BUDGET 2023-24 ANALYSIS - ECONOMY
News: Union Finance Minister Nirmala Sitharaman presented the Union Budget 2023-24
What's in the news?
● Union Finance Minister Nirmala Sitharaman presented the Union Budget 2023-24.
● With this Budget, the world has recognized the Indian Economy as a ‘bright star’ as the Economic Growth is estimated at 7 percent, which is the highest among all major economies, in spite of the massive global slowdown caused by COVID-19 and Russia-Ukraine War.
Key takeaways:
● India’s rising global profile is due to several accomplishments like unique 'World Class Digital Public Infrastructure' namely, Aadhaar, Co-Win and UPI; the COVID-19 vaccination drive in unparalleled scale and speed; proactive roles in frontier areas such as achieving climate-related goals, mission.
Fiscal Management - Revised Estimate:
● The Revised Estimate of the total receipts other than borrowings is Rs 24.3 lakh crore, of which the net tax receipts are Rs 20.9 lakh crore.
● The Revised Estimate of the total expenditure is Rs 41.9 lakh crore, of which the capital expenditure is about Rs 7.3 lakh crore.
● Similarly, the Revised Estimate of the fiscal deficit is 6.4 percent of GDP, adhering to the Budget Estimate.
Budget Estimates 2023-24:
● The total receipts other than borrowings and the total expenditure are estimated at Rs 27.2 lakh crore and Rs 45 lakh crore respectively.
● The net tax receipts are estimated at Rs 23.3 lakh crore.
● The fiscal deficit is estimated to be 5.9 percent of GDP.
Personal Income Tax:
There are five major announcements relating to the personal income tax.
1. The rebate limit in the new tax regime has been increased to ₹ 7 lakh.
2. The tax structure in the new personal tax regime has been changed by reducing the number of slabs to five and increasing the tax exemption limit to ₹ 3 lakh. This will provide major relief to all taxpayers in the new regime.
3. The benefit of standard deduction has been extended to the salaried class and the pensioners including family pensioners under the new tax regime. The salaried individual will get a standard deduction of ₹ 50,000 and the pensioner ₹ 15,000 as per the proposal. Each salaried person with an income of ₹ 15.5lahks or more will thus gain ₹ 52,500, from the above proposals.
4. The highest surcharge rate in personal income tax has been reduced from 37% to 25% in the new tax regime for income above ₹2 crores. This would result in the maximum tax rate of personal income tax coming down to 39% which was earlier 42.74%.
5. The limit of tax exemption on leave encashment on the retirement of non-government salaried employees has been increased from ₹3 to ₹25 lakh.
The new income tax regime has been made the default tax regime. However, the citizens will continue to have the option to avail the benefit of the old tax regime.
Senior Citizens:
● The maximum deposit limit for the ‘Senior Citizen Savings Scheme’ will be enhanced from Rs 15 lakh to Rs 30 lakh.
● Also, the maximum deposit limit for the monthly ‘Income Account Scheme’ will be enhanced from Rs 4.5 lakh to Rs 9 lakh for a single account and from Rs 9 lakh to Rs 15 lakh for a joint account.
Priorities of this Budget:
Finance Minister Nirmala Sitharaman listed seven priorities of the Union Budget such as
1. Inclusive Development
2. Reaching the Last Mile
3. Infrastructure and Investment
4. Unleashing the Potential
5. Green Growth
6. Youth Power
7. Financial Sector.
Food Security:
● The Government ensured that no one goes to bed hungry during the Covid-19 pandemic, with a scheme to supply free food grains to over 80 Crore persons for 28 months.
● The Government will implement a scheme from 1st January 2023 to ensure food and nutritional security.
● It will ensure a supply of free food grain to all Antyodaya and priority households for the next one year, under PM Garib Kalyan Anna Yojana (PMGKAY).
● The entire expenditure of about Rs 2 lakh crore will be borne by the Central Government.
G20 Presidency - Steering the global agenda through challenges:
● The G20 Presidency gives India a unique opportunity to strengthen its role in the world economic order.
● With the theme of ‘Vasudhaiva Kutumbakam’, India is steering an ambitious, people-centric agenda to address global challenges and facilitate sustainable economic development.
Achievements since 2014 - Leaving no one behind:
● The government’s efforts since 2014 have ensured all citizens a better quality of life and a life of dignity and the per capita income has more than doubled to Rs 1.97 lakh.
● The Indian economy has increased in size from being 10th to 5th largest in the world in the last 9 years.
● Moreover, the economy has become a lot more formalized as reflected in the EPFO membership, more than doubling to 27 crores, and 7,400 crore digital payments of Rs 126 lakh crore through UPI in 2022.
Inclusive Development:
● The Government’s philosophy of Sabka Saath Sabka Vikas has facilitated inclusive development covering in specific, farmers, women, youth, OBCs, Scheduled Castes, Scheduled Tribes, divyangjan and economically weaker sections, and overall priority for the underprivileged (vanchiton ko variyata).
● There has also been a sustained focus on Jammu & Kashmir, Ladakh and the North-East.
Agriculture and Cooperation:
● The digital public infrastructure for agriculture will be built as an open source, open standard and interoperable public good.
● The move will enable 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.
Agriculture Accelerator Fund:
● An ‘Agriculture Accelerator Fund’ will be set up to encourage agri-startups by young entrepreneurs in rural areas, which will aim at bringing innovative and affordable solutions for challenges faced by farmers.
● It will also bring in modern technologies to transform agricultural practices and increase productivity and profitability.
Enhancing the productivity of cotton crop:
● To enhance the productivity of extra-long staple cotton, the Government will adopt a cluster-based and value chain approach through Public Private Partnerships (PPP).
● This will mean collaboration between farmers, the state and industry for input supplies, extension services, and market linkages.
Atmanirbhar Horticulture Clean Plant Programme:
● The Government will launch an Atmanirbhar Clean Plant Programme to boost the availability of disease-free, quality planting material for high-value horticultural crops at an outlay of Rs 2,200 crore.
Global Hub for Millets - ‘Shree Anna’:
● India is the largest producer and second largest exporter of ‘Shree Anna’ in the world as it grows several types of ‘Shree Anna’ such as jowar, ragi, bajra, kuttu, ramdana, kangni, kutki, kodo, cheena, and sama.
● These have a number of health benefits, and have been an integral part of our food for centuries and acknowledged with pride that the huge service done by small farmers in contributing to the health of fellow citizens by growing these ‘Shree Anna’.
● To make India a global hub for ‘Shree Anna’, the Indian Institute of Millet Research, Hyderabad will be supported as the Centre of Excellence for sharing best practices, research and technologies at the international level.
Agriculture Credit:
● The finance minister announced that the agriculture credit target will be increased to Rs 20 lakh crore with a focus on animal husbandry, dairy and fisheries.
Sub scheme for Fisheries:
● The Government will launch a new sub-scheme of PM Matsya Sampada Yojana with a targeted investment of Rs 6,000 crore to further enable activities of fishermen, fish vendors, and micro & small enterprises, improve value chain efficiencies and expand the market.
Cooperation:
● For farmers, especially small and marginal farmers, and other marginalized sections, the government is promoting a cooperative-based economic development model.
● A new Ministry of Cooperation was formed with a mandate to realize the vision of ‘Sahakar Se Samriddhi’.
● To realize this vision, the Government has already initiated the computerization of 63,000 Primary Agricultural Credit Societies (PACS) with an investment of Rs 2,516 crore.
● In consultation with all stakeholders and states, model bye-laws for PACS were formulated enabling them to become multipurpose PACS.
● A national cooperative database is being prepared for the country-wide mapping of cooperative societies.
● The Government will implement a plan to set up massive decentralized storage capacity, which will help farmers store their produce and realize remunerative prices through sales at appropriate times.
● The Government will also facilitate the setting up of a large number of multipurpose cooperative societies, primary fishery societies and dairy cooperative societies in uncovered panchayats and villages in the next 5 years.
Vision for Amrit Kaal – an empowered and inclusive economy:
The economic agenda for achieving this vision focuses on three things and those are
● Facilitating ample opportunities for citizens, especially the youth to fulfill their aspirations.
● Providing a strong impetus to growth and job creation.
● To strengthen macroeconomic stability.
To service these focus areas in our journey to India@100, the following four opportunities can be transformative during Amrit Kaal such as
● Economic Empowerment of Women: ‘Deendayal Antyodaya Yojana National Rural Livelihood Mission’ has achieved remarkable success by mobilizing rural women into 81 lakh Self Help Groups and we will enable these groups to reach the next stage of economic empowerment through the formation of large producer enterprises or collectives with each having several thousand members and managed professionally.
● PM Vishwakarma KAushal Samman (PM VIKAS): For centuries, traditional artisans and craftspeople, who work with their hands using tools, have brought renown to India and they are generally referred to as Vishwakarma. The art and handicraft created by them represent the true spirit of Atmanirbhar Bharat.
● Tourism: The sector holds huge opportunities for jobs and entrepreneurship for youth in particular and emphasized that the promotion of tourism will be taken up on mission mode, with the active participation of states, the convergence of government programmes and public-private partnerships.
● Green Growth: Dwelling on the subject of green growth, India is implementing many programmes for green fuel, green energy, green farming, green mobility, green buildings, green equipment, and policies for efficient use of energy across various economic sectors. These green growth efforts help in reducing the carbon intensity of the economy and provide for largescale green job opportunities.
Health, Education and Skilling:
● One hundred and fifty-seven new nursing colleges will be established in co-location with the existing 157 medical colleges established since 2014.
● A mission to eliminate ‘Sickle Cell Anaemia’ by 2047 will be launched, which will entail awareness creation, universal screening of 7 crore people in the age group of 0-40 years in affected tribal areas, and counseling through collaborative efforts of central ministries and State Governments.
Water for Drought Prone Region:
● The central assistance in the drought-prone central region of Karnataka of Rs 5,300 crore will be given to the ‘Upper Bhadra Project’ to provide sustainable micro irrigation and filling up of surface tanks for drinking water.
PM Awas Yojana:
● The outlay for PM Awas Yojana is being enhanced by 66 percent to over Rs 79,000 crore.
● A new Urban Infrastructure Development Fund (UIDF) with shortfalls from Priority Sector Lending has been established to develop infrastructure in urban areas.
Infrastructure & Investment:
● The capital investment outlay is being increased steeply for the third year in a row by 33 percent to Rs 10 lakh crore, which would be 3.3 percent of GDP.
Railways:
● A capital outlay of Rs 2.40 lakh crore has been provided for the Railways, which is the highest ever outlay and about 9 times the outlay made in 2013- 14.
● Besides, one hundred critical transport infrastructure projects, for last and first-mile connectivity for ports, coal, steel, fertilizer, and food grains sectors have been identified and they will be taken up on priority with an investment of Rs 75,000 crore, including Rs 15,000 crore from private sources.
National Data Governance Policy:
● A ‘National Data Governance Policy’ will be brought out to unleash innovation and research by start-ups and academia which will enable access to anonymized data.
● An ‘Entity DigiLocker’ will be set up for use by MSMEs, large businesses and charitable trusts for storing and sharing documents online securely, whenever needed, with various authorities, regulators, banks and other business entities.
Creation of 5G labs:
● The Government will also set up one hundred labs for developing applications using 5G services will be set up in engineering institutions to realize a new range of opportunities, business models, and employment potential.
● The labs will cover, among others, applications such as smart classrooms, precision farming, intelligent transport systems, and health care applications.
Green Growth:
● India is moving forward firmly for the ‘panchamrit’ and net-zero carbon emission by 2070 to usher in a green industrial and economic transition.
● The recently launched National Green Hydrogen Mission, with an outlay of Rs 19,700 crores, will facilitate the transition of the economy to low carbon intensity, reduce dependence on fossil fuel imports, and make the country assume technology and market leadership in this sunrise sector.
● The target is to reach an annual production of 5 MMT by 2030.
● The Budget also provides Rs35,000 crore for priority capital investments towards energy transition and net zero objectives and energy security by the Ministry of Petroleum & Natural Gas.
● To steer the economy on the sustainable development path, ‘Battery Energy Storage Systems’ with a capacity of 4,000 MWH will be supported with Viability Gap Funding.
● The Inter-state transmission system for evacuation and grid integration of 13 GW of renewable energy from Ladakh will be constructed with an investment of Rs20,700 crore including central support of Rs 8,300 crore.
GOBARdhan scheme:
● At least 500 new ‘waste to wealth’ plants under GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme will be established for promoting a circular economy.
● These will include 200 compressed biogas (CBG) plants, including 75 plants in urban areas, and 300 community or cluster-based plants at a total investment of Rs10,000 crore.
Youth Power:
● The government has formulated the ‘National Education Policy’ to empower the youth and help the ‘Amrit Peedhi’ realize their dreams.
● The policy will be focused on skills, adopted economic policies that facilitate job creation at scale, and have supported business opportunities.
● Pradhan Mantri Kaushal Vikas Yojana 4.0 will be launched to skill lakhs of youth within the next three years.