“The budget makes the need once again to ramp up the virtuous cycle of investment and job creation. Capital investment is being increased steeply for the third year in a row.”
- Nirmala Sitharaman, Finance Minister of India
Source:- https://www.telegraphindia.com/business/union-budget-2023-live-updates-focus-on-job-creation-more-spending-on-key-schemes-push-to-manufacturing/cid/1913508
As an economics student, Budget day has always intrigued me. Indian people have many expectations on Budget Day. The television channels flood with interview expert panels on budget expectations and everyone gives their take on it. But no one really knows what exactly is in the red pouch.
Finance Minister of India, Nirmala Sithraman on 1st February presented the annual budget in the parliament with a digital tablet wrapped around in a traditional “bahi-khata” style as she headed to present a paperless budget just like the previous two years.
And as for every budget, the supporters praise the government for a well thought of strategy. The opposition criticizes that the budget will ruin our economy and will make poor people poorer. And in the end a normal citizen will just think of the budget for a day and go to work the next morning.
That being said, it is very interesting for one to actually take a deep dive into the budget. It helps one comprehend the economy they are living in and actually help them to make wiser decisions the next time they vote in an election or just are filing their taxes.
This year the budget was given the name “Amrit Kaal”. The finance minister went on to say that their vision for the Amrit Kaal includes a technology-driven and knowledge based economy, with strong public finances and robust financial sector. The term ‘Amrit Kaal’ comes from Vedic astrology and indicates a sort of golden era.
The vision for the budget this year was to firstly have a strong and stable macroeconomic environment. Second is to bring in more opportunities for citizens with special focus to the youth of India. Third is to create jobs and follow in a growth trajectory.
FM Nirmala Sitharaman went on to refer to seven priorities as “Saptarishi” , describing them as a framework for the government. Those were:-
Inclusive Development
Reaching the last mile
Infrastructure and Investment
Unleashing the potential
Green growth
Financial Sector
Youth power
The Economic Survey 2023 which was tabled by Finance Minister Nirmala Sitharaman in the Parliament on 31st January 2023 showed India's GDP forecast for the financial year of 2024 is to be in the range of 6-6.8%. The economic survey also cautions that India must keep a careful eye on the depreciating value of rupee. CAD (Current Account Deficit) may continue to widen as global commodity prices remain elevated. On a good side, the credit growth to the MSME (Micro, Small and Medium Enterprises) sector has been remarkably high, with over 30.5%, on average during January-November 2022. With keeping all this in mind the budget was presented with high hopes and all positivity.
The key highlights that were noted are:-
Inclusive Development
The government has proposed building a digital public infrastructure to get farmers informative solutions on their fingertips. They also plan on setting up an agriculture accelerator fund which can encourage innovative startups in rural India to work on their ideas. Atmanirbhar Bharat Horticulture Clean Plant Programme is to be launched wherein it will boost the production of horticulture crops. The government also plans to fund Rs. 20 lakh crores to the Animal Husbandry, Dairy and Fisheries market.
The budget also incorporates making India a global hub for millets. Full support and funding will be given to IIMR (Indian Institute of Millet Research), Hyderabad for promoting research and coming up with new products that can be made by millets. It also plans on setting up widely available storage capacity which will enhance farmers remuneration by enabling sales at appropriate times.
Source:- Ministry of Finance, GOI
As our food grain production is increasing farmers will directly require more credit and all storage capacity. Big warehouses are very expensive to build and it is not feasible for private farmers to make one. Hence building cold storages in proper locations across India is very crucial so that the produce is reached on time to the markets and the vegetables are still fresh as half of all produce is perishable.
The government also plans to build 157 new nursing colleges and bring in new programmes to promote research in the pharmaceutical sector. It also aims to launch joint public and private medical research to be encouraged via select ICMR labs to build in the quality of research and development. The government has allocated a budget of Rs. 1,250 on development of the pharmaceutical companies.
On the education point of view the budget aims to revamp the teacher’s training via District Institutes of Education and Training. They also propose setting up a digital library for children and adolescents. The budget allocation has shown a significant increase from 1.4% in 2019 to 2.1% in 2023 in the health sector. No notable increase can be seen on the expenditure towards the education sector.
Source:- Ministry of Finance, GOI
Reaching the last mile
In order to improve the economic conditions of particularly vulnerable groups, PM-Primitive Vulnerable Tribal Group Development Mission was launched. Safe housing, clean water, road, and telecom connectivity will be provided. An amount of Rs. 15,000 crores was allocated to implement this across three years.
The FM also said that 38,800 teachers and support staff would be recruited for 740 Eklavya residential schools, which will serve 3.5 lakh tribal students. An online portal will also be launched for the digitization of ancient inscriptions.
Infrastructure and Investment
Incentives were announced to boost the investment in infrastructure and productive capacity that will help in the rise in growth and employment. Highest ever capital outlay of Rs.2.4 lakh crores was announced for the Railways sector. FM also said that the 50 year interest free loan to State Governments to incentivize infrastructure investment will be continued. There are many transport infrastructure projects identified for end to end connectivity for ports, coal, steel and fertilizer sectors. Lastly, urban infrastructure in Tier 2 and 3 cities will be developed via the establishment of UIDF (Urban Infrastructure Development Fund).
Unleashing the potential
This budget also is quite focused on the implementation and usage of AI (artificial intelligence) in India. While presenting the budget the FM realised the vision of “Make AI in India and Make AI work in India.” She made the announcement to set up three specialized AI centres. in top educational centres to provide AI based solutions in agriculture, health and sustainable cities.
Source:- https://www.simplilearn.com/tutorials/artificial-intelligence-tutorial/what-is-artificial-intelligence
She also introduced the National Data Governance Policy which aims to enable access to anonymized data for research by start-ups and academia. This policy is expected to address one of the major hiccups for adoption of AI in the country – the lack of datasets, as the policy would enable widespread access to anonymized data.
Further, in another boost to the Centre’s bid to create a skilled AI talent pool, the finance minister said that the fourth edition of the Pradhan Mantri Kaushal Vikas Yojana will provide on-job training and courses in emerging technologies such as AI.
E-courts will also be launched for effective and timely administration of justice. The government also plans to set up 100 labs for 5G services based application development.
Green Growth
India is moving forward firmly to achieve the net zero target. The recently launched national green hydrogen with an outlay of Rs 19,700 crore will facilitate the transition of the economy to low carbon intensity and reduce dependency on fossil fuel imports. Our target is to reach an annual production of 5 MMT by 2030. This budget provides for Rs 35,000 crore capital investment towards energy transition and net zero objective and energy security by the Ministry of petroleum and natural gas, the FM declared.
The government has also launched the National Monetisation Pipeline with an investment potential of Rs 9 lakh crore.
Green credit programs for encouraging behavioral change will be notified under the environment protection act. This will incentivize environmentally sustainable and responsive action by companies, individuals, and local bodies in mobilizing additional resources for such activity.
Financial Sector
The backbone of the economy, the financial sector was also given major importance with major announcements in the sector too. The government is planning to set up a National Financial Information registry to enable efficient lending, promote financial inclusion and enhance financial stability. Maximum deposit limit for senior citizens savings scheme was increased from Rs 15 lakhs to Rs 30 lakhs. There are also initiatives to promote business activities in GIFT IFSC.
Youth Power
The government has formulated the National Education Policy. There will be a launch of the PM Kaushal Vikas Yojana 4.0 to skill lakhs of youth. In addition to drones and 3D printing, the scheme will cover new age courses. There will be 30 Skill India International centers in various states.
The FM also announced the launch of a unified skill platform for India and states will be encouraged to set up Unity Malls for promotion and sale of handicraft products among others.
Tax
Tax collections are expected to be robust in 2020-23 with the revised gross tax standing at Rs. 30.4 trillion or a little over 10% more than the budgeted number. Without going into details about the taxation policy, let's take a brief look into the major changes made.
The new regime of income tax slab increased the rebate of income tax from Rs 5 lakh to Rs 7 lakh. For example, up until now 2022-23, those with an income of Rs. 5- 7.5 lakh came under the 10% tax bracket. But from now (2023-2024 onwards) those with an income of Rs. 6-9 lakh will come under this bracket.
This is more simple and doesn't come up with exemptions and deductions making it suitable for the tax-filers. This benefit was given for salaried class and pensioners. The government expects tax collections in 2023-24 to be at Rs, 10.4% higher than the current financial year, in line with the assumed growth of 10.5% in the nominal GDP (GDP which hasn't been adjusted to inflation).
The stock market also showed a happy mood towards the budget. Although the expectations were about an increase in long term capital gains tax made on the sale of listed shares and equity mutual funds, a no mention about it in the budget speech kept the markets positive. But the mood soon changed with the Nifty 50 index ending the day with 17,616.6 points flat. In all this, Adani Enterprises fell by around 27% to close the day at a share price of Rs. 2.179 (approx). Well lets leave this controversy for some other article.
The highest allocation of funds went to the Ministry of Defence at Rs 5.94 lakhs crore followed by Ministry of Road Transport and Highways at Rs 2.70 lakhs crore and Ministry of Railways at Rs 2.41 lakh crores.
Source:- https://www.theweek.in/news/health/2023/02/01/budget-2023-centre-allocates-rs-495-crore-for-global-fund-grant-under-covid-19-response-mechanism.html
Some of the major schemes with highest budgetary expenditure are Jal Jeevan Mission (70,000 crores), Eklayva Model Residential Schools (5,943 crores), PM Awas Yojana (79,590 crores), Scheme for Faster Adoption and Manufacturing of EV’s (5,172 crores) and finally North East Special Infrastructure Development Scheme (2,491 crores).
As for me the budget 2023 was not much of a spectacular one. This budget is just paving a way of its own for the 2024 Lok Sabha elections and is just made lucrative for the people to just believe in the government. Also the numbers in the budget look plausible and not overly optimistic. The question government needs to answer is that how will it be financing the fiscal deficit? The fiscal deficit (difference between the government expenditure and government revenue) for 2023-24 is expected to be at Rs. 17.9 trillion or 5.9% of the GDP.
With that being said, the Finance Minister kept her budget speech short and completed her speech in about 90 minutes with total words counting to 13,761. The FM cut to the chase with Budget 2023. In conclusion, the 2023 budget has the potential to shape the future of the economy in the coming year. As we move forward, it will be interesting to see how the 2023 budget plays out and how it impacts the lives of the people. Until then have a great day folks!
Article by:- J Shree Nidhi
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