Union Budget for the financial year 2023-24 was tabled in the Parliament by Finance Minister Nirmala Sitharaman earlier today. It was growth-oriented budget that focussed on infra, agri, green energy, and railways, which witnesses an increase in capex outlay. The middle class also witnessed some relief with the FM tweaking the new income tax regime, providing tax exemptions up to ₹7 lakh. She listed 7 priorities for this budget - Inclusive development, Reaching the last mile, Infrastructure and investment, Unleashing the potential Green growth, Youth power, and Financial sector.
Experts are also very pleased with this last full budget before the general elections in 2024.
"The Union Budget is a Pro-Growth Budget which meets expectations while keeping up with fiscal prudence. It has put more money in the hands of consumers even as it generates a multiplier effect on the economy by increasing outlays on Agriculture, Infrastructure, Railways and Energy Transition. By harnessing the potential of digital technology in a slowing world the Budget has a very credible road map," said S Ranganathan, Head of Research at LKP Securities.
"FM scored in both the Economic expansion line as well as relieving common man with higher Personal Disposable Income in Hand. This budget enables domestic consumption growth while boosting business & investment sentiment for corporates," said Anmol Das, Head of Research, Teji Mandi.
From income tax relief to green energy proposals, let's take a look at the key highlights of the 2023 Budget:
The Finance Minister propose to increase the rebate limit to ₹7 lakh in the new tax regime from ₹5 lakh crore earlier. She also proposed to change the tax
structure in this regime by reducing the number of slabs to five from six earlier and increasing the tax exemption limit to ₹3 lakh. Currently, the highest rate is 42.74% income tax under the new regime. The FM has proposed to reduce the highest surcharge from 37% to 25% in the new tax regime, max rate of 39%. The new tax regime will be default but the taxpayers will have the option to choose the old regime.
People who are earning an income of ₹9 lakh a year will have to pay only ₹45,000 a year as tax. That is 5% of their income or a reduction of 25 percent from the ₹60,000 they were paying earlier, she said.
TAX SLABS
0-3 lakh- nil
3-6 lakh -5%
6-9 lakh - 10%
9-12 lakh-15%
12-15 lakh -20%
Above 15 lakh - 30%
Finance Minister Nirmala Sitharaman announced reforms in the Budget 2023, allowing senior citizens to save and invest more for their future. The maximum deposit level of the Senior Citizens' Saving Scheme (SCSS) has been enhanced from ₹15 lakh to ₹30 lakh. The minimum deposit for the scheme continues to be pegged at ₹1,000.
For the quarter ending March 31, 2023, the government has raised the interest rate on the SCSS to 8%.
The Finance Minister Ms Nirmala Sitharaman announced in her Budget 2023 speech a one-time small savings scheme ‘Mahila Samman Saving Certificate’. It will be available for two years. The interest rate has been fixed at 7.5 per cent per annum.
The Budget 2023-24 allocated ₹79,000 crore for the Pradhan Mantri Awas Yojana (PMAY), giving a further boost to the government’s programme to provide housing to the urban poor.
Presenting the Union Budget on February 1, finance minister Nirmala Sitharaman said that the outlay of PMAY is being enhanced by 66 percent to over ₹79,000 crore.
MSMEs
Finance minister Nirmala Sitharaman announced a revamped Credit guarantee scheme for MSMEs with effect from April 1 this year with an infusion of around ₹9,000 crore into the corpus. The new credit guarantee scheme is expected to lower cost of credit by 1 percent and allow MSMEs to avail additional collateral free credit guarantee of ₹2 lakh crore. The MSME segment accounts for 30 percent of GDP and employs nearly 11 crore people, she said. If MSMEs fail to execute contract, 95 percent of performance security will be returned to small business as part of Vivad Se Vishwas, she added.
Agri-reforms
Agriculture credit target increased to ₹20 trillion for FY'24, with focus on animal husbandry, dairy and fisheries, announced Sitharaman in Budget 2023. Government to spend ₹2200 crore for high-value horticulture.
The Union Government’s focus on reforming the agriculture sector continues, after its legal reforms had to be repealed, said FM Sitharaman. The Budget envisages an open-source digital infrastructure for agriculture and an agriculture accelerator fund focused on youth in rural areas. These steps will help the nascent agri-tech industry and could help boost the sector which still employs nearly half of the country’s workforce, she added.
Green growth and renewable energy
Green growth would be one of the priorities of the budget, said Sitharaman. "We are implementing many programmes for green growth across various economic sectors. They will help reduce carbon intensity and create green jobs," she announced.
The govt has announced an outlay of ₹35,000 cr for energy transition investment. It also mentioned the target to reach green hydrogen production of 5MMT by 2030. Green credit programme will be notified under the Environment Protection Act, it added.
Infra
Finance Minister Nirmala Sitharaman on Wednesday announced hiking the capital expenditure by 33 per cent to ₹10 lakh crore for infrastructure development for 2023-24 and will be at 3.3 percent of the GDP. This is the highest outlay for capex ever. In FY23, the capex outlay was ₹7.5 lakh crore.
The Centre has also identified 100 critical transport infrastructure projects for implementation and proposed 50 new airports for increased connectivity. Also, ₹10,000 crore will be set aside for the development of urban infrastructure. FM Sitharaman said that the increased capital outlay for infrastructure will "crowd in" private investment in India.
"Newly established infrastructure finance secretariat will assist all stakeholders in more private investment," Sitharaman said.
Railways
Finance minister Nirmala Sitharaman announced a record allocation for Indian Railways in the budget at ₹2.4 trillion, as the national transporter is looking for massive infrastructure expansion in the coming years ahead.
During last year’s Budget, Sitharaman had allocated ₹1,40,367.13 crore for the rail sector. "This is the highest ever outlay in the history of railways, almost nine times the outlay made in 2013-14," the finance minister said.
Custom Duty
FM Nirmala Sitharaman on Wednesday announced a reduction in Customs duty on certain mobile phone components and television parts to boost their manufacturing in India. In her speech, Sitharaman said the Customs duty will be brought down to 2.5 percent on camera lenses and continue the concessional duty on lithium ion cells for another year. Further, she said Customs duties on open cells of LED TV panels will be reduced to 2.5 percent.
Pharma
FM announced new programmes to promote research in pharmaceuticals. Facilities in select ICMR labs will be made available for research by public and private medical faculties. She further announced India's mission to eliminate sickle cell anaemia by 2047 will be launched by the government. This will entail awareness creation, universal screening of 7 crore people in the age group of 0-40 years in tribal areas and collaborations between central institutions and state government.
Digital India
- The government also proposes to set up three centres of excellence for artificial intelligence in top educational institutions.
- 100 labs for developing applications for 5G services will be set up in engineering institutions.
- FM Sitharaman proposed to launch Phase III of e-courts. The government is making efforts to make the legal system more accessible to people by using technology. The Supreme Court has already begun streaming its proceedings on online platforms.
- She also proposes to set up a single-window system for registrations and approvals in IFSC Gift City. Companies would be able to set up "data embassies" in the economic zone.
- Government would formulate a National Data Governance policy, which will enable anonymised data, and besides KYC process will be simplified by adopting a risk-based system.
- PAN will be used for common identifier for all digital systems of specified government agencies
- For reclaiming shares, dividends a, integrated IT portal will be established
- Capital Investment outlay increased by 33% to ₹10 Lk Cr, 3.3% of GDP
- Increased capital outlay for infrastructure to crowd in private investment
- Capital investment outlay is being increased steeply for third year in a row
- Capital outlay of ₹2.40 lakh cr that will be provided for railways, highest ever outlay; 9x of 2013-2014
- Plan to increase PM Housing outlay to ₹79000 crore
Fiscal deficit and other key numbers
- FY24 fiscal deficit target at 5.9% of GDP
- FY23 fiscal deficit target retained at 6.4% of GDP
- FY24 food subsidy seen at 1.97 lakh crore, fertilizer subsidy seen at 1.75 lakh crore
- FY24 divestment target at ₹61,000 crore
- FY23 divestment target revised to ₹50,000 crore
- FY23 growth estimated at 7%
- FY24 capital expenditure proposed at ₹10 lk cr, up 33%
- FY24 nominal GDP target at 10.5%
- FY24 revenue deficit seen at ₹8.7 lakh crore
- FY24 dividend from PSU companies seen at ₹43,000 crore
- FY24 gross tax receipt target at ₹33.6 lakh crore
- FY24 interest payments seen at ₹10.8 lakh crore
- FY24 income tax target at ₹9.1 lakh crore