Finance Minister of India Nirmala Sitharaman presented the Union Budget for FY 2023-24 on Wednesday. In the budget speech which went on for more than 90 minutes, Nirmala Sitharaman announced some key modifications in the taxation system and several large-scale investments outlays.
It is important to note that this is the first union budget of India after becoming 5th largest economy in the worked. This would also be the last full budget before the general elections in 2024.
During the budget speech, the finance minister stated that the government under prime minister Narendra Modi’s leadership is focusing on seven priority areas, namely, inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power, and financial sector. Budgetary allocations focussing on these seven areas will help in guiding the country through the “Amrit Kaal”.
Major announcements –
7% growth in the fiscal year 2023-24 – According to Nirmala Sitharanam, the government is estimating a 7% growth for the Indian economy in the upcoming fiscal year. The high growth rate along with cuts in the fiscal deficit will make it the fastest-growing economy in the world. The fiscal deficit target for FY24 has been cut from 6.4 percent of GDP to 5.9 percent.
Changes in new income tax regime – Finance Minister announced that the Indian government has decided to make significant changes in the new tax regime. The basic exemption limit for income tax is increased from 2.5 lakhs to 3 lakh rupees.
From 1st April 2023, the income tax system in India will be based on 5 tax slabs as opposed to 6 slabs currently. The changes in tax slabs are aimed at providing more flexibility to taxpayers. The new tax rates are 0 to ₹ 3 lakhs – nil, ₹ 3 to 6 lakhs – 5%, ₹ 6 to 9 lakhs – 10%, ₹ 9 to 12 lakhs – 15%, ₹ 12 to 15 lakhs – 20% and above ₹ 15 lakhs – 30%.
In a major relief for middle-income households, the minister announced that the income level for tax rebates under Section 87A has been increased from 5 lakh rupees to 7 lakh rupees.
The massive increase in capital investment outlay – In the upcoming fiscal, government plans to hike capital investment outlay by 33% to 10 lakh crore. This would be nearly 3.3 percent of GDP in fiscal 2023-24.
Railway gets big push – Finance minister announced big budgetary support to railways as total outlay for the Indian Railway is increased to Rs 2.40 lakh crore for the upcoming fiscal year. This is the largest budget allocation for railways in almost a decade. Allocation for railways has quadrupled when compared to the budget in the previous fiscal year.
Defense sector – For fiscal 2023, the government has allocated 5.94 Lakh Crore rupees for the defense sector. There has been a slight increase in budget allocation when compared to the previous fiscal when 5.25 crore rupees were allotted to the defense sector.
As part of pushing the ‘Atmanirbhar Bharat’ vision, 68 percent of the capital procurement budget was earmarked for the domestic defense industry in 2022-23.
Go, Green – As a component of seven priority areas, the government will be focussing on a green energy push in the upcoming fiscal. The finance minister announced a major energy infrastructure project, the inter-state transmission system of 13 GW of renewable energy from Ladakh, which would be completed with an investment of Rs. 20,700 crores. The central government will be providing financial support of Rs. 8,300 crores for the timely completion of this significant project.
The government is also planning to increase the production of Green Hydrogen to 5 metric tonnes by 2030.
Affordable housing to the urban poor – Budgetary allocation to PM Awas Yojana has been increased by 66% to 79000 crore rupees. In the previous fiscal, PMAY’s budget allocation was 48000 crore rupees.
Agriculture credit – In a measure that will be beneficial for millions of farmers across the country, the target for agricultural credit has been increased to ₹ 20 lakh crore
Ease of doing business, Settlement of commercial disputes – The finance minister announced that the union government would be introducing a newer scheme named Vivad Se Vishwas-2 for the resolution of commercial disputes.
As part of improving the ease of doing business, the government will introduce a new system for the reconciliation of IDs maintained by various government agencies. This new system will act as a one-stop solution for all reconciliation-related matters.
Additional ICMR Labs, nursing colleges – Considering the challenges posed by COVID-19 to health infrastructure in the country, Nirmala Sitharaman announced that the central government will set up 157 new nursing colleges and additional Indian Council for Medical Research (ICMR) labs. This will help in increasing the number of trained nurses in the country and at the same time push more research and innovation in the healthcare sector.
The government will soon launch a special program with a mission to eliminate sickle cell anemia by 2047. Under the program, there will be universal screenings conducted in places where cases have been reported. Awareness programs will also be conducted regularly to increase awareness regarding sickle cell anemia.
Developing telecom and postal services – In the union budget, the central government has allocated 1.23 lakh crore rupees for the postal and telecom departments. Department of telecom has been allocated Rs 97,579.05 crore of which Rs 52,937 crore will be used for capital infusion in central government-owned BSNL.
Rs 2,158 crore rupees will be spent on setting up Optical Fiber Cable based network for Defense Services and telecom projects in northeastern states got a push with Rs 715.8 crore.