What went right and wrong with Budget 2023
Created on 01 Feb 2023
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The 2023 Union Budget of India is an important event in the country's financial calendar and is closely watched by various stakeholders, including businesses, investors, and citizens.
The budget is an opportunity for the government to outline its priorities and plans for the upcoming financial year, based on factors such as economic growth, tax revenue, and spending requirements
The Economic Survey, which is usually released before the budget, provides an overview of the country's economic performance in the previous financial year and offers insights into the government's economic policy stance.
The Union Budget for this year focuses on seven key areas or "Saptrishis guiding us through Amrit Kaal," as the Finance Minister put it: inclusive development, reaching the last mile, infrastructure and investment, unleashing potential, green growth, youth power, and the financial sector.
Here are some important highlights from 2023 Union Budget of India:
Major modifications to the new tax regime
- Capital goods and lithium batteries are exempt from taxation.
- Cooperatives have a higher TDS limit of Rs 3 crore.
- In the new income tax regime, the rebate limit has been raised to Rs 7 lakh; the number of slabs has been reduced from seven to five.
- Individuals with an annual income of Rs 9 lakh must pay only Rs 45,000 in taxes plus cess of Rs. 1800.
- The standard deduction for salaried and pensioners has been raised to Rs 52,500 under new tax regime for income of 15.5 Lakh & above.
- The highest tax rate of 42.74 percent was reduced.
According to the new tax bracket:
15 LPA and above
Agriculture receives a massive benefit
- Agri accelerator funds will be established to encourage agribusiness startups in rural areas.
- The agriculture credit target has been raised to Rs 20 lakh crore.
- Natural farming will be made available to one crore farmers.
Significant increase in capital investment
- As the finance minister stated in her budget speech, investment and job creation remain the government's top priorities.
- Railways has made a record capital outlay of Rs 2.4 lakh crore.
- Capex for infrastructure development increased by Rs 10 lakh crore, accounting for 3.3% of GDP PM The budget for the Awas affordable housing scheme has been increased by 66% to Rs 79,000 crore.
- 50 new airports and heliports will be built.
- Increased capital outlay for infrastructure to attract private investment
- Every year, Rs 10,000 crore will be allocated to an urban infrastructure fund, and Rs 75,000 crore will be allocated to 100 transportation infrastructure projects.
- Defence Ministry allocated Rs 5.94 lakh crore, up from Rs 5.25 lakh crore the previous year.
- Capex of Rs 1.62 lakh crore has been set aside for purchases of weapons and equipment, aircraft, vessels, and other military hardware.
- According to Budget Highlights 2023, the new credit guarantee scheme will go into effect on April 1, and 47 million youth will receive a three-year allowance.
- The Green Card Scheme notification will be issued soon, and MSME will pay interest to MSME.
- The PM Skills Development Scheme 4.0 will begin operations soon.
Fiscal Deficit Goal for Fiscal Year 24
The fiscal deficit target for FY24 has been reduced from 6.4 percent of GDP to 5.9 percent. "I reiterate my intention to bring the fiscal deficit below 4.5 percent of GDP by 2025-26," said the finance minister.
Other announcements include:
1. The Indian economy is on the right track: Finance Minister Nirmala Sitharaman stated that the Indian economy is on the right track and, despite challenges, is on track for a prosperous future. "Our focus on wide ranging reforms and sound policies helped us perform well in trying times. India's rising global profile is due to several achievements, including a one-of-a-kind world-class digital public infrastructure, a Covid vaccination drive, and a proactive role in frontier areas.
2. PM Garib Kalyan Anna Yojana's free food grain scheme: Under the PM Gaarib Kalyan Anna Yojana, the finance minister stated that the government has implemented a scheme to provide free food grains to priority households for the next year. The government will bear the entire expenditure of approximately Rs 2 lakh crore, according to the finance minister.
3. PAN to be used as a universal identifier: According to the finance minister, for businesses that are required to have a Permanent Account Number, the PAN will be used as a common identifier for all Digital Systems of stipulated government agencies.
What’s expensive and what’s cheaper?
Here is a list of items that will become cheaper and more expensive.
What is cheaper?
- India produces mobile phones and television sets.
- Denatured ethanol
- Fluorspar in acidic solution
- Lab-grown diamonds
- Fish lipid oil is used in the production of aquatic feed.
- Lithium ion cell manufacturing machinery for use in electric vehicles
- Raw materials for the production of CRGO Steel, ferrous scrap, and nickel cathode
What is expensive?
- Cars that have been fully imported, including electric vehicles (EV)
- The kitchen chimney
- Bicycles and toys from other countries
- Gold and platinum articles
- Jewelry that is a knockoff
- Dores, bars, and articles made of silver
- Scrap copper
- Rubber compounds
Major impetus announced to revive India
- Over the next three years, tribals will receive Rs 15,000 crore for safe housing, sanitation, drinking water, and electricity.
- A completely redesigned credit guarantee scheme for MSMEs with a Rs 9,000 crore budget will be launched on April 1.
- Mode shift from manhole to machine-hole — All cities and towns will be able to transition their sewers and septic tanks completely.
- 38,800 teachers will be hired for the Eklavya Model Residential Schools.
- The goal is to 'Make AI in India' and 'Make AI Work For India,' and three centres of excellence for AI will be established in top educational institutes.
- Computerization of 63,000 credit societies will cost Rs 2,516 crore.
- 100 labs for developing apps using 5G services will be established in engineering institutions.
- Rs 35,000 crore for net-zero emission goals in the energy transition.
The Bottom Line
In line with its emphasis on inclusive growth, the Union Budget increased spending on infrastructure and agriculture. By lowering income taxes, Finance Minister Sitharaman's Budget has given individuals more money.
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