Union Budget 2023-24 Striking A Perfect Balance

Union Budget 2023-24 Striking A Perfect Balance

 

Union Budget 2023-24 Striking A Perfect Balance

 

The Union Budget 2023-24, presented by the Finance Minister Ms. Nirmala Sitharaman in Parliament on February 1, 2023, sought to lay out the vision for Amrit Kaal and contained several new initiatives cutting across sectors. Infact, Ms. Sitharaman, presenting her 5th and her government's last full-fledged budget before the next general election in 2024, ticked all the right boxes. A focus on infrastructure and investment that serves as a multiplier for growth and employment, inclusive development that ensures prosperity for all, especially the youth, women, farmers, Other Backward Classes, Scheduled Castes and Scheduled Tribes, policies to enable green or environmentally sustainable growth, the rationalisation of direct taxes, including several concessions to the middle and salaried classes as well as pensioners, and, most importantly, doing all this while staying the course on fiscal consolidation. After presenting the Budget, she called it "a beautiful balancing act" that it truly was. The Finance Minister noted that the world has recognised the Indian economy as a "bright star" which is expected to grow in the Financial Year (FY) of 2022- 23 at 7%, the highest among all the major economies. She outlined seven priorities to act as "Saptarishi" to guide vision during Amrit Kaal, the 25-year-long period up to 2047 when India will celebrate the centenary of its Independence. Keeping an eye on "India at 100", the vision for Amrit Kaal includes opportunities for citizens with focus on youth, growth and job creation, and a strong and stable macro- environment. The Budget reflected that India's targets are on a scale that is expected to impact the world.

natural farming over the next three years. Pradhan Mantri Kaushal Vikas Yojana 4.0 will be launched to skill lakhs of The first Union Budget in Amrit Kaal has been guided by 7 priorities that youth within the next three years. Thirty 'Saptarishi'. These are: (1) Inclusive complement each other and act as the Skill India International Centres will be set up across states to skill youth for international opportunities. The indirect

tax proposals contained in the Budget aim to promote exports, enhance domestic value addition and encourage green energy and mobility. After all this, the fiscal deficit is estimated to be 5.9% of GDP. Mantra Of Leaving No One Behind Finance Minister in her Budget speech said that the mantra of "leaving no one behind" has resulted in inclusive development of the country. Since 2014, India's per capita income has more than doubled to Rs. 1.97 lakh. The Indian economy has increased in size from being 10th to 5th largest in the world. The economy, in turn, has become a lot more formalised. This is reflected in the EPFO membership more than doubling to 27 crore. In addition, 7,400 crore digital payments of Rs. 126 lakh crore were made through UPI in 2022. Some of the notable achievements include:

·        11.7 crore household toilets under Swachh Bharat Mission;

• 9.6 crore LPG connections under Ujjawala;
• 220 crore Covid vaccinations of 102 crore persons;
• 47.8 crore PM Jan Dhan bank accounts;
• Insurance cover for 44.6 crore persons under PM Suraksha Bima and PM Jeevan Jyoti Yojana, and
• Cash transfer of Rs. 2.2 lakh crore to over 11.4 crore farmers under PM Kisan Samman Nidhi

The Vision For Amrit Kaal Union Budget 2023-24 highlighted the Amrit Kaal" that includes technology- driven and knowledge-based economy with strong public finances, and a robust financial sector. This will essentially be achieved through Sabka Saath Sabka Prayas. The economic agenda for The Union Budget 2023-24 proposed Modi Government's "Vision for the changes in personal income tax aimed at the middle class and initiatives for various sections of society, especially the youth, farmers and women. The Budget proposed to increase capital investment outlay steeply for the third year in a row by 33% to Rs. 10 lakh crore, which would be 3.3% of GDP. It proposes 66% increase in outlay for PM Awas Yojana to over Rs. 79,000 crore and the highest-ever capital outlay for Railways providing strong impetus to growth and of Rs. 2.40 lakh crore. The Centre will facilitate one crore farmers to adopt achieving this vision would focus on three priorities:

• facilitating ample opportunities for citizens, especially the youth, to fulfil their aspirations;
• job creation, and strengthening macro-economic stability. Development;
• Reaching the Last Mile;
• Infrastructure and Investment;
• Unleashing the Potential;
• Green Growth;
• Youth Power; and
• Financial Sector.

To service these focus areas in country's journey to India@100, the Budget identifies four transformative opportunities. Here are these:

 

1. Economic Empowerment of Women through Self Help Groups (SHGs):
 

The Deendayal Antyodaya Yojana National Rural Livelihood Mission has achieved remarkable success by mobilising rural women into 81 lakh SHGS. Now, these groups will be enabled to reach the next stage of economic empowerment through formation of large producer enterprises

or collectives with each having several thousand members and managed professionally. They will be helped with supply of raw materials and for better design, quality, branding and marketing of their products. Through supporting policies, they will be enabled to scale up their operations to serve the large consumer markets, as has been the case with several start-ups growing into Unicorns.

 

2. Prime Minister Vishwakarma Kaushal Samman (PM VIKAS) Yojana:
 

The Union Finance Minister announced a new scheme for the traditional artisans and craftspeople, generally referred to as Vishwakarma. Noting that the art and handicraft created by them represent the true spirit of Aatmanirbhar Bharat, for the first time, a package of assistance for them has been conceptualised. The new scheme will

 

(a) enable them to improve the quality, scale and reach of their products, integrating them with the MSME value chain,

 

(b) include not only financial support but also access to advanced skill training, knowledge of modern digital techniques and efficient green technologies, brand promotion, linkage with local and global markets, digital payments, and social security; and

 

(c) greatly benefit the Scheduled Castes, Scheduled Tribes, OBCs, women and people belonging to the weaker sections.

 

3. Tourism Promotion in Mission Mode: With the huge tourism potential the country offers for domestic as well as foreign tourists, the sector holds huge opportunities for jobs and entrepreneurship for youth in particular and there is a large potential to be tapped in tourism. Therefore, promotion of tourism will be taken up on mission mode, with active participation of States, convergence of government programmes partnerships and public-private

 

4. Green Growth: The Union Finance Minister emphasised the focus of the government on green growth efforts that help in reducing carbon intensity of the economy and provide for largescale green job opportunities. She noted that "We are implementing many programmes for green fuel, green energy, farming, green green mobility, green buildings, and green equipment, and policies for efficient use of energy across various economic sectors."

 

Focus On Infrastructure

 

Continuing with the focus of creating world-class infrastructure, the Union Budget 2023-24 allocated substantial funds for capital expenditure for developing infrastructure. The government has committed an outlay of Rs. 10 lakh crore during 2023-24 towards infrastructure capital expenditure compared to Rs. 7.5 lakh crore (BE) during 2022-23, which is a 33% year-on-year increase. The overall effective capital expenditure of the government is estimated at Rs. 13.7 lakh crore for 2023-24 considering the additional grant-in-aid earmarked for capital asset creation for states. Given such high budgetary provisions, it is clear that infrastructure spending remains a key lever for the Union Government to enable overall GDP growth.

Multiple initiatives declared for developing infrastructure in the Budget include:

(i)           Rs. 2.4 lakh crore capital outlay for Railways;

(ii)               Rs. 75,000 crore (including Rs. 15,000 from private sector) for creating 100 critical transport infrastructure for improving first and last mile connectivity for ports, coal, steel, fertiliser and food grain sectors;

(iii)             50 additional airports, heliports, water aerodromes and advance landing grounds for improving regional connectivity; and

(iv)             100% mechanical desludging of septic tanks and sewers in all cities and towns focusing on scientific and dry waste management.wet The Budget also announced multiple Collaborative and joint public and forward-looking initiatives for improving private medical research and innovation the infrastructure sector. For ensuring more private sector investments in infrastructure like roads, railways, urban infrastructure and power, support will be provided by the newly-established Infrastructure Finance Secretariat.

An Urban Infrastructure Development Fund (UIDF) will be created and managed by National Housing Bank, which will enable creation of infrastructure in Tier 2 and Tier 3 cities by supporting viability gap funding, enabling creation of more bankable projects and enhancing access to external funding, among others. Further, the 50-year interest-free loan to State governments for capital expenditure has been extended for FY 2023-24, which will enable the States allocate funds in areas like urban planning and reforms, fiscal reforms in urban local bodies and capital expenditure (States share), among others. To complement the physical infrastructure spending, multiple initiatives for augmenting digital infrastructure have also been announced in the Budget. For instance, a National Data Governance Policy will be brought out, which will enable start-ups and academia access anonymised data to unleash innovation in areas like road sector management and urban service delivery, urban safety & security and management infrastructure management, among others. Open data will also enable evidence-based policy formulation in the infrastructure sector. The three Centres of Excellence for Artificial Intelligence will enable development of solutions for creating sustainable cities. One hundred labs for developing applications using 5G services will enable creation of digital solutions in areas like intelligent transport management, urban water and solid management management, among others. Social Sector waste

 

The Union Budget 2023-24 aimed at focussing on boosting India's social capital with announcements in the areas of health, education and women empowerment. The Finance Minister said that the government's approach is "inclusive" and "reaching the last mile". The Budget proposes to establish 157 new nursing colleges in co-location with the existing 157 medical colleges will be encouraged via select Indian Council of Medical Research (ICMR) laboratories. A new programme to promote research in pharmaceuticals will also be launched.

 

To commemorate Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, Mahila Samman Savings Certificate, will be launched. It will offer deposit facility upto Rs. 2 lakh in the name of women or girls for tenure of 2 years (up to March 2025) at fixed interest rate of 7.5% with partial withdrawal option. The maximum deposit limit for Monthly Income Account Scheme is to be enhanced from Rs. 4.5 lakh to Rs. 9 lakh for single account and from Rs. 9 lakh to Rs. 15 lakh for joint account. The maximum deposit limit for Senior Citizen Savings Scheme is proposed to enhance from Rs. 15 lakh to Rs. 30 lakh.

 

A provision of Rs. 15,000 crore has been made for implementation of Pradhan Mantri Particularly Vulnerable Tribal Group (PM-PVTG) Development Mission over the next three years under the Development Action Plan for the Scheduled Tribes. This will saturate PVTG families and habitations with basic 11 facilities such as safe housing, clean drinking water and sanitation, improved access to education, health and nutrition, road and telecom connectivity, and sustainable livelihood opportunities. Outlay for PM Awas Yojana being enhanced by 66% to over Rs. 79,000 crore. A new Aspirational Blocks Programme, covering 500 blocks for saturation of essential government services across multiple domains such as health, nutrition, education, agriculture, water resources, financial inclusion, skill development, and basic infrastructure, has also been announced.

 

Youth Skill Development Pradhan Mantri Kaushal Vikas Yojana 4.0 is proposed to be launched to skill lakhs of youth within the next three years covering new-age courses for Industry 4.0 like Coding, AI, Robotics, Mechatronics, IOT, 3D Printing, Drones and Soft Skills. In order to skill youth for international opportunities, 30 Skill India International Centres will be set up across different states. Teachers' training is to be re-envisioned through innovative pedagogy, continuous professional development and ICT implementation. District Institutes of Education and Training will be developed as vibrant institutes of established since 2014. A new Sickle Cell Anaemia Elimination Mission, especially in the tribal areas, will be launched. excellence for Teachers' Training. The government will recruit 38,800 teachers and support staff for the 740 Eklavya Model Residential Schools, serving 3.5 lakh tribal students over the next three years. A National Digital Library for Children and Adolescents is to be set for facilitating availability of quality geographies, languages, and levels, and device agnostic Apprenticeship Promotion Scheme is to Rs. 20 lakh crore agricultural credit has been targeted at animal husbandry, dairy and fisheries. A new sub-scheme of PM Matsya Sampada Yojana with targeted investment of Rs. 6,000 crore will be launched to further enable activities of fishermen, fish vendors and micro & small enterprises, improve value chain efficiencies, and expand the market.

Digital public infrastructure for agriculture will be built as an open source, open standard and interoperable public good to enable inclusive farmer- centric solutions and support for growth of agri-tech industry and start-ups. Computerisation of 63,000 Primary Agricultural Credit Societies (PACS) with an investment of Rs. 2,516 crore has be rolled out to provide stipend support to 47 lakh youth in three years. A unified Skill India Digital platform is to be launched for enabling demand-based formal skilling, linking with employers already been initiated. Massive decentralised storage capacity is to be including MSMEs, and facilitating access set up to help farmers store their to entrepreneurship schemes. At least produce and realise remunerative prices 50 tourist destinations are to be selected through sale at appropriate times. through challenge mode; to be Green Growth developed as a complete package for domestic and foreign tourists. Sector- specific skilling and entrepreneurship development is to be dovetailed to achieve the objectives of the 'Dekho Apna Desh' initiative for tourism.

 

Agriculture & Allied Sectors Aatmanirbhar Clean Plant Programme with an outlay of Rs. 2,200 crore will be launched to boost availability of disease-free, quality planting material for high value horticultural crops. A total of 500 new 'Waste to Wealth' plants under GOBAR Dhan (Galvanising Organic Bio-Agro Resources Dhan) scheme will be established for promoting circular economy with a total investment of Rs. 10,000 crore. These will include 200 compressed biogas (CBG) plants, including 75 plants in urban areas and 300 community or cluster-based plants at total investment of Rs 10,000 crore. 5% Compressed Biogas Mandate will be introduced for all organisations marketing natural and bio gas. The government will facilitate one crore farmers to adopt natural farming a national- over the next three years. For this, 10,000 Bio-Input Resource Centres are to be set up, creating level distributed micro-fertiliser and pesticide manufacturing network.

 

An Agriculture Accelerator Fund will be set up to encourage agri-startups by young entrepreneurs in rural areas. To make India a global hub for Millets or 'Shree Anna', the Indian Institute of Millet Research, Hyderabad will be supported as the Centre of Excellence for sharing best practices, research and technologies at the international level. Seven The "Green Growth" is one of the priority called sectors, "Saptarishi", of the Union Budget 2023- 24. The term Green Growth means fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies. It aims to respect biodiversity, natural resources and working conditions. India's Green Growth will include multiple programmes on green fuel, green energy, green farming, green mobility, green buildings and green equipment. The Finance Minister outlined various initiatives in line with this priority. Union Budget 2023-24 allocates Rs. 35,000 crore for priority capital investments towards energy transition and net zero objectives and energy security.

To steer the economy on the sustainable development path, Battery Energy Storage Systems with capacity of 4,000 MWH will be supported with Viability Gap Funding. A detailed framework for Pumped Storage Projects will also be formulated. The inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh will be constructed with investment of Rs. 20,700 crore

including Central support of Rs. 8,300 crore. With an outlay of Rs. 19,700 crore, the recently-launched Green Hydrogen Mission will facilitate the transition to low carbon intensity and reduce dependence on fossil fuel imports. The country's target is to reach an annual production of five MMT by 2030.

 

To encourage behavioural change, a Green Credit Programme will be initiated under the Environment (Protection) Act. This will incentivise environmentally sustainable and responsive actions by companies, individuals and local bodies, and help mobilise additional resources for such activities. The Prime Minister Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth (PM-PRANAM) will be launched to incentivise States and Union Territories to promote alternative fertilisers and balanced use of chemical fertilisers. Building on India's success in afforestation, a new Mangrove Initiative for Shoreline Habitats & Tangible Incomes (MISHTI) will be taken up for mangrove plantation along the coastline and on salt pan lands, wherever feasible, through convergence between MGNREGS, CAMPA Fund and other Sources Wetlands are vital ecosystems which sustain biological diversity. The government will promote their unique conservation values through Amrit Dharohar, a scheme that will be implemented over the next three years to encourage optimal use of wetlands and enhance bio-diversity, carbon stock, eco-tourism opportunities and income generation for local communities. Coastal shipping will be promoted as an energy-efficient and lower cost mode of transport, both for passengers and freight, through public-private partnership mode with viability gap funding, Replacing old polluting vehicles is an important part of greening our economy. In furtherance of the vehicle scrapping policy mentioned in Budget 2021-22, the government has allocated adequate funds to scrap old vehicles of the Union Government. States will also be supported in replacing old vehicles and ambulances.

 

Ease Of Doing Business The Union Budget 2023-24 proposed a slew of measures to enhance Ease of Doing Business in the country. Revamped credit guarantee scheme for MSMEs was to take effect from April 1, 2023 through infusion of Rs. 9,000 crore in the corpus. This scheme would enable additional collateral-free guaranteed credit of Rs. 2 lakh crore and also reduce the cost of the credit by about 1%. A Central Processing Centre is to be set up for faster response to companies through centralised field offices under the Companies Act. handling of various forms filed with More than 39,000 compliances have been reduced and more than 3,400 legal provisions have been decriminalised to enhance Ease of Doing Business. Jan Vishwas Bill to amend 42 Central Acts has been introduced to further trust- based governance.

 

Amendments have been proposed to the Banking Regulation Act, the Banking Companies Act and the Reserve Bank of India Act to improve bank governance and enhance investors' protection. Countries looking for digital continuity solutions would be facilitated for setting up of their Data Embassies in GIFT IFSC. The Securities and Exchange Board of India (SEBI) is to be further empowered to develop, regulate, maintain and enforce norms and standards for education in the National Institute of Securities Markets and to recognise award of degrees, diplomas and certificates. An integrated IT portal will be established to enable investors to easily reclaim the unclaimed shares and unpaid dividends from the Investor Education and Protection Fund Authority.

 

Digital Infrastructure

 

Entity DigiLocker is proposed to be set up for use by MSMEs and large business and charitable trusts to store and share documents online securely. A total of 100 labs are to be set up for 5G services-based application development to realise a new range of opportunities, business models and employment potential. A new Bharat Shared Repository of Inscriptions (BSRI) is to be set up in a digital epigraphy museum, with digitisation of one lakh ancient inscriptions in the first stage.

 

An integrated online training platform, iGOT Karmayogi, will be launched to provide continuous learning opportunities for lakhs of government employees to upgrade their skills. One- stop solution for reconciliation and updation of identity and address of individuals is to be established using DigiLocker service and Aadhaar as foundational identity. Three centres of excellence for Artificial Intelligence are to be set up in top educational institutions to realise the vision of "Make AI in India and Make AI work for India". Phase-3 of the E-Courts project is to be launched with an outlay of Rs. 7,000 crore for efficient administration of justice.

 

Cooperative Federalism

 

The entire 50-year interest-free loan to States is to be spent on capital expenditure within 2023-24. Part of the loan is conditional on States increasing actual Capital expenditure and parts of outlay will be linked to States undertaking specific loans. Tourism infrastructure and amenities are to be facilitated in border villages through the Vibrant Villages Programme. States are to be encouraged to set up a "Unity Mall" for promotion and sale of their own and also all other States' ODOPS (One District, One Product), GI products and handicrafts. Fiscal Deficit of 3.5% of Gross State Domestic Product (GSD) will be allowed for States of which 0.5% is tied to Power sector reforms.

 

Financial Sector Reforms

 

National Financial Information Registry is proposed to be set up to serve as the Central repository of financial and ancillary information for facilitating efficient flow of credit, promoting financial inclusion, and fostering financial stability. A new legislative framework is to be designed in consultation with the Reserve Bank of India (RBI) to govern this credit public infrastructure. Financial sector regulators are to carry out a comprehensive review of existing regulations in consultation with public and regulated entities. Time limits to decide the applications under various regulations would also be laid down.

 

Direct Taxes

 

Direct Tax proposals in the Union Budget 2023-24 aim to maintain continuity and stability of taxation, further simplify and rationalise various provisions to reduce the compliance burden, promote the entrepreneurial spirit and provide tax relief to citizens. Rebate limit of Personal Income Tax (PIT) is to be increased to Rs. 7 lakh from the current Rs. 5 lakh in the new tax regime. Tax structure in new PIT regime, introduced in 2020 with six income slabs, is to be changed by reducing the number of slabs to five and increasing the basic tax exemption limit to Rs. 3 lakh. The new income tax regime is to be made the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime.

 

Highest surcharge rate is to reduce from 37% to 25% in the new tax regime. This will further result in reduction of the maximum personal income tax rate to 39%. The limit for tax exemption on leave encashment on retirement of non- government salaried employees is to increase to Rs. 25 lakh. Agniveer Fund will be provided EEE status. The

payment received from the Agniveer Corpus Fund by the Agniveers enrolled in Agnipath Scheme, 2022 is proposed to be exempt from taxes. To further improve tax payer services, a next- generation Common IT Return Form has been proposed to be rolled out for tax payer convenience, along with plans to strengthen the grievance redressal mechanism.

 

Fiscal Strategy
 

In the Union Budget 2023-24, the Finance Minister has brought down the fiscal deficit target to 5.9% of GDP against the 6.4% in the Revised Estimates (RE) for 2022-23. In absolute terms, the fiscal deficit is expected to be at Rs. 17.87 lakh crore as against Rs. 17.55 lakh crore in RE 2022-23. Gross Tax Revenue is projected to grow at 10.4% in Budget estimates (BE) 2023-24 over RE for 2022-23. Both, the Direct and Indirect Tax receipts are individually estimated to grow at 10.5% and 10.4%, respectively. In BE 2023-24, it is estimated that the Direct and Indirect Taxes will contribute 54.4% and 45.6%, respectively, to the Gross Tax Revenue. In BE 2023-24, the Tax Revenue (Net to Centre) is projected at Rs. 23.30 lakh crore, which is around 11.7% more than Rs. 20.87 lakh crore of RE 2022-23. In BE 2023-24, the Tax to GDP ratio is estimated at 11.1% which is at par with the RE of 2022-23. Conclusion

Finance Minister Ms. Sitharaman presented the Union Budget 2023-24 at a time of many uncertainties hovering around. Deepening of the global slowdown can adversely impact India's exports and jobs. The Russia-Ukraine war and the developments in China are other causes of uncertainty. Still, Ms. Sitharaman has ticked all right boxes with striking a perfect balance. Her Budget 2023-24 can be commended on three counts. First, despite being an ahead-of-election Budget, she has stayed the course of fiscal consolidation. Secondly, she has laid much emphasis on changing the composition of government expenditure in favour of capital. The third welcome move has been on personal income taxation. The Budget has made annual incomes up to Rs. 7 lakh free from taxation. This will provide relief to middle class people, putting more money in their hands and spur consumption in turn. There is also merit in eventually moving towards a low tax regime with fewer and targeted exemptions such as pension and health insurance plans.