On August 15 2022, India completed 75 years of her independence from the centuries old colonial rule. A month back India had achieved another milestone replacing China as the world’s most populous country with around 142 crore citizens. The year also witnessed India assuming the presidency of the G20 Summit. The economy of the country on the other hand is also standing at a glorious position by becoming the 5th largest economy replacing our former rulers, i.e., The Great Britain. While almost one third of the economy in the world is about to witness a serious recession in the year 2023, India stands as a ray of hope in the otherwise dark horizon. In such a time the Union Budget of 2023-24 plays a crucial role in evaluating where the country is standing, and which all are the before us. A budget to build the foundation of the previous budgets and a blueprint for India at 100, the first budget of the Amrit Kaal, the last full budget of the second Modi Government was presented before the parliament by the Honorable Union minister for Finance and Corporate Affairs, Smt. Nirmala Sitaraman. The focus of the budget includes a technology driven, knowledge-based economy with strong public finances and robust financial sector.
On 31st January 2023, Smt. Nirmala Sitaraman had placed the economic survey for 2022-2023 in the parliament house in which it has pegged that India’s GDP growth for the next fiscal year, that is, 2023-2024 will be between a broad range of 6 to 6.8%. According to the economic survey presented, India remains and will continue to remain the fastest growing major economy in the world. The economic Survey also states that the country is recovering from the pandemic induced inflation, the impact of Russia-Ukraine war and the other external pressures, positioning herself to ascend to the pre-pandemic growth. The idea of a technology driven economy is evidently marked in this budget as well. While the budget for 2022-23 was a budget for digital India, this one can be without any doubt called as the budget for a developed India. There was not a single area which was left untouched in this budget. Starting from infrastructure to MSME, Direct Tax to Indirect Tax, Make in India to Export Promotion, the budget focused on all important aspects of the economy.
While the Rs. 20 lakh crore agricultural credit targeted at animal husbandry, diary and fisheries sector is the major takeaway in this head with regards to agriculture, the measures, or programs like, ANB Horticulture Clean Plan Program, Sree Anna Program, Agriculture Accelerator Fund and Building up of Digital Public Infrastructure boost the sector growth. For health sector the major take away remains to be the setting up of 157 Nursing Colleges all around the world, followed by the Mission to eliminate Sickle Cell Anemia by 2047. The setting up of National Digital Library for Children and Adolescents and the revamping of teachers’ training via DIETs provide added boost to the educational sector.
The idea of a country is reiterated by the way how the citizens treat the marginalized and vulnerable section of the society. Focusing on the same ideology, tribal and vulnerable class are addressed under the budget by the honorable Finance Minister. The newly announced Pradhan Mantri Particularly Vulnerable Tribal Groups (PM-PVTG) which focuses on the development of the vulnerable tribal groups with regards to housing, education and other basic amenities will be addressed through this. The enhancement of PM -AWAS outlay by 66% to 79,000 crores ensures house for all who are not having a roof above their head. The Bharat SHRI (Shared Repository of Inscriptions) will be set up for the preservation of the ancient inscription in digitalized form. Boosting education of the tribal community, under this head, the Government has also proposed to recruit 38800 new teaching and non-teaching staffs to around 740 Eklavya Model Residential Schools.
Infrastructure is the backbone of every economy. Any investment made for the development of infrastructure including the incentivization to boost investment in infrastructure and productive capacity will have a multiplier impact in the rise in growth and employment in the economy. The budget 2023 therefore has proposed humungous increase in the Capital investment outlay by 33.4% to Rs. 10 lakh Crore, highest ever capital outlay of Rs. 2.4 lakh crore for railways and creating Urban Infrastructure in Tier 1 and 2 cities via UDIF. Apart from that the government has identified 100 transport infrastructure projects for end-to-end connectivity of ports, coal, steel, and fertilizer sector.
As the PM said, “Good Governance is the key to a nation’s progress.” To ensure the commitment of providing transparent and accountable administration the budget has proposed many major measures. The most important take aways in this regards are, 3 Specialized Make AI in India, National Data Governance Policy, Vivad se Viswas 1 and 2 for less stringent contract execution for MSMEs and easier and Standardized settlement scheme, E-Courts, Entity Digital Locker, 100 Labs for 5G Services and R&D Grant for Lab Grown Diamond sector focuses on a trust-based governance development in the economy.
Zero Carbon Footprint is a policy being echoed by the country for a long time. To reach the goal of zero carbon footprint by 2070, the union budget of India ensures various major steps comprising the PM – PRANAM (Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth), MISHTI (Mangrove Initiative for Shoreline Habitats and Tangible Incomes), GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) and Amrit Dharobar. Apart from that 10000 bio input resource centers, facilitating farmers to adopt natural farming, Promotion of Battery energy storage system etc. are also notified under the budget. The budget 2023 focuses on the are of Youth Power or Amrit peedhi as well. Though the budget the government focuses on ensuring the utilization and upgradation of the youth power available in the country. The launch of PMKVY 4.0 ensures to equip the youth with new courses like Coding, AI, Robotics, 3D printing etc. which will serve as a benefit for then in the coming digitalized, technology driven world. Tourism which is integral part of any economy’s development is also addressed. With state and private participation, the budget focuses to develop at least 50 destinations as a complete package. Other important takeaways in the financial sector are the setting up of National Financial Information Registry, Mahila Samman Bachat Patra, a one-time new small saving scheme for a period of 2 years for women, enhancement of the deposit limit of senior citizen savings scheme to 30 lakhs and extending the credit guarantee scheme for MSMEs.
The budget also stands apart from the previous budgets with the announcements it made with regards to tax proposals. In the indirect tax sector, the budget focuses on reducing various import duties with regards to various raw materials which are necessary in order to produce goods or commodities in India and also reduced various export duties including BCD on various commodities being exported from India. This will ensure higher export, higher domestic manufacturing, and more value addition in the economy. In the direct tax sector, the Budget gave more power to the newly incorporated New Tax Regime (Sec. 115BAC). While it was evident from 2020 since its incorporation, that the exemptions will be systematically scrapped to ensure a One Income One Tax policy, the new announcements accelerated the scrapping effectively. The FM through the budget reduced the tax slabs from 7 to 6 making income up to 3 lakhs exempted from tax under new tax regime and incorporated rebate up to 7 lakhs for the tax payers of new tax regime. The reduction of highest surcharge from 37% to 25% was also made available for the taxpayers of new regime. Also, in the new tax regime first time since its incorporation, the government allowed Rs. 52,500 as standard deduction for salaried class with an income more than or equal to Rs. 15.5 lakhs. For corporates and cooperative sectors also, the budget was very lenient. MSME are allowed to avail benefits of presumptive taxation, new cooperatives are provided with the benefit of 15% corporate tax and TDS on cash withdrawal limit also enhanced to 3 crores.
While it cannot be called as a budget like never before or a historic one in the sense, the inputs being put forward through the budget will result in a great and visible change in the economy for sure. The areas in which it focuses will not only result in an inclusive development of the economy but will also result in the upgradation of the country into a more advanced and more developed one. The budget 2023-24 is focused mainly on 7 key areas, or otherwise referred by FM as the Saptarshis, of Inclusive development, reaching the last mile, agriculture, and investment, unleashing potential, green growth, youth power and financial sector in the first part and Direct as well as Indirect Tax in the second part. While it is the last full budget of the second Modi government, it is to be noted that there were not much populistic announcements, no high hope building promises in the budget, however, it remains as one of the vital and important budgets for the development of the economy focusing on development and providing relief measures to the common man. Thus, the budget also creates a special place being a not so politically motivated budget like any previous before election budgets.
Apart from a few measures in the budget, most of the measures to some extents are macro in nature, therefore, the impact of the same will not be a recent one. Employment Generation which is one of the crucial matters considering the population explosion which we are passing through, is not addressed separately in the budget. It is also to be noted that while it is necessary to scrap the exemptions to reduce the burden of work on the officials and to make it more transparent, deductions like LIC Premium, PF contribution and other Thrift based Deductions and Housing Loan, if removed will have an adverse impact on the loan and insurance sectors of the economy. If the same is scrapped, the common taxpayer who invests with the mere intension of reducing tax will automatically withdraw it as it serves him/her no purpose leading to a downfall in the economy.
CMA Hrishikesh R Nampoothiri
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