by 33%.
• Continuation of 50% interest free loans to states to incentivise infrastructure investment
• Highest ever capital outlay of 2.4 lakh crore for railways
• Creating urban infrastructure in Tier-2 and Tier-3 cities.
• 100 transport infrastructure projects for end-to-end connectivity for ports, coal, steel and fertilizer sectors.

Unleashing the potential—Trust based governance:

• Make AI in India programme
• National Data Governance policy to be introduced.
• Less stringent contract execution for MSMEs
• Easier and standardised settlement scheme.
• E-courts to be launched (Phase 3).
• Setting up of 100 labs for 5G services based application development.
• Research and development grant for Lab Grown Diamonds (LGD) Sector

Green growth:

• Incentive to promote usage of alternative fertilizers
• 500 new waste to wealth plants.
• Green Credit Programme
• Sustainable ecosystem development – MISHTI for mangrove plantation along the coastline.

Youth power:

• New courses like coding, AI, Robotics, 3-D Printing under PMKVY 4.0.
• Measures to boost tourism sector and for this at least 50 destinations to be selected and developed.
• States to be encouraged for promotion and sale of ODOP (one district one product), GI and handicraft products.

Financial sector:

• Senior citizens saving scheme limit to be increased to 30 lakhs from the existing 15 lakhs.
• Deposit facility of RS 2 lakh for two years for women.
• Credit guarantee scheme for MSME to be expanded.
• Setting up of a Central Data Processing Centre for faster handling of administrative work.

Tax proposals - Simplification in Indirect taxes to be undertaken to deliver higher exports, higher domestic manufacturing, more value addition in the economy, green energy and mobility.

Changes in Custom Duty and benefits:

• Import of capital goods for li-ion battery manufacturing - for greener mobility
• Import of mobile camera lens - Deepening value addition
• Denatured ethyl alcohol - For the chemical industry
• Key imports for producing shrimp feed - For more marine exports
• Seeds for manufacturing lab grown diamonds - For export promotion
• Concessional basic custom duty on copper scrap - For augmenting raw material for MSMEs
• Compounded rubber to bring it at par with natural rubber - To curb duty circumvention

"The Finance Minister articulated the vision of the present budget as: Opportunities for citizens with focus on youth, growth and job creation, and strong and stable macro-economic environment"

Direct Tax:

• Personal income tax rebate on income of up to 7 lakhs applicable under the new tax regime and so no tax burden to this extent.
• Changed scales for new tax regime:

  SCALE	TAX
  0-3 lakh .........................................	NIL
  3-6 lakh .........................................	5%
  6-9 lakh .........................................	10%
  9-12 lakh .........................................	15%
  12-15 lakh .........................................	20%

• Standard deduction against salary/pension now available under the new tax regime too.
• Reduction of highest surcharge from 37% to 25% in the new tax regime, thus helping high income individuals.
• Limit on tax exemption on leave encashment increased from 3 lakh to 25 lakh.
• Common IT form and grievance redressal system.
• MSMEs can avail the benefit of presumptive tax system up to 3 crore receipts.
• Professionals can also now have the benefit of receipts of 75 lakhs. Earlier the limit was 50 lakhs.
• TDS deduction only on payment.
• Benefits for start-ups extended for one more year.
• Capital-gains relief 54 and 54 F on purchase of new house has been capped upto 10 crores.
• Life insurance proceeds on maturity to be
• no longer tax free if annual premium paid is 5 lakhs and above. This will not be applicable on death claims.
• PAN will be a common identity.

How does the rupee come?

How does the rupee go?

Allocation for specific ministries:

For any country, annual budget making is very difficult. There are limitations of income but many ways to spend. India is not an exception. It is more difficult for our country as we are still a developing country with a huge population to cater to and added to our problem are our hostile neighbours on both the east and the west. “We must consult our means rather than our wishes,” said George Washington. As a good road map can reach us to our destination, so can the country’s annual budget