Union Finance Minister Nirmala Sitharaman. (Express Photo: Renuka Puri)
Nirmala Sitharaman interview: ‘This is a golden opportunity for India. We should really not miss the bus this time’
A day after presenting the Union Budget for 2023-24, Union Finance Minister Nirmala Sitharaman said growth was the predominant focus from Day 1 when she and her team sat down to prepare the last full-year Budget ahead of Lok Sabha elections. “The Prime Minister was also on board with it. He said growth ka momentum rakhna chahiye (we need to keep the growth momentum). If anything, we need to speed it up, oil it better and run it better, and that is why this number of Rs 10 lakh crore for capital expenditure came up.,” Sitharaman told The Indian Express in an interview at her North Block office Thursday.
She added that her “single-minded” guiding imperative was that this was a “golden opportunity” for India and this time “we should really not miss the bus.” (Read the full interview here)
Union Finance Minister Nirmala Sitharaman with Ministers of State for Finance Bhagwat Kishanrao Karad and Pankaj Chaudhary and officials during the 'Halwa' ceremony to mark the final stage of Union Budget 2023-24, in New Delhi, Thursday, Jan. 26, 2023. (PTI Photo/Manvender Vashist Lav)
GDP growth: The Survey said India’s growth estimate for FY23 is higher than for almost all major economies. “Despite strong global headwinds and tighter domestic monetary policy, if India is still expected to grow between 6.5 and 7.0 per cent, and that too without the advantage of a base effect, it is a reflection of India’s underlying economic resilience; of its ability to recoup, renew and re-energise the growth drivers of the economy,” said the Survey.
Inflation: The RBI has projected headline inflation at 6.8% in FY23, outside its comfort zone of 2% to 6%. High inflation is seen as one big factor holding back demand among consumers. However, the Survey sounded optimistic about the inflation levels and trajectory, saying “it is not high enough to deter private consumption and also not so low as to weaken the inducement to invest.”
Unemployment: The Survey said “employment levels have risen in the current financial year”, and that “job creation appears to have moved into a higher orbit with the initial surge in exports, a strong release of the “pent-up” demand, and a swift rollout of the capex.”
It pointed to the Periodic Labour Force Survey (PLFS), which showed that urban unemployment rate for people aged 15 years and above declined from 9.8% in the quarter ending September 2021 to 7.2% one year later.
The Survey also underlined that the fall in unemployment rate is accompanied by an improvement in the labour force participation rate.
Chief Economic Advisor V. Anantha Nageswaran presents the Economic Survey 2022-23 during a press conference, in New Delhi, Tuesday, Jan. 31, 2023. (PTI Photo/Manvender Vashist Lav)
It is true that Union Budgets tend to differ from one year to another. However, here are five metrics on which any Union Budget must come through.
The Budget speech: The speech introduces the Budget to the public. Shorn of all the chatter around it, the Budget is essentially an annual financial statement. What the public needs to know is whether they will be taxed more or less, whether the government will be able to make its ends meet (and if not, then how much will it borrow from the market) and, lastly, where will the government spend all its money.
The Budget numbers: The whole Budget is based on certain assumptions of economic growth and revenue buoyancy. But sometimes the government’s assumptions leave everyone puzzled.
Fiscal and Revenue deficit: When the latest Budget is presented, the fiscal deficit figure should be read in conjunction with the revenue deficit data to understand how much of money that the government intends to borrow in the coming financial year will be used towards paying everyday bills and how much of it will go towards boosting the productive capacity of the economy.
Revenue targets: A particular problem is that often the disinvestment target is calculated at the very end of government’s revenue calculations — that is, after revenue assumptions from all other sources are already made. As such, there is a great temptation to stretch the disinvestment target depending on the gap that needs to be filled.
This practice often leads to unrealistic disinvestment targets. This, in turn, undermines the credibility of Budget numbers. That’s because if the disinvestment target is not met in a particular year, it immediately means the fiscal deficit will expand from the budgeted level.
Expenditure: In allocating expenditure, the trick lies in figuring out the country’s priorities.
No country has risen to dominate the world without first substantially investing in the health and education of its people. All the hopes of India becoming a superpower are contingent on India leveraging its human resources. But while much is made of the promise of India becoming the back office of the world, little is thought of the threat of automation.
Trying to understand the Union Budget, Economic Survey, and state of India's economy? Read more:
Budget 2023 Explained: Finance Minister Nirmala Sitharaman presented the Union Budget in Parliament on Wednesday, the last full-fledged Budget of the Narendra Modi government before the 2024 Lok Sabha elections early next year.
In the Union budget 2023-2024, the government has reaffirmed its commitment to the path of fiscal consolidation. From staying with the fiscal deficit target of 6.4 per cent of GDP in 2022-23, the budget has now projected a lowering of the deficit to 5.9 per cent in 2023-24 and then to less than 4.5 per cent by 2025-26. While last year the government had been conservative in the assumptions that formed the basis of its fiscal math, leading to actual revenue exceeding budget targets, this time around, the assumptions made seem more reasonable, even as there are concerns over the macroeconomic environment. Read Express View here
The major contours of the 2023-24 Union Budget have already been analysed. To recap, the government proposes to reduce the fiscal deficit substantially from 6.4 per cent of GDP to 5.9 per cent, while continuing to shift the composition of expenditures away from revenue towards capital. An increase in the share of capital expenditure in total expenditures (from 19 per cent to 22 per cent) while reducing the fiscal deficit is being achieved by reducing or freezing expenditures on key social sector programmes such as NFSA, ICDS, MGNREGA, and other areas. Read Amit Basole's piece here
Union Budget 2023-24 has got a mixed response from industry, middle income group and tax consultants with many people terming it as an election budget that has tried to please the majority. Take a look at how industrialists and tax consultants reacted to it.
Looking at the reaction in the media to the Union budget, it would appear that many have been carried away by the lofty ideals of “Amrit Kaal”, the glitter of high-tech schemes and the surge in capital expenditure. Very few seem to have remembered what Mahatma Gandhi said: “Recall the face of the poorest and weakest man you have seen, and ask yourself if this step you contemplate is going to be of any use to him.”
India’s economic deceleration was the result of multiple policy failures, and the present budget does not seem to have any new strategy to make up for the mistakes. The budget assumes “a full recovery in FY22 ahead of many nations and (is) position(ed) to ascend the pre-pandemic growth path in FY23”. It is rather silly to assume that the economy fully recovered from the pandemic in FY22. The per capita GDP would still be below the pandemic level. It is this assumption that underlies the budget’s approach to agriculture and the rural poor. Read Thomas Isaac's column here
Are all budgets invariably contextual — a melange of flashbacks, existing in realities and crystal gazing? This budget is an innovative amalgamation. It comes in the backdrop of the impending state elections and the general election in 2024. Temptations for excessive subsidies and measures designed to influence the electoral psyche are inevitable. It is laudable when the short-term temptations are spurned in favour of longer-term outcomes.
Indeed, the budget is a unique example of being both responsive and responsible, write NK Singh, Prachi Mishra in this opinion column.
By tweaking tax slabs and rates in the new personal income tax regime in the Budget for 2023-24, Finance Minister Nirmala Sitharaman has nudged taxpayers towards a simpler, hassle-free tax regime with minimal compliance burden, as against the more complicated old system.
So, what does it mean? What is the change in the new regime? Should you shift to the new regime? Will this impact savings? In our Explained Your Money column, Sandeep Singh and Sukalp Sharma break it down for you.
Looking at the reaction in the media to the Union budget, it would appear that many have been carried away by the lofty ideals of “Amrit Kaal”, the glitter of high-tech schemes and the surge in capital expenditure. Very few seem to have remembered what Mahatma Gandhi said: “Recall the face of the poorest and weakest man you have seen, and ask yourself if this step you contemplate is going to be of any use to him.”
Poverty alleviation programmes have been given short shrift in Budget 2023. The most important among them is MGNREGA, whose allocation has been cut to Rs 60,000 crore. The actual expenditure in 2021-22 was Rs 98,468 crore and the expected expenditure in 2022-23 is Rs 89,400 crore. The total allocation for the National Social Assistance scheme, anganwadis, the National Livelihood Mission and nutrition programmes has stagnated at less than Rs 60,000 crore.
The expectation is that the public capital expenditure would crowd in private investment. But the puzzle is that despite higher government capital investment, private investment is not forthcoming. Thomas Isaac writes
The Urban Infrastructure Development Fund, announced by Finance Minister Nirmala Sitharaman in her Budget 2023-2024 speech Wednesday, would provide the impetus needed for the growth of infrastructure in cities, Hitesh Vaidya, Director, National Institute of Urban Affairs (NIUA), said.
“The announcement in the budget that government will establish the Urban Infrastructure Development Fund, to be managed by the National Housing Bank, is a great move, which will provide much-needed impetus for urban infrastructure growth,” Vaidya told The Indian Express. Read the entire article by Damini Nath
This year’s Union budget has been marked by areas of continuity over the past three years. Some areas like the continued boost in capital expenditure have received wide attention. Others, such as the reform of urban development and planning processes have received less.
As India grows, the quality of urbanisation will determine the quality of economic growth, and vice versa. From this perspective, the continued focus on improving urban infrastructure and land-use efficiency is welcome. However, we should not overlook the missed opportunities for more fundamental reforms while celebrating continuity.
In her budget speech, the Finance Minister laid out four proposals related to urban planning and urbanisation. First, cities will be encouraged to undertake urban planning reforms, adopting practices that use land more efficiently, creating resources for urban infrastructure, making urban land affordable, and improving inclusivity. Second, cities will be incentivised to ring-fence user charges on infrastructure and undertake property tax governance reforms so that they are creditworthy enough to issue municipal bonds. Read the full Opinion piece here
The budget has proposed that the current level of rebate will be raised from Rs 5 lakh to Rs 7 lakh. At the same time, the exemption threshold has been raised to Rs 3 lakh. This implies that individuals with an annual income of Rs 3 lakh or less will pay no tax and those who earn Rs 7 lakh will receive a full rebate on tax paid.
While raising the exemption threshold has been passionately discussed, it is estimated that India now exempts incomes in multiples of its per capita income. Although such claims of generous exemptions are often countered with the need for accommodating the cost of living, even the inflation-adjusted historical threshold is exceeded by the actual exemptions now given. Thus, one may expect that such relief will cost the exchequer.
However, the numbers suggest otherwise and the revision in the exemption limit along with the rebate will have a muted impact on the government’s fiscal position. Suranjali Tandon writes
It is helpful to think of the Union budget as satisfying two important objectives — growth and stability. Depending on the state of the economy and availability of fiscal resources, electoral compulsions etc, a given budget is either more growth-oriented or stability-oriented. Which category does the Union budget of 2023-24 fall into?
The Union budget is an annual statement of the government’s income and expenditure. From that standpoint, this budget was a critical one, for two main reasons. First, for several years, the government has been struggling to spend within its means and the fiscal deficit has been increasing. During the pandemic period, the deficit shot up first to 9.2 per cent of GDP in 2020-21, and then to 6.9 per cent in 2021-22.
Secondly, this was the last full-year budget before the country goes into general elections in 2024. There was a general apprehension that the government would throw caution to the wind, and use the budget to announce populist schemes for specific electoral constituencies. Read the opinion piece by Rajeswari Sengupta
The government has gone all out in its attempt to convince individual taxpayers to migrate to the new income tax regime by overhauling slabs and offering additional sops to the lowest as well as the top strata of taxpayers. In the Budget speech, Finance Minister Nirmala Sitharaman pitched hard for the new tax regime, offering a slew of incentives in comparison to the old system, and dangling the carrot of negligible compliance burden that the simplified new regime promises.
While no changes have been made in the old tax regime, the government has decided to increase the scope of rebate to those with a taxable income of Rs 7 lakh per year from the earlier limit of Rs 5 lakh in the new system. Put simply, this means that those with an annual income of up to Rs 7 lakh will not be required to pay tax under the new system. The income ceiling for rebate in the old regime continues to be Rs 5 lakh. Sukalp Sharma , Sandeep Singh explain
Union Finance Minister Nirmala Sitharaman’s latest budget, the last full-fledged one before next year’s general elections, can be commended on three counts. First, for staying the course on fiscal consolidation. The second positive feature is the emphasis on changing the composition of government expenditure in favour of capital, as against revenue, spending. The third welcome move has been on personal income taxation.
Politically, this is a budget with few giveaways. For all the rhetoric on Sabka Saath Sabka Vikas and new welfare schemes in the budget speech, the actual allocations have not risen by that much. It is possible that the Modi government is conserving the gunpowder for a later day as elections draw nearer.
This calendar year will see assembly polls in nine states. These will be before the big election early next year. In a matter of months, politics could trump economics. Whether or not that happens, it is clear that Budget 2023 steers clear of the most politically contentious reforms – be it on farm and land acquisition or big-bang privatisation – even though it has the numbers to take the plunge. Read the full editorial here
In turbulent times like these, a good budget is just a starting point. The turmoil in the global economy is likely to continue, as the impact of higher interest rates shows up in weaker demand for consumption and investment, and geopolitical tensions continue to disrupt energy supplies and trade. As the resilience of the domestic economy gets tested by global headwinds, deft fiscal manoeuvres may be necessary, like they were this year, writes Neelkanth Mishra in an opinion column.
With smart tweaking in tax slabs and rates under the new tax regime and extending the benefit of standard deduction, the government has made a big pitch for taxpayers to move from the old tax regime (OTR) to the new tax regime (NTR) by making taxation under the new regime nearly equivalent to OTR without the need for any deduction.
It comes on the back of the announcement to increase the limit of rebate from Rs 5 lakh earlier to Rs 7 lakh beginning April 1, 2023. This means that if an individual earns up to Rs 7 lakh, he/she is not required to pay any tax. However, if the salary is more than Rs 7 lakh he/she will have to pay taxes as per the applicable tax slabs under the new tax regime. - Sandeep Singh, Sukalp Sharma report
Indian markets opened in the red in early trade this morning, before recovering some losses. The Sensex at BSE is trading 100 points lower at 59,599, while the broader Nifty is is down 86 points at 17,529. Read more here
The government has gone all out in its attempt to convince individual taxpayers to migrate to the new income tax regime by overhauling slabs and offering additional sops to the lowest as well as the top strata of taxpayers. In the Budget speech, Finance Minister Nirmala Sitharaman pitched hard for the new tax regime, offering a slew of incentives in comparison to the old system, and dangling the carrot of negligible compliance burden that the simplified new regime promises.
Take a look at the new tax slabs here:
A comparison of tax computations for an individual earning Rs 15 lakh per annum under both tax regimes suggests that his annual tax liability will be Rs 1,45,600 under the new regime, against Rs 1,24,800 in the old regime. However, it is worth noting that to save the additional Rs 19,800 in tax, the individual will have to claim deductions worth Rs 1.50 lakh under Section 80C, Rs 25,000 on health insurance premia for self and family, Rs 50,000 as health insurance premium for senior citizen parents, and Rs 2,00,000 towards home loan interest. Read details here
Finance Minister Nirmala Sitharaman said the new tax regime will be the default system, but not compulsory, and that the government intends to gradually attract people to this new regime. "The old system is complicated and several requests in the past have been made to simplify it. Suggestions were to simplify the process, reduce taxes and improve compliance. We have done all of it in the Budget and the new system will also be the default system but not compulsory. Our intent is to gradually attract people to this new regime," she tells DD News in her post-Budget interview. Read full interview here
What’s the big political economy message from Nirmala Sitharaman’s latest Budget? The answer probably lies in five words: The Middle Class Finally Matters.
The Modi government’s big initiatives during its almost nine years in power have been largely aimed at the very poor, the farming community and corporates. As cynics would say, the first and second have the votes, while the last bring in the notes. - Harish Damodaran writes
In her last full Budget ahead of Lok Sabha elections next year, Union Finance Minister Nirmala Sitharaman kept her focus on two key aspects: one, growth – by setting aside a large outlay for an unprecedented surge in capital spending, and two, fiscal consolidation, by slashing subsidies and spending on the job guarantee scheme. The big Budget idea came in the form of raising the threshold at which income tax kicks in to Rs 7 lakh a year from Rs 5 lakh a year, plus a solid nudge prodding individuals to shift to a new tax regime by restructuring the tax slabs. - Anil Sasi, P Vaidyanathan Iyer write
In the Union Budget presented on Wednesday, the Centre has cut the allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) by 21.66 per cent for 2023-24, attracting criticism from some quarters. Finance Minister Nirmala Sitharaman has allocated Rs 60,000 crore for the scheme, lower than the budgetary estimate of Rs 73,000 crore for 2022-23. The reduction is sharper when compared with the revised estimate of Rs 89,400 crore for the current financial year. Read more
As the state’s footprint on the economy has shrunk over the past three decades, the relevance of the annual Union budget for the economy has contracted accordingly. The advent of the Goods and Services Tax (GST), which shifted indirect taxation decisions to the GST Council, and the separation of reforms from the fiscal arithmetic has added to this trend. Nevertheless, presentation of the last full budget before the next general elections was an important event, not just for the commentariat, but also for the financial markets. Neelkanth Mishra writes
What are the key takeaways from Union Budget 2023-24? Join us LIVE on Twitter Spaces today at 9 PM and hear our Deputy Associate Editor Udit Misra decode the Budget.
The topmost priority of the Narendra Modi government, as announced by Finance Minister Nirmala Sitharaman during her Budget speech on Wednesday, is inclusive development, which is also the first of the “saptarishis’’, or the seven goals it has set for “this Amrit Kaal’’.
In its final budget before the 2024 elections, the government said its mantra of inclusive growth was particularly targeted at youth, women, farmers, OBCs, Scheduled Castes and Scheduled Tribes, differently abled people, economically weaker sections and other underprivileged sections. Esha Roy writes
In a pre-election year, there were wide expectations that the Union Budget would announce populist measures, which could impact the fiscal deficit glide path. However, the budgetary announcements ticked all the boxes by balancing the wider expectations of tax relief to individuals with sufficient resources for various government schemes. Adherence to the fiscal deficit glide path and market borrowing in line with expectations led to a rally in bond prices and a decline in the yield on government securities. This is expected to provide some relief to the debt markets and prevent any near-term crowding out of private borrowings from the debt capital market. -- Karthik Srinivasan writes
Finance Minister Nirmala Sitharaman’s budget speech introduced schemes and policies aimed at ecological conservation. Targeting an array of different issues, these schemes come with the promise of preserving India’s ecological health. This is part of a larger “green push” with a focus on the environment and climate change. The following are the schemes announced.
? MISHTI (Mangrove Initiative for Shoreline Habitats & Tangible Incomes): MISHTI is a new programme that will facilitate mangrove plantation along India’s coastline and on salt pan lands.
? PM PRANAM (Prime Minister Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth): This programme will seek to incentivise states and union territories promoting alternative fertilisers and the balanced use of chemical fertilisers
? Bhartiya Prakritik Kheti Bio-Input Resource Centres: To further facilitate the adoption of “natural farming,” 10,000 Bio-Input Resource Centres will be set-up, creating a national-level distributed micro-fertiliser and pesticide manufacturing network.
? Amrit Dharohar: This is 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. Read more
Nirmala Sitharaman’s fifth Budget, presented on Wednesday, while being bereft of populism, entails giveaways for some sections, especially the middle class and the youth. There is also a clear focus on reviving job-creating sectors such as housing and construction. The priorities Sitharaman listed as Saptarshi include inclusive development, unleashing potential, green growth, youth power, reaching the last mile, the financial sector and infrastructure investment. -- Liz Mathew writes
In her Union Budget 2023 speech on Wednesday, Finance Minister Nirmala Sitharaman announced some targeted schemes for tribal welfare, ranging from better education to clean drinking water to sanitation. Here is a look at the various announcements.
? Facilities for Eklavya Schools: Sitharaman said, “In the next three years, the Centre will recruit 38,800 teachers and support staff for the 740 Eklavya Model Residential Schools, serving 3.5 lakh tribal students.”
? Eliminating Sickle Cell Anaemia: “A Mission to eliminate Sickle Cell Anaemia by 2047 will be launched. It will entail awareness creation, universal screening of 7 crore people in the age group of 0-40 years in affected tribal areas, and counselling through collaborative efforts of central ministries and state governments," Sitharaman said.
? Focus on PVTGs: To improve socio-economic conditions of the particularly vulnerable tribal groups (PVTGs), Pradhan Mantri PVTG Development Mission will be launched. An amount of Rs 15,000 crore will be made available to implement the Mission in the next three years under the Development Action Plan for the Scheduled Tribes. Read more here
Presenting the Union Budget 2023-24 Wednesday, Union Finance Minister Nirmala Sitharaman announced a hike in basic customs duty on articles made from gold bars while increasing the tax on cigarettes by 16 per cent. The government would also reduce customs duty on shrimp feed to promote exports, she said.
What gets costlier:
? Taxes on cigarettes hiked by 16 per cent
? Basic import duty on compounded rubber increased to 25 per cent from 10 per cent
? Basic customs duty hiked on articles made from gold bars
? Customs duty on kitchen electric chimney increased to 15 per cent from 7.5 per cent
What gets cheaper:
? Customs duty on parts of open cells of TV panels cut to 2.5 per cent
? Govt proposes to reduce customs duty on the import of certain inputs for mobile phone manufacturing
? Govt to reduce basic customs duty on seeds used in manufacturing of lab-grown diamonds
? Govt to reduce customs duty on shrimp feed to promote exports
Finance Minister Nirmala Sitharaman on Wednesday announced a budgetary allocation of Rs 5.93 lakh crore for defence—a hike of 12.9 per cent over the budgetary estimates of Rs 5.25 lakh crore budgetary estimates in the previous financial year. While the modernisation funds saw a meagre hike of 6.57 per cent at Rs 1.62 lakh crore, the revenue budget—including the pay and allowances of defence personnel—saw an increase of around 17.39 per cent. -- Amrita Nayak Dutta writes
In her Budget speech, Finance Minister Nirmala Sitharaman on Wednesday said that states would be encouraged to set up a 'Unity Mall' in their capitals, their most prominent tourism centres, or their financial capitals.
? Sitharaman did not specify what the “unity mall” would be, its physical or non-physical structure, or how it would work. She said that the unity malls would focus on the promotion and sale of the state’s own “ODOPs (one district, one product), GI products and other handicraft products, and for providing space for such products of all other States”.
? One District, One Product is an initiative by the government which aims to make regional products more accessible, while providing capital to those who produce them. Read our explainer here
What are the main highlights of the budget in the agri-food space? If I had to sum it up in just two words, I would say “revdi restrained”. Let’s look at some of the key figures. The food subsidy in the FY24 budget is estimated (BE) at roughly 1.97 lakh crore against the revised estimates (RE) of FY23 at Rs 2.87 lakh crore.
This means a net saving of roughly Rs 90,000 crore. This has been done by discontinuing the earlier PM-GKAY (Garib Kalyan Anna Yojana), which was started during the Covid-19 period by giving an extra 5 kg of grain free to more than 81 crore people. This has been stopped from January 1. Instead, PDS supplies under the National Food Security Act (NFSA), for which rice and wheat were being charged Rs 3 and Rs 2 per kg, are now made free — this has been renamed as PM-GKAY. Ashok Gulati writes
Finance Minister Nirmala Sitharaman on Wednesday proposed to raise the income tax rebate limit from Rs 5 lakh to Rs 7 lakh in the new tax regime.
Who exactly benefits from this, and how? We explain
Put simply, only those with an annual income of up to Rs 7 lakh under the new tax regime will benefit from the proposal, as they will get a 100 per cent rebate on their tax liability. On the other hand, those with incomes over Rs 7 lakh will have to pay tax as per the slabs of the new tax regime. This is because the zero-tax benefit is a rebate and not an exemption, and this rebate is being offered to only those with an annual taxable income of up to Rs 7 lakh. We Explain here
Here are the Budget highlights, an explanation of the provisions, and what it means for you. Our senior editors P Vaidyanathan Iyer, Anil Sasi, Sandeep Singh, Udit Misra, Harish Damodaran, Ishan Bakshi, Aanchal Magazine break down the Budget for you.
During her Budget speech, Finance Minister Nirmala Sitharaman announced the government’s move to focus on lab grown diamonds. “Customs duty on the seeds used in lab-grown diamond manufacturing will be reduced”, announced the finance minister. She also announced a grant to IITs to facilitate the growth of LDGs in India.
Lab grown diamonds are diamonds that are produced using specific technology which mimics the geological processes that grow natural diamonds. They are not the same as “diamond simulants” – LDGs are chemically, physically and optically diamond and thus are difficult to identify as “lab grown.” Read more here
In her Union Budget speech, Finance Minister Nirmala Sitharaman highlighted the government’s continuous efforts to push for digitization in the country. The minister announced a wide range of schemes and proposals to move towards 'Digital India'.
? Digital Public Infrastructure for Agriculture: The platform will offer inclusive, farmer-centric solutions through relevant information services for crop planning and health, improved access to farm inputs, credit, and insurance, help for crop estimation, market intelligence, and support for the growth of the agri-tech industry and start-ups.
? National Digital Library for Children and Adolescents: This will be established for facilitating the availability of quality books in different languages, genres and at different levels. The government will also try to inculcate a culture of reading by collaborating with NGOs, which will provide age-appropriate reading material to everyone.
? National Data Governance Policy: Government will formulate a data governance policy to enable access to anonymised data for innovation and research by start-ups and academia. We explain here
What are the key takeaways from Union Budget 2023-24? Join us LIVE on Twitter Spaces today at 9 PM and hear our Deputy Associate Editor Udit Misra decode the Budget.
There is no populism in Union Budget for 2023-24, Finance Minister Nirmala Sitharaman’s fifth in a row, no foreshadow of the 2024 Lok Sabha elections – or its imperatives for a party working for a third term. If at all, this Budget clearly points to continuity to the government’s economic strategy. It is bold, and innovative too with the hope that good economics isn’t necessarily bad politics.
The big picture of the Budget is its focus on growth through higher productive capital spending, and simultaneously sticking to fiscal prudence, which in the near to medium term will mean lower interest rates for the private sector, encouraging them to invest. -- P Vaidyanathan Iyer writes
Union Finance Minister Nirmala Sitharaman Wednesday addressed the press after announcing the Union Budget 2023. Here's what she said:
? Sitharaman said that the Budget largely focussed on four major points: empowering women, focus on tourism, “Vishwakarma” or those toiling traditionally through their hands for the country, and green growth.
? Speaking about the new tax regime, the finance minister said, that it has greater incentives and attractions so that people can 'unhesitatingly' move from the old tax regime to the new one. "We are not compelling anyone. But the new one is now attractive as it gives greater rebates," she said.
? Budget 2023 gives leg-up to capital investment, and attends to MSMEs as they are the 'engine of growth', gives push to private sector, while giving tax reliefs to individuals and middle class, Sitharaman said.
? Govt has decided to release wheat into the market because of which the price of wheat will come down, she said. "Before the budget, we had already taken action to ease wheat prices".
Benchmark BSE Sensex zoomed over 1,200 points in the afternoon trade on Wednesday as market investors cheered the Union budget proposals presented by Finance Minister Nirmala Sitharaman in the Lok Sabha. The 30-share BSE barometer zoomed 1,223.54 points or 2 per cent to its intra-day high of 60,773.44. The broader NSE Nifty jumped 310.05 points or 1.75 per cent to 17,972.20.
“The market had mixed expectations on the budget presuming it to be populist and low elbowroom for the government ahead of the slowing economy, high inflation and interest rates. However, the government has taken it to a new zone with a well-tuned perfection between growth and stability. Read more here
Addressing the media following the Budget, Finance Minister Nirmala Sitharaman said that the Budget largely focussed on 4 major points: empowering women, focus on tourism, “vishvakarma” or those toiling traditionally through their hands for the country, and green growth.
Finance Minister Nirmala Sitharaman on Wednesday said that the new tax regime (which has now been announced as the default tax regime), has got greater incentives and attractions so that people can "unhestatingly" move from the old to new regime.
Speaking to the media, she said, "We are not compelling anyone. But the new one is now attractive as it gives greater rebates"
Addressing the media after announcing the Union Budget 2023, Finance Minister Nirmala Sitharaman said that the government was focusing on a futuristic financial sector for India. "This budget focusses on growth so that India moves ahead," she said.
Lauding the 2023 Union Budget, Prime Minister Narendra Modi on Wednesday said it will fulfil the dreams of the aspirational society, farmers and middle class. In a video address, PM Modi said, “First budget of Amrit Kaal will build a strong foundation for building a developed India. This budget will fulfil dreams of aspirational society including poor people, middle-class people, farmers.” Read more
The Union Budget 2023-24 can be summarised in three big takeaways. In essence Finance Minister Nirmala Sitharaman has stuck to the broader growth strategy that she unveiled in 2019-20.
1) Raising capital expenditure by the government
Capital expenditure is the money that is spent on building productive assets such as roads and bridges and ports. This has a greater return to the economy and every Rs 100 spent leads to Rs 250 gain for the economy. Revenue expenditure on the other hand returns less than Rs 100. In the latest budget capital expenditure by the government has been raised to Rs 10 lakh crore — this is more than double the amount of money allocated when compared to 2020-21 (Rs 4.39 lakh crore).
2) Fiscal Prudence
The FM has assured that the fiscal deficit (market borrowing by the govt ) will fall to 5.9% of the GDP, as promised in the glide path. This will have a salutary impact on the broader economy as it suggests that money will be available for private entrepreneurs to borrow.
3) New Personal Income Tax regime is now the default
This will be perhaps the most talked about decision of the Budget. Salaried Indians were expecting some relief on the income tax front. The FM seems to have provided it but in the so-called new personal income tax regime, which was introduced last year, but did not have many takers. The FM has used the incentives to popularise the income tax regime while also declaring that it will now be the default scheme. Until last year it was optional for people with the provison that once you adopted it you could not go back to the old income tax regime. Udit Mishra explains
Finance Minister Nirmala Sitharaman made five major announcements on personal income tax to benefit the “hard-working” middle class. She also said that while the new tax regime would be the default, tax payers could opt for the old one. Sitharaman proposed to raise the rebate limit from Rs 5 lakh to Rs 7 lakh in the new tax regime. Therefore, if an individual has opted for the new tax regime, he or she will not be required to pay any tax up to an annual income of Rs 7 lakh. Read more
The Finance Minister listed ‘Green Growth’ as one of the seven priorities of her Budget. She said that these seven principles complement each other and act as the ‘Saptarishi’ guiding India through the Amrit Kaal. Green Growth is the fifth of these seven priorities.
The FM said that the Prime Minister has given a vision for “LiFE”, or Lifestyle for Environment, to spur a movement of environmentally conscious lifestyle, and that India was moving towards the ‘panchamrit’ and net-zero carbon emission by 2070 to usher in green industrial and economic transition. Read more here
Union Finance Minister Nirmala Sitharaman commenced her Budget speech by calling it "the first budget of Amrit Kaal". Throughout her address, she referred to the term 'Amrit Kaal' repeatedly.
It was Prime Minister Narendra Modi who first used the term 'Amrit Kaal' in 2021, during the 75th Independence Day celebrations. It comes from Vedic astrology and indicates a sort of golden era. In the run-up to the 2024 general elections, the BJP-led government has heightened the emphasis on 'Amrit Kaal', saying that the coming period in India is going to be its most prosperous, with economic growth and social justice. 'Amrit Kaal' also describes the hope for a better future, where India would be self-reliant and fulfil all of its humanitarian obligations. Read more here
The lower tax regime (sans exemptions and deductions) for individuals was introduced in 2020 under Section 115BAC as a simpler alternative, without claiming any investment-related deductions or exemptions. This was expected to prove useful for individuals who were not in a position to invest and claim deductions. The new regime had more slabs than the previous one. However, this regime has not seen many takers so far, as it is considered more complicated.
Now, in a bid to push the new regime, Union Finance Minister Nirmala Sitharaman has proposed raising the rebate limit from Rs 5 lakh to Rs 7 lakh. Therefore, if an individual has opted for the new tax regime, he or she will not be required to pay any tax up to an annual income of Rs 7 lakh. Read more here
Finance Minister Nirmala Sitharaman has announced that the new tax regime would be the default, while taxpayers would still have the option of the old regime. The slabs under the new tax regime have been tweaked. The government has increased the income tax rebate limit from Rs 5 lakh to Rs 7 lakh under the new tax regime.
The new tax rates are as follows:
Rs 0 to Rs 3 lakh - Exempt
Rs 3 to 6 lakh - 5%
Rs 6 to 9 lakh - 10%
Rs 9 to 12 lakh - 15%
Rs 12 to 15 lakh - 20%
Above Rs 15 lakhs - 30%
Under the old tax regime, the rates are:
Income till Rs 2.5 lakh - Exempt
Rs 2.5 to Rs 5 lakh - 5%
Rs 5 lakh to Rs 7.5 lakh - 15%
Rs 7.5 lakh to Rs 10 lakh - 20%
Above Rs 10 lakh - 30%
What is the new tax regime?
Under the new regime, individuals and Hindu Undivided Families are taxed at lower rates if they don't avail specified exemptions and deductions, such as house rent allowance, interest on home loan and investments under Section 80C.
Finance Minister Nirmala Sitharaman has announced a scheme to support state governments and municipalities in replacing their old polluting vehicles. This is set to give a push to the sales of automobiles in the country, including to electric vehicles, as the focus of the government is also on a shift to green fuels by 2030.
The biggest beneficiary of this push is likely to be companies such as Tata Motors and Toyota Kirloskar, which have a line-up of electric vehicle products in all segments.
The announcement has come during a year when auto companies are predicting a slowing of sales of automobiles after a record year in 2022, where carmakers sold record numbers despite the shortage of semiconductors impacting manufacturing during the early part of the year. - Mihir Mishra writes
In a big relief to Covid-hit micro, small and medium enterprises (MSMEs), Finance Minister Nirmala Sitharaman has announced that the Credit Guarantee Scheme for MSMEs will be extended with an infusion of Rs 9000 crore. Sitharaman said this will enable collateral for Rs 2 lakh crore loans to MSMEs. This is expected to boost fund flow to the distressed and fund-starved MSME sector. The proposed scheme will take effect from April 1, 2023.
According to bankers, the scheme will give comfort to banks which are normally reluctant to lend to MSMEs in the absence of proper collateral.
The government’s Emergency Credit Line Guarantee Scheme (ECLGS) was earlier extended up to March 2023 from March 2022. Its guarantee cover was also expanded by Rs 50,000 crore to a total cover of Rs 5 lakh crore with the additional amount being earmarked exclusively for hospitality and related enterprises.
The Finance Minister has stayed on the path of fiscal consolidation, budgeting to bring the deficit down from 6.4 per cent of GDP in 2022-23 to 5.9 per cent in 2023-24. As per the glide path elaborated by Nirmala Sitharaman, the deficit is projected to come down to 4.5 per cent in 2025-26. - Ishan Bakshi writes
Here are some other announcements in the Union Budget 2023:
As FM announced to keep fiscal deficit at 5.9 per cent for FY’24 down from 6.4 per cent in FY’23, the stock markets hold on. Sensex up 530 points at 60,080. - Sandeep Singh writes