How does Budget 2023 effect your consumption habits
Created on 01 Feb 2023
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The Indian budget can affect the consumption habits of citizens in a number of ways. For example, changes in taxes and subsidies on goods can influence their prices and therefore affect the demand for these goods.
If taxes on certain items increase, the prices of these items may also increase, leading to decreased consumption. On the other hand, if subsidies are increased on certain items, the prices may decrease, leading to increased consumption.
Additionally, changes in government spending and economic policies can impact citizens' disposable income, affecting their ability to consume goods and services. In general, the budget can play a significant role in shaping consumption patterns in India.
In any household, one of the main points of concern for people is the overall budget. Based on that, one can plan the upcoming expenditure on transportation, food, living, and more. For example, statistics show that, on average, 12.5% of people's income goes toward food-related expenses.
On a broad scale, like an entire country's budget, such consumption points are also essential to focus on. In addition, the government has to invest in specific fields, particularly for growth and opportunities. These include healthcare, a sustainable green lifestyle, the financial sector, education, and more.
For regular people, the budget does influence their consumption rates heavily, like the rate of food, daily items like groceries, etc.
Requirement for better budget management in different fields
Consumers' demand from the 2023–2024 union budget was initially focused on many other sections.
Consumers wanted an improvement in the limitation set for income tax exemption for easier management of finances. They wanted more breaks for long-term saving programs like pension and insurance, a relaxation of the rising fuel charges, more job opportunities, lowered duties for top-rated electronic items, etc.
The noticeable constraints
However, the demands, while understandable from a citizen's perspective, are too high. There is limited fiscal space in the overall budget structure for the whole year, especially if one wants to provide funding support to different sectors.
That is the case for the budget of 2023 in India. Yes, the experts have taken the time to properly understand the needs of the masses. Given that, they have created different reforms that are currently active or will get launched this year for varying aspects, like agriculture, finances, etc.
However, it is impossible to concentrate on all the consumers' demands mentioned in this section. The necessities are the main things in focus for individual consumption areas that people budget for, like oil, transportation expenses, entertainment areas, or food.
Effect of budget 2023-2024 on consumption sections
The following retail consumer habits have potential to be affected by the Union Budget 2023-24.
LPG is the typical proponent for cylinders that are useful for different materials, like chemical plants, central heating systems, gas cooktops/ovens, grills, etc. Currently, gas prices are relatively high in rural and urban areas and are most useful in the industrial sector and vehicles.
Many people are shifting towards electronic devices like induction stoves for a sustainable lifestyle, which is what the budget focuses on. However, the custom duty rate for kitchen-based electric chimneys is 15%, higher than the previous rate in the Union Budget 2023. It would help if you also focused on that while considering consumption habit adjustments.
Many households have private vehicles, contributing to India's high fuel consumption rates. Some people are turning towards more sustainable solutions compared to fuel-based cars. But, overall, the fuel consumption rate is relatively high. However the new budget has proposed an allocation of ₹35,000 crore for energy transition initiative shows positivity on the green energy front.
No major taxation-related updates are related to food items in the new, updated Budget 2023. However, it is vital for people to keep around 10-15% of their budget for food, especially while avoiding fast food. But from the perspective of the Budget 2023 changing people's consumption habits, that is not noticeable in this context.
Changes in taxation for consumer items and services in Budget 2023
- There is a 2.5% cut in the custom duty amount for TV panel parts, specifically the open cells.
- The custom duty for shrimp feed has declined for more export possibilities.
- There are custom duty-related cuts in the price of input items for electronic devices that companies import, so mobile phones will potentially reduce costs.
- The custom duty amount on seeds for lab-based diamond manufacturing is reduced.
- On the other hand, the following things have risen in cost. Know what they are to plan your consumption habits accordingly:
- The standard import duty for compounded rubber is now valued at 25%.
- Cigarette-related taxes are now 16% higher.
- Gold-made items will now have a higher customs duty tax.
- The custom duty for EVs and imported luxury cars has increased to 70 per cent.
The Bottom Line
Indeed, the Budget 2023 is planned to keep different aspects of society in mind for overall growth and prosperity. However, individuals must focus on their budget and income rates to prepare their consumption points. The current budget plan does not affect all consumption habits of people much specifically.
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