The state of various asset classes after Budget 2023

Today, on 1st February 2023, Finance Minister Nirmala Sitaraman presented the union budget 2023 in the parliament amid series of loud thumping and occasion thumbs down from the opposition.

The Minister of Finance refers to the Union Budget 2023-2024 or the first Budget in Amrit Kaal as “the blueprint drawn for India@100”. She identified four focus areas to achieve the target earmarked for India@100, including Economic Empowerment of Women, Vishwakarma KAushal Samman (PM VIKAS), Tourism, and Green Growth. 

Further, she emphasized on the need for a technology-driven and knowledge-based economy with strong public finances and a robust financial sector. To achieve which, she calls out for Jan Bhagidari through Sabka Saath Sabka Prayas.
 

Budget Roadmap

Talking about the roadmap, she prioritizes seven areas (called Saptarishi) in the Amrit Kaal, including:

• Infrastructure and Investment
• Inclusive Development 
• Reaching the Last Mile
• Green Growth
• Unleashing the Potential
• Youth Power 
• Financial Sector

From over 14,000-word transcript of Union Budget 2023-24, we have brought to you what may interest you the most i.e. how’s the budget 2023 going to affect the current state of major asset classes.

Fixed Income

According to the new tax regime, persons with income up to Rs. 7 lakh will not have to pay any tax. Also, the tax structure is reduced from seven slabs to six slabs, with the tax exemption limit exceeding to Rs. 3 lakh. 
The new tax rates are:

• The FM also proposes to increase the maximum deposit limit for Senior Citizen Savings Scheme from Rs. 15 lakh to Rs. 30 lakh.
• The maximum deposit limit under the Monthly Income Account Scheme will see an increase from Rs. 9 lakh to Rs. 15 lakh for joint account and from Rs. 4.5 lakh to Rs. 9 lakh for a single account.

Equity

• An integrated IT portal will be developed to help investors reclaim unpaid dividends and unclaimed shares.
• Capital investment outlay will see and steep increase of 33 percent to Rs. 10 lakh crores.
• For online games, the FM proposes to apply TDS and taxability on net winnings at the time of withdrawal or at the end of the financial year. Further, there would be no threshold of 10,000 on the TDS. On the contrary, the threshold limit of Rs. 10,000 for TDS shall continue to apply for the lottery, crossword puzzles games, etc, however, shall apply to aggregate winnings during a financial year.
• Railways will receive a capital outlay of Rs. 2.40 lakh crore.
• Customs duty will be relieved on the import of certain parts and inputs like camera lenses while lithium-ion cells for batteries will continue to enjoy concessional duty for another year.
• The basic customs duty on parts of open cells of TV panels will see a cut to 2.5 percent. 
• Allocation of Rs. 35,000 crores for priority capital investments towards energy transition and net zero objectives, and energy security by the Ministry of Petroleum & Natural Gas. 
• Investment of Rs. 20,700 crores (including central support of ` 8,300 crores) to establish an inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh.

Real Estate

• The outlay for PM Awas Yojana will see an increase of 66 percent to over Rs. 79,000 crores. 
• The FM continued with the 50-year interest-free loan to state governments for another year to fuel investment in infrastructure. And outlay of Rs. 1.3 lakh is proposed to incentivize them for complementary policy actions.
• Proposal to establish an Urban Infrastructure Development Fund (UIDF), which will be managed by the National Housing Bank. Public agencies will use the bank to create urban infrastructure in Tier 2 and Tier 3 cities. The UIDF is expected to make available Rs. 10,000 crores per annum for this purpose.
• Identification of 100 transport infrastructure projects for end-to-end connectivity for ports, steel, coal, and fertilizer sectors.

Commodities

• The FM proposes to set up an Agriculture Accelerator Fund to encourage agri-startups by young entrepreneurs, especially in rural areas. The Fund will endeavor to address challenges faced by farmers through innovative and affordable solutions.
• The Government aims to adopt a cluster-based and value chain approach through Public Private Partnerships (PPP) to enhance the productivity of extra-long staple cotton.
• Under an Atmanirbhar Clean Plant Program, an outlay of ` 2,200 crores is proposed to enhance the availability of disease-free, quality planting material to boost the production of high-value horticultural crops 
• The agriculture credit target will witness an increase to Rs 20 lakh crore with a focus on animal husbandry, dairy, and fisheries. 
• A new sub-scheme of PM Matsya Sampada Yojana will be launched with a targeted investment of Rs. 6,000 crores to improve the state fishermen, fish vendors, and micro & small enterprises.
• An investment of ` 2,516 crores is proposed to realize the vision ‘Sahakar Se Samriddhi’. The funds will be used for the already-initiated computerization of 63,000 Primary Agricultural Credit Societies (PACS).

The Bottom Line

The Union Budget 2023-24 seems to be balanced as it has tried to cheer up people across the classes. The budget looks tilted more towards the middle class, with proposals like pushing the tax slab. Also, the budget provides ample impetus to farmers and the agriculture sector with steep capital investments. The Railways has also got the biggest ever outlay. The start-ups and prospective entrepreneurs may feel happy about the boost they have received. 

However, the stock exchanges have given a mixed response to the budget, amid extreme volatility. It is surprising to see the Nifty 50 closing in negative after seeing a rise of over 300 points.