Introduction

The Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman, presented the Union Budget 2023-24 in Parliament, outlining a vision for India’s economic growth and development. The budget focuses on various sectors and introduces key initiatives to propel the nation forward.

Economic Milestones

  1. Economic Growth: India’s per capita income has surged, reaching ₹1.97 lakh in approximately nine years, showcasing robust economic advancement.
  2. Global Standing: The Indian economy has ascended from the 10th to the 5th largest globally in the past nine years, highlighting its increasing global influence.

Inclusive Development

  1. Social Welfare Achievements: The government has achieved significant milestones in social welfare, including the construction of 11.7 crore household toilets and providing 9.6 crore LPG connections under the Swachh Bharat Mission and Ujjwala schemes, respectively.
  2. Health Initiatives: A monumental effort of 220 crore Covid vaccinations and the creation of 157 new nursing colleges are pivotal steps towards strengthening the healthcare system.

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Infrastructure and Investment

  1. Railway Development: The budget allocates a record capital outlay of Rs. 2.40 lakh crore for the Railways, demonstrating a commitment to extensive railway development.
  2. Urban Infrastructure Fund: The establishment of the Urban Infrastructure Development Fund (UIDF) will address urban development needs in Tier 2 and Tier 3 cities.
  3. Digital Transformation: Introduction of Entity DigiLocker and setting up 100 labs for 5G services application development showcase the government’s focus on digital infrastructure.

Agricultural Growth

  1. Atmanirbhar Clean Plant Program: An initiative with a ₹2200 crore outlay aims to boost the availability of disease-free, quality planting material for high-value horticultural crops.
  2. Agricultural Credit: The budget targets ₹20 lakh crore agricultural credit, emphasizing support for animal husbandry, dairy, and fisheries.
  3. Fisheries Development: The launch of PM Matsya Sampada Yojana with a ₹6,000 crore investment will enhance the fisheries sector’s value chain efficiencies.

Skill Development and MSMEs

  1. Skill Development: Launching Pradhan Mantri Kaushal Vikas Yojana 4.0 and a revamped credit guarantee scheme for MSMEs demonstrates a commitment to skill enhancement and financial support for small businesses.
  2. MSME Support: The infusion of Rs. 9,000 crore into the credit guarantee scheme for MSMEs will boost credit availability and reduce costs.

Financial Sector Reforms

  1. Senior Citizens: Increasing the maximum deposit limit for the Senior Citizen Savings Scheme and targeting a fiscal deficit below 4.5% by 2025-26 aim to strengthen financial stability.
  2. Digital Initiatives: Emphasis on PAN as a common identifier, National Data Governance Policy, and a one-stop solution for identity and address reconciliation showcases a digital-first approach.

Environmental Initiatives

  1. Green Initiatives: The budget introduces various eco-friendly programs, such as the GOBARdhan scheme, ‘PM-PRANAM’ for alternative fertilizers, and the Amrit Dharohar scheme for wetland optimization.
  2. Renewable Energy: A substantial outlay of ₹35,000 crore for energy security, energy transition, and net-zero objectives underscores the commitment to sustainable development.

Fiscal Outlook

  1. Fiscal Targets: The budget sets a targeted fiscal deficit below 4.5% by 2025-26, showcasing a prudent fiscal approach.
  2. Revised Estimates 2022-23: The fiscal deficit adheres to the Budget Estimate, standing at 6.4% of GDP, with total receipts of Rs 24.3 lakh crore and total expenditure of Rs 41.9 lakh crore.
  3. Budget Estimates 2023-24: The estimated fiscal deficit is 5.9% of GDP, with total receipts projected at Rs 27.2 lakh crore and total expenditure at Rs 45 lakh crore.
  4. Borrowing Strategy: To finance the fiscal deficit, net market borrowings from dated securities are estimated at Rs 11.8 lakh crore, with gross market borrowings at Rs 15.4 lakh crore.

Capital Expenditure and Financial Inclusions

  1. Capital Expenditure Surge: The Capital Expenditure outlay for 2024-25 sees an 11.1% increase to ₹11,11,111 crore, amounting to 3.4% of GDP.
  2. Tripling of CapEx Impact: CapEx has tripled over the last 4 years, significantly impacting economic growth and employment creation.
  3. Total Receipts and Expenditure Estimates: The Revised Estimate of total receipts, other than borrowings, is ₹27.56 lakh crore, with tax receipts at ₹23.24 lakh crore. The Revised Estimate of total expenditure is ₹44.90 lakh crore.
  4. Fiscal Deficit and Receipts: The Revised Estimate of the fiscal deficit stands at 5.8% of GDP, with revenue receipts expected to surpass the budget estimate.
  5. Extended Interest-Free Loan Scheme: The scheme of a fifty-year interest-free loan for capital expenditure to states will continue for 2024-25 with a total outlay of ₹1.3 lakh crore.
  6. Fiscal Discipline: The fiscal deficit in 2024-25 is estimated to be 5.1% of GDP, with a commitment to reducing it below 4.5% by 2025-26.
  7. Market Borrowings: Gross and net market borrowings through dated securities are estimated at ₹14.13 lakh crore and ₹11.75 lakh crore, respectively.
  8. Boosting Private Investment: The government proposes to create ₹1 lakh Crore to boost private investment in sunrise technologies.

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Direct Tax Proposals

Simplifying Taxation

  1. The Income Tax Department aims to provide enhanced services by introducing a next-generation Common IT Return Form, easing compliance for taxpayers.
  2. The rebate limit for Personal Income Tax is set to increase to ₹7 lakh from ₹5 lakh in the new tax regime, offering relief to individuals.
  3. The new personal income tax regime undergoes changes, reducing the slabs to five and increasing the tax exemption limit to ₹3 lakh, providing substantial relief.

Tax Rates and Deductions

  1. New Tax Rates:
    • Up to ₹3,00,000: Nil
    • ₹3,00,001 to ₹6,00,000: 5%
    • ₹6,00,001 to ₹9,00,000: 10%
    • ₹9,00,001 to ₹12,00,000: 15%
    • ₹12,00,001 to ₹15,00,000: 20%
    • Above ₹15,00,000: 30%
  2. Standard Deduction: Proposal to extend the standard deduction of ₹50,000 to salaried individuals in the new tax regime.
  3. Surcharge Reduction: The highest surcharge rate decreases from 37% to 25% in the new tax regime, resulting in a maximum personal income tax rate of 39%.

Other Highlights

  1. Leave Encashment Exemption: The tax exemption limit on leave encashment for non-government salaried employees increases to ₹25 lakh.
  2. Co-operative Benefits: New co-operatives entering manufacturing activities till 31.3.2024 will enjoy a lower tax rate of 15%.
  3. Start-up Support: The date of incorporation for income tax benefits for start-ups is extended from 31.03.23 to 31.3.24.
  4. Loss Carry Forward: The benefit of carrying forward losses on a change of shareholding of start-ups is extended from seven to ten years.

Indirect Tax Reforms

Customs Duty Adjustments

  1. Customs Duty Rates: The number of basic customs duty rates on goods, excluding textiles and agriculture, is reduced from 21 to 13.
  2. Excise Duty Exemption: Excise duty exempted on GST-paid compressed bio gas contained in blended compressed natural gas.
  3. Customs Duty Extensions: Customs duty on specified capital goods/machinery for lithium-ion cell manufacturing for electric vehicles extended to 31.03.2024.

Legislative Changes

  1. Customs Laws Amendments: Amendments proposed in the Customs Act and Customs Tariff Act to specify a nine-month time limit for final orders by the Settlement Commission and clarify provisions related to Anti-Dumping Duty, Countervailing Duty, and Safeguard Measures.

GST Act Amendments

  1. GST Act Changes:
    • Minimum threshold for launching prosecution under GST raised from one crore to two crores.
    • Reduction in compounding amount from 50-150% to 25-100% of the tax amount.
    • Decriminalization of certain offences.
    • Restriction on filing returns/statements to a maximum of three years from the due date.
    • Enable unregistered suppliers and composition taxpayers to make intra-state supply through E-Commerce Operators.

Financial Inclusions and Developmental Initiatives

  1. Empowering MSMEs: The government prioritizes timely finances, relevant technologies, and appropriate training for MSMEs, aiming for all-round growth and global competitiveness.
  2. ‘Panchamrit’ Goals: The government aligns with the ‘Panchamrit’ goals, facilitating sustained high and resource-efficient economic growth, focusing on energy security in terms of availability, accessibility, and affordability.
  3. Next Generation Reforms: The ‘Reform, Perform, and Transform’ mantra drives the next generation reforms, aiming for holistic development.
  4. Social Justice: A commitment to effective and necessary social justice models, with an average real income increase of 50%.
  5. COVID Pandemic Response: A whole nation approach effectively addresses the COVID pandemic, providing free rations for 80 crore people and direct financial assistance to 11.8 crore farmers.

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Agriculture and Rural Development

  1. Agricultural Sector Boost: The interim budget 2024-25 promises to step up value addition in the agricultural sector, highlighting the importance of PM Fasal Bima Yojana, Electronic National Agricultural Market, and Minimum Support Price (MSP) enhancements.
  2. Farmers’ Welfare: The government has benefited 38 lakh farmers through Pradhan Mantri Kisan Sampada Yojana, generating 10 lakh jobs, and supporting 2.4 lakh Self Help Groups (SHGs) through PM Formalization of Micro Food Processing Enterprises Yojana.
  3. Nano Urea Adoption: Following the success of Nano Urea, the application of Nano DAP on various crops will be expanded in all agro-climatic zones.
  4. Start-ups and Strategic Disinvestment: The date of incorporation for income tax benefits to start-ups is extended, and the carry forward of losses on strategic disinvestment, including that of IDBI Bank, is allowed.

Social and Economic Achievements

  1. Pradhan Mantri Jan Dhan Yojana (PMJDY): Enrolments under PMJJBY in Aspirational Districts increased, emphasizing financial inclusion and accessibility.
  2. MSME Empowerment: Empowering 83 lakh Self Help Groups (SHGs) with 9 crore women demonstrates the government’s commitment to transforming the rural socio-economic landscape.
  3. Women’s Empowerment: The government highlights achievements in higher education, with female enrolment reaching 28% in the last 10 years and STEM registration at 43%, the highest in the world.
  4. Policy Focus: A policy focus on the ‘Garib’ (Poor), ‘Mahilayen’ (Women), ‘Yuva’ (Youth), and ‘Annadata’ (Farmer) is emphasized for holistic development.
  5. Skill India Mission: The Skill India Mission has trained and upskilled 1.4 crore youth in the country, contributing to employment opportunities.

Taxation and Financial Management

  1. Tax Collections and Rationalization: Direct tax collections have more than trebled in the last ten years, with rationalized tax rates under the new tax regime.
  2. Simplification Measures: The introduction of a new Form 26AS and pre-filling of tax returns has simplified the tax filing process, reducing processing time from 93 days in 2013-14 to 10 days in 2024.
  3. Policy Slogan: “Sabka Saath, Sabka Vikas, and Sabka Vishwas” encapsulate the country’s pride in its youth achieving new heights in sports.
  4. Tax Relief Proposal: The proposal to withdraw outstanding direct tax demands up to ₹25,000 for the period up to financial year 2009-10 and up to ₹10,000 for financial years 2010-11 to 2014-15 is expected to benefit approximately a crore.

Economic Transformation

  1. Comprehensive Development: The government’s focus on more comprehensive GDP, governance, development, and performance aims at providing increased opportunities for employment and entrepreneurship.
  2. Development at Scale: The fruits of development are reaching people at scale, aligning with the country’s strides towards “Atmanirbhar Bharat.”
  3. Export Boost: Doubling exports to ₹1 lakh crore is projected to generate 5 lakh new jobs, reinforcing the commitment to economic growth.
  4. Infrastructure Corridors: Implementation of three major economic railway corridor programs under PM Gati Shakti will enhance multi-modal connectivity and reduce logistics costs.

Health and Education

Maternal and Child Health Care: Initiatives to streamline maternal and child health care, including the development of Anganwadi Centres and Mission Indradhanush, emphasize a comprehensive healthcare approach.

Vaccination Drive: Encouraging vaccination for girls aged 9 to 14 years to prevent cervical cancer demonstrates a commitment to women’s health

Conclusion

The Union Budget 2023-24 reflects a comprehensive vision for India’s economic growth, development, and inclusive transformation. The government’s initiatives across various sectors, coupled with fiscal prudence, set the stage for a resilient and dynamic economic trajectory.

 

 

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