The Big Picture:
Every year, the union budget is one of the most keenly watched events in the country. This year, the first budget of “Amrit Kaal” have fueled expectations for laying down the blueprint for PM’s vision for India@100. Was it successful in doing so? What were the key takeaways? In this article, we will have a bird's eye view of the budget and try to unravel the undercurrents behind it.
The Vision for Amrit Kaal: The government’s vision for the Amrit Kaal is for an empowered and inclusive economy that includes a technology-driven and knowledge-based economy with strong public finances, and a robust financial sector. To achieve this, Jan Bhagidari through Sabka Saath Sabka Prayas is essential. The economic agenda for achieving this vision focuses on three things: (i) facilitating ample opportunities for citizens, especially the youth, to fulfil their aspirations (ii) providing strong impetus to growth and job creation and (iii) strengthening macro-economic stability.
In line with this, the Union Budget 2023-24 focused on 7 priorities - the ‘Saptrishis’ which are as follows:
- Inclusive Development- The government’s philosophy of Sabka Sath Sabka Vikas includes development for farmers, women, youth, tribal groups, and other weak sections of society. It moves forward to agriculture for building digital public infrastructure, set-up an agricultural accelerator fund, and making India a global level for millets (Sree Anna). There is an agricultural credit of Rs.20 lakh crore targeted at animal husbandry, dairy and fisheries. Moreover, 157 nursing colleges are to be developed and a new plan is envisaged to promote research in pharmaceuticals. They have also announced to set up of a National Digital Library for children and adolescents.
- Reaching the last mile- The government has formed a Ministry of Tribal groups and developed the department of the North-Eastern region in India. Hence, a decision to provide financial assistance for sustainable micro irrigation in drought-prone areas of Karnataka has been taken. There will be many more teachers assigned to Eklavya Model. The setup for the digitalization of ancient inscriptions will be done.
- Infrastructure & investment- An investment in infrastructure and productive capacity has been in the bigger picture to focus on impacting growth and development. Thus, there has been an increase in capital outlay to Rs.10 lakh crore which is a growth of 33%. Also, the highest ever capital outlay has been provided for Railways of ₹2.4 crores. Furthermore, the facility of extension for one year of 50-year interest-free loans has been given to state governments.
- Unleashing the potential- An initiative to ease out the business procedures has been reduced by lowering more than 39,000 compliances and 3,400 legal provisions have been decriminalized. Development and working with AI in India, establishments of e-courts, entity DigiLocker, setting up labs for 5G services, research grants for lab-grown diamonds (LGD), and national data governance are some of the areas where the government has taken a focal point. The government also has plans for AI (Artificial Intelligence) to be made in India to serve India’s problems and announced a lot of measures in this direction.
- Green growth- The government has given a lifestyle for the environment to continue with the movement of an environment-friendly lifestyle. To build a green India, the budget cited that India will continue to move towards net zero carbon emissions by 2070. It also gave ₹19,700 crore outlay to green hydrogen and energy transition outlay of about ₹35,000 crores. In addition to this, a green credit program will also be activated for generating sustainable and responsive actions by firms and localities.
- Youth Power- In order to let the youth achieve their dreams, the government has made a launch of PMKVY 4.0 to skill, re-skill, and upskill the “Amrit Peedhi” with the latest upbringings like AI, robotics, and 3D printing, etc. The appreciation for handicrafts products has also been an inclusion by establishing units malls. This would additionally promote the sale of ODOP (One District-One Product).
- Financial Sector- With the encouragement of the financial sector and to additionally boost this sector, some initiatives were taken. Setting up the National Financial Information Registry, increment of senior citizen savings scheme from ₹15 lakhs to ₹30 lakhs, and facility for women i.e., Mahila Samman Bachat Patra were some of them.
The Budget Estimates:
- Growth: India’s economic growth in the next year is estimated to be 6.5% in real terms in FY24, being the fastest-growing economy.
- Rupee Comes From: (i) Borrowings & Other Liabilities: 34% (ii) GST: 17% (iii) Corporation tax: 15% (iv) Income Tax: 15% (v) Excise Duties: 7% (vi) Customs: 4% (vii) Non-Tax Receipts: 6% (viii) Non-Debt Capital Receipts: 2%
- Rupee Goes To: (i) Interest payments: 20% (ii) States’ share of taxes & duties: 18% (iii) Central Sector Schemes: 17% (iv) Finance Commission & Other Transfers: 9% (v) Centrally Sponsored Scheme: 9% (vi) Other Expenditure: 8% (vii) Subsidies: 7% (viii) Defence: 8% (ix) Pensions: 4%
- Expenditure: For 2023-24, the total expenditure is estimated to be ₹45.03 lakh crore higher than ₹41.87 lakh crore (2022-23).
- Receipts: The revised estimated total receipts (other than borrowings) in 2023-24 are expected to be ₹27.2 lakh crore, under which the net tax receipts are ₹20.9 lakh crore. This implies that the government has the fiscal capacity to maintain the support and increase capital expenditure when required.
- Deficit: There was a retainment of the fiscal deficit target of 6.4% in the revised estimate for 2022-23. The fiscal deficit for FY2023-24 is expected to be 5.9% of GDP and it will be brought down to below 4.5% by 2025-26.
- Tax Revenues: The revised estimates pegged for gross tax revenue of ₹30.43 lakh crore in the current fiscal. Considering both, direct and indirect taxes, revenues are projected to up-level by 10.45% to ₹33.61 lakh crore in 2023-24.
The indirect tax proposals broadly aimed to promote exports, boost the domestic economy, enhance domestic value addition, and encourage green energy and mobility. In direct taxes, the income tax rebate limit was increased from ₹5,00,000 to ₹7,00,000 under the new tax regime. This new tax regime for individuals and HUF would be the default regime, while taxpayers are given the option to continue with the old regimes.
Continuity is good and surprises are bad. The government's last full budget before the elections treads a very cautious path. It did not carry any big bang surprises, except for some relief to the middle class in form of tax slabs in the new regime. However, it does maintain continuity and continues to build on structures rather than tinker here and there for appeasement. As expected, the budget continues to build on capital investments, infrastructure, job creation, domestic manufacturing, green energy, start-ups, digital economy and agriculture support. The Indian economy today is a bright spot in the global scene and this budget does well in not falling into the trap of populism and instead maintains the balance as is required. The budget surely adds to the vision for India@100 and makes sure that we continue to be a shining star on the global front.